If you’re planning to sell your car in Ontario, understanding trade-in vs selling your car in Ontario can help you make the right financial decision. Most drivers consider two dealership options: trading in their vehicle or selling it directly to a dealer.
While both options are simpler than selling privately, they serve different purposes. Knowing the difference between trade-in vs selling your car in Ontario can save you money, time, and stress.
Trade-In vs Selling Your Car in Ontario: What’s the Difference?
A trade-in implies you use your existing car as credit towards another car purchase at the dealership. Your current vehicle’s worth is, then, subtracted on the price of the new one.
Selling a car to a dealer means selling the car directly. You get paid, and you’re not required to buy another vehicle.
Both options are legal and regulated in Ontario when conducted through a registered dealership.
If you’re already thinking about upgrading, you can check out available vehicles in the Planet Motors inventory.
Why Many Ontario Drivers Choose to Trade In
One of the biggest advantages of trading in your car in Ontario is HST savings.
Tax is only applied to the price difference between your trade-in value and the vehicle you’re purchasing. You don’t pay HST on the full price of the new car.
If you’re planning to upgrade, you can start with a trade-in appraisal with Planet Motors
Beyond the tax savings, trade-ins are convenient. Most appraisal, paperwork, ownership transfer, and purchase undergo through just one place and often in a single visit, depending on the vehicle and lender.
When Selling Your Car to a Dealer Makes More Sense
The option of selling your car to a dealer might be the more optimal choice in case you do not intend to buy a new car immediately.
According to Ontario Motor Vehicle Industry Council (OMVIC), transactions with registered dealerships must follow strict rules around disclosure, documentation, and payment, which helps protect consumers.
This choice appeals to those drivers who prefer quick, easy sales without placing their car on the Internet, having personal meetings with buyers, and negotiating independently.
If you’d like to sell without upgrading, you can request a no-obligation offer.
What If Your Car Is Still Financed?
In Ontario, you are allowed to trade or sell your car despite an outstanding loan. The majority of dealerships deal directly with lenders to settle the outstanding balance as a part of the transaction. The positive equity can be transferred to your next vehicle or can be paid out to you in case your car is worth more than you owe. In the event that balance exceeds the value of the vehicle, the balance can be rolled over to a new loan or paid off.
Trade-In vs Selling Your Car in Ontario: Which Option Is Right for You?
A trade-in can be a good idea when you are switching to another car and are interested in reducing your total price with Ontario HST tax credit.
It is always better to sell your car to a dealer when you need cash fast and not willing to purchase another vehicle at this moment.
Having said that, in case you are not sure, it can be a good idea to begin with an appraisal in order to compare the two alternatives with real numbers.
Frequently Asked Questions
Yes. In trading a vehicle in Ontario, HST is calculated based on the balance after subtracting the trade-in value.The tax credit is not applicable when you sell your car directly without buying another car.
Yes. You can trade in a financed vehicle in Ontario. The dealership will normally settle the outstanding loan and in the process. You can use any positive equity on your next car.
In many cases, the process can be completed the same day. This includes appraisal, paperwork, and loan payoff coordination, depending on your lender.
Yes. Most dealerships offer free appraisals with no obligation. This will enable you to make comparisons on your options and then either trade in, sell or retain your car. Get your trade in offer at Planet Motors.