If you're wondering "Why would someone sell their car to a dealership?" or maybe "Why would anyone bother selling private party?" then this article might help you understand both sides!

In the end, it comes down to a balance of convenience and cost factors — including some big ones you probably haven't thought of.

When should you sell your car private-party?

Essentially, if you own your car outright; you're not planning to replace it with another vehicle; it's an in-demand model (likely to sell quickly); and you have the time to spend, then selling your car private-party may be the way to go.

There are some other specific situations as well:

You already have a buyer for the vehicle

If you're selling a car to your cousin, sister, or daughter-in-law's coworker's cat (okay, maybe that's a stretch), that makes the situation easier. You can more easily navigate a situation where you still have a loan on the vehicle, as well, meaning a lien and some calls to your bank. More importantly, you're already done with the hardest part of selling your car by yourself — finding someone who will buy it!

On the other hand, some people consider it to be very wise advice to not do business with anyone you know. You might feel a pressure to sell the car for a lot less than it's actually worth, to be nice to the other person. Or if the car breaks down soon after you sell it, you might feel guilty or it could cause damage to your relationship with that person. So consider carefully if you're thinking about selling to someone you know.

Your vehicle is old, high-mileage, or damaged

For an old-but-still runs vehicle worth about $5,000 or less on the private market, selling private-party might make the most sense. Buyers usually have enough cash to pay up front, you probably won't have a loan (or much left to pay off), and the tax benefits of using it as a trade-in will be minimal.

In addition, vehicles in this price range depreciate more slowly than higher-valued vehicles, meaning you aren't losing as much value while it's waiting for its new owner.

Why sell your car to a dealership?

Many people think: "If I can get more money by selling my car directly to its new owner, why would I sell it to a dealership?" We're not going to tell you that selling to us is always going to be the right choice (it's a personal decision!) but there are a lot of good reasons why many people choose to sell their car to a dealership, including financial ones.

If you don't want to use your free time selling your car,

selling to a dealership is probably the way to go. Listing on multiple sites online, texting, calling, and messaging with buyers and tire-kickers — it all takes up time and if your weekends are precious, this can be a pretty big reason.

If you have a hard-to-sell vehicle,

it could be on the market for six months or more, depreciating all the while and maybe costing you insurance fees and interest charges. If you've already tried selling your vehicle and haven't gotten anywhere, selling it to a dealer is probably the way to go.

If you live far from any cities or larger towns,

you may have a hard time finding buyers and it may take longer to sell, meaning a dealership might be the better way to go. Even if it's a 100-mile drive to the nearest dealership and 100 miles farther to the one that gave you the great offer, it could be worth it to avoid having the vehicle just rusting in your yard.

If you're moving and need your vehicle up until the point when you move,

then a dealer is probably the only way to go (besides leaving it with someone you trust and having them try to sell it). You can even try arrange the sale in advance and drop the vehicle off on the specified day, assume its condition hasn't changed significantly from when you got your quote.

If you're planning to replace the vehicle with another one,

in Minnesota you can get significant amounts of tax savings by using your current vehicle as a trade-in. Unfortunately, this benefit is only available when you trade in a vehicle for another vehicle at the same dealership, and it's not possible to claim it on private-party sales.

If you have a lien on the car,

most banks won't let you sell it very easily. This is because the car is your security on the loan, and the bank isn't willing to just transfer the loan to someone who doesn't have the same credit and history as you.

You might be able to work this out by doing the deal right at your bank: have the buyer make the payment directly to the bank while you are both there. If that's not possible, you might be able to take out an unsecured personal loan, use it to pay off your car and get the title and lien release, and proceed with selling it.

In contrast, at a dealership we can work out the loan directly with your bank, cut you a check for an equity (or take your payment to cover negative equity), and you walk away within 1-2 hours.

If you are underwater on your loan, you will also need to have cash to cover the negative equity (the difference between what your car is worth and what you still owe on it). This can make selling a car with a lien on it even more difficult.

Summary

There are surely some other special scenarios out there that would push the decision-meter one way or another, but these points should give you a good starting point to decide!