So my mother has a 2012 Toyota, and she is not really into it. She is short and it has poor visibility. I want to get her a 2014 Subaru or CRV but I'm trying to figure out what the best approach is. If i trade in the Toyota, we are losing 1- 2k that we could potentially get by selling it to a private buyer. However, we don't have to pay the sales or Transfer tax on the car (NY) for the amount that is traded in, which I think is around 8%, saving around $800. According to my logic, if the trade in value is close enough to the private party value, it seems like trading it in is a good deal, but I might be missing something. Has anyone tabulated this or done a similar comparison?
This is a very easy question to answer. Take the value of the trade in ($10,000), add in the discount from sales tax that you will receive, ($800) compare that $10,800 benefit to what you could make selling it privately $11,000–12,000, and determine whether the hassle of selling your car is worth an extra $200–1,200 to you. If it is, sell it privately. If not, trade it in.
Since all those numbers are included in your question (I derived the $10,000 from your estimated sales tax and rate) What more do you think anyone can add here? There is risk selling a car. Someone might try to scam you, or steal the car. Weigh all of that against the possible payout.
You are correct, including the tax savings by trading in a car could make it worthwhile. If the price the dealer gives you, plus the tax savings, is less than you would get from a private party sale, then may still want to consider selling it yourself. But, it could be that the reduced hassle may still make it worth it to you.
If you go into the dealership knowing what you could get for your car in a private sale, then you can make that decision based on how much they'll give you for your trade-in.