The easiest and quickest solution to getting rid of your old car is to swap keys with the dealer; in return for a trade-in allowance on the new car, you give him your old car. It happens all on the same day. You have no ads to write. You don't have to spend time waiting by the telephone or giving test drives. You don't need to worry about smog or safety certificates which are, in some states, the seller's responsibility. You don't have to concern yourself with paperwork regarding title transfer. And, you'll get the money for your used car immediately - an important consideration if you need cash from your old car to help pay for the new car. Moreover, in many states the sales tax on a new car is calculated based on the difference between the value of your trade-in and the new-car cost rather than on the full purchase price of the new car. For example, if the dealer gives you $10,000 for your old car and you pay $20,000 for the new car, you'll pay sales tax on the $10,000 difference. In a state that charges 6% sales tax, you'll save $600 in taxes by trading in your old car. In effect, you'll be getting $10,600 for your old car. But there is one major disadvantage to trading with the dealer: money. Even if you live in a state that figures sales tax on the difference between the trade-in value and new-car cost, you'll probably end up leaving money on the table if you trade. Many car buyers find it hard to believe, but new-car dealers often make twice as much money from selling used cars than they do on new cars. In order to do this they must buy low and sell high. That's why a dealer’s starting point is often "wholesale price" or "low book value" on your trade - and many times, even less. The difference between high book value and low book value can amount to thousands of dollars - money that you will never see if you trade the car to a dealer unless you negotiate carefully and are willing to walk away from an unreasonable trade-in offer. The dealer will invariably have to put money into your old car before it goes on the lot. Even if your vehicle is in fine shape, the dealer may have to perform to repairs - say, a safety check or a set of new tires. Plus, if it goes into a certified-used car program, it can cost the dealer $1,500 or more to get the vehicle ready for sale. The dealer will also have to advertise the vehicle and pay sales personnel in addition to interest and overhead costs. Or, if the vehicle isn't one he's likely to keep on his used-car lot because it's too much of a clunker or it doesn't fit the dealership's mix, he'll have to wholesale it. The wholesaler will have to make a profit, and the dealer who finally ends up with the old heap will have to make a profit ... all of which means the dealer can't give his customers full retail value for their old cars and still make healthy profits on them. So it often comes down to a relatively expensive tradeoff: take less for the car with little or no hassle, or forego the trade-in opportunity at the dealership in order to pursue other options.