Selling or Trading In Your Car
The Pros and Cons of Selling Privately vs Trading In
Should You Sell Your Car Privately or Trade It In When Getting a Loan?
If you’re thinking about upgrading your car and applying for finance, one of the first decisions you’ll face is what to do with your current vehicle. Should you sell it privately or trade it in at a dealership5?
This decision isn’t just about convenience—it can also impact how much money you need to borrow, the size of your deposit, and even your chances of loan approval. For people with bad credit or those receiving Centrelink benefits, getting it right could make a real difference.
See car loans with bad credit and our Centrelink friendly car loans pages to learn more about how Money3 could help.
Why It Matters
Whether you’re selling privately or trading in, the goal is usually the same: to get as much as you can from your current car, that can help fund your next one. That could mean:
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Using the money as a deposit to reduce the loan amount.
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Paying off an existing loan if there's still finance owing.
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Improving your loan application chances by showing a contribution toward the new purchase.
- More flexibility in vehicle choices, above the limits of your car loan pre-approval.
This is especially important if your credit history isn’t perfect, as many lenders often look more favourably on applicants who can provide a deposit or who can reduce the loan-to-value ratio (LVR).
Option 1: Selling Your Car Privately
Pros:
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You’ll often get more money than a trade-in.
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That extra value can reduce the size of your new loan—or act as a stronger deposit.
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Helps show lenders you're serious about managing your finances.
Cons:
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Can take time to find a buyer, especially if your car is older or has cosmetic issues.
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You’ll need to handle advertising, inspections, test drives, and paperwork yourself.
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If you're relying on the sale to get your next car, delays can cbe frustrating.
⚠️ Tip: If you're on Centrelink or have had defaults in the past, it’s a good idea to speak to a lender before selling your car—especially if there's still money owing.
Option 2: Trading In Your Car at a Dealership
Pros:
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Fast and simple—the dealer handles everything.
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You can often apply your trade-in value directly to your new car loan.
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Some lenders may consider your trade-in as a deposit, which could improve your approval chances.
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No need to meet with strangers or wait weeks for a buyer.
Cons:
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The trade-in offer is usually lower than what you might get selling privately.
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Not all dealers offer fair market value, so it’s worth shopping around.
For customers with bad credit, a trade-in can be a helpful way to boost your application.
| Consideration | Sell Privately | Trade-In |
|---|---|---|
| Highest possible value | ✅ | ❌ |
| Fastest way to change cars | ❌ | ✅ |
| Lower stress, admin & paperwork | ❌ | ✅ |
| More control over the process | ✅ | ❌ |
| May help with loan approval | ✅ | ✅ |
Can You Do Both?
Yes. Some people try to sell their car privately first—and if that doesn’t work out, they fall back on a trade-in. You could also get a free valuation to understand what your car is worth, so you can make a better decision either way.
If you're planning to get a car loan, it’s a smart move to get pre-approval first. This can give you clarity on what you can afford and help you time your sale or trade-in more confidently.
Final Thoughts
There’s no one-size-fits-all answer—but if you're applying for a loan and have bad credit or are receiving Centrelink payments, it's worth taking a little time to consider the pros and cons5.
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If you need to maximise value, a private sale could help reduce your loan.
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If you need to move quickly or prefer less hassle, a trade-in may be the way to go.
Money3 Could Help!
At Money3, we help people every day who want to upgrade their car with car finance, even if they’ve had trouble getting finance in the past. Whether you’re trading in, selling privately, or still making repayments on your current car—we’re here to help.
5. This information is general in nature and is for information purposes only. It is not financial advice.
Upgrading Your Car FAQs
Yes, it is possible. Money3 considers applications for car loans from people with bad credit. We look at your current financial situation—not just your credit history. We'll give you a fair go!
Yes. If Centrelink is part of your regular income, we may still be able to help—depending on your overall financial circumstances. We'll give you a fair go!
Yes, that's an option. Getting pre-approved could give you a clearer idea of your budget while you organise the sale or trade-in of your current car. However, your car loan pre-approval will generally only be valid for a short time.
It could. A trade-in can reduce how much you need to borrow, which may improve your chances of loan approval.
Not always. If you still owe money on your car, the dealer may be able to pay out the remaining balance as part of the trade-in deal.
Yes, that's possible. Even if your car isn’t in great shape, some dealers may still accept it as a trade-in. The condition will affect its value.
Dealers look at your car’s age, condition, kilometres, service history, and current market value to determine its trade-in worth.
A fair trade-in price reflects your car’s market value, taking into account its age, condition, kilometres, service history, and demand for that make and model.
Here’s how to check if the offer is reasonable:
- Get multiple quotes: Visit or contact several dealerships to compare trade-in valuations. Each one may offer slightly different amounts based on their current stock or buyer demand.
- Check online marketplaces: Look up your vehicle’s make, model, year, and condition on sites like Carsales, RedBook, or Gumtree to see what similar cars are selling for privately and what dealers are advertising.
- Use valuation tools: Some websites offer free car valuation tools that give a general price range based on recent sales data.
- Know your car’s condition: Be honest about any damage, mechanical issues, or wear and tear—these will affect the final price.
Keep in mind that trade-in prices are often lower than private sale prices, because the dealer takes on the cost of reconditioning and reselling the car. That said, a fair trade-in offer should still feel reasonable given your car’s overall value and the convenience offered.
If you're unsure, feel free to ask the dealer to explain their offer—a reputable dealer should be willing to walk you through their valuation.
Usually, you’ll get more from a private sale—but it takes more time and effort. Trade-ins are quicker and simpler.
It varies. It could take anywhere from a few days to a few weeks, depending on your car’s condition, price, and market demand.
Private sales take more time, require paperwork, and involve meeting with strangers. There’s also a risk of delayed or failed payment.
You’ll usually need the registration papers, a proof of identity, and a receipt or sale contract. Each state or territory may have specific requirements.
Approval times vary, but many applications are assessed within one business day. Having your trade-in or sale sorted could help speed things up.
See our how it works page to learn more about the application process.
5. This information is general in nature and is for information purposes only. It is not financial advice.
Car Loans We Offer
Car Finance
Car finance with Money3 goes up to $75,000 and is available for both new and used cars. Private sales or dealerships OK.
Car Loans with Bad Credit
At Money3, we’ll consider your finance application with a bad credit history. Our car loans finance is available up to $75,000 over 2 to 7 years terms.
Centrelink* Friendly Car Loans
Even if you are receiving Centrelink payments* you could qualify for a car loan. We believe in giving everyone a fair go, including those who are on Centrelink benefits.
Used Car Finance
Our car loans are available for used and second-hand cars. Whether you need a private sale or when buying from a dealership, we could help you finance your next car.
Loans for Car Repairs
Personal loans are available, up to $30,000 for car repairs, services, upgrades or for other vehicle types - we'll give you a fair go!
Vehicle Finance
Finance is available for all road vehicle types plus boat or watersport vehicles with Money3. From campervans and trailers to boats and motorbikes. We'll give you a fair go!
* Money3 is not affiliated with, or endorsed by, Services Australia, but does provide personal loan and vehicle finance options which are available to recipients of benefit payments
Related Articles
Also check out some related articles below:
10 Tips for Bad Credit Loan Approval
Bad credit loan tips to help improve your chances of loan approval.
Loans on Centrelink Benefits
Check out your options and see how you could qualify for a loan on Centrelink benefits *.
Why Choose Money3?
Find out why so many people choose Money3 for a range of loans and finance needs.
1. Subject to verification, suitability and affordability
* Money3 is not affiliated with, or endorsed by, Services Australia, but does provide personal loan and vehicle finance options which are available to recipients of benefit payments
