Car Deal Canada

Selling a Used Car To a Dealer

Selling a Used Car To a Dealer

With used car prices at record highs, many owners are considering selling their vehicles to dealerships. But how exactly does the dealer used car buying process work? This guide will walk you through everything you need to know about selling your car to a dealership.



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How Dealers Source Used Inventory

Car dealerships get their used vehicle inventory from a variety of sources. Here are the main ways dealers acquire pre-owned cars and trucks to sell on their lots:

 

Wholesale Auctions

The bulk of a dealership’s used inventory – around 47% – comes from other dealerships selling at massive wholesale auto auctions held regularly around the country. By buying in volume at auction, dealers can get lower prices than negotiating one-off deals for individual vehicles. The tradeoff is the vehicles tend to have higher mileage and wear from being demo models or daily rentals originally. But the volume pricing at auction makes up for the extra mileage in most cases.

 

Trade-Ins

The next biggest source of a dealer’s used cars is trade-ins from customers. When you trade in your old car as part payment on a new one from the dealer, that’s 35% of their used stock right there. Trade-ins are attractive since they tend to be in good condition from owners who cared for them well. The selection is limited to whatever makes/models people are trading in though.

 

Lease Returns

When leased vehicles get turned in at the end of their lease term, dealers scoop many of them up and resell them as certified pre-owned cars. These off-lease cars make up around 7% of a typical dealer’s used inventory. Their key advantage is low miles and predictable maintenance since they were leased. The challenge is getting enough volume and the right mix of models.

 

What Dealerships Look For When Buying Used Cars

Dealerships have a checklist of factors they evaluate when assessing used car purchases. Their goal is to buy vehicles they can resell quickly at a profit, so they focus on cars in high demand with clean histories.

The most important factors dealers evaluate are:

 

  • Popular makes/models – High-demand vehicles like Toyota RAV4s, Honda Civics and Ford F-150s are hottest sellers, so dealers target buying these to ensure fast inventory turnover.
  • Condition/mileage – Dealers avoid vehicles needing major mechanical repairs or bodywork. They target average mileage based on age – for example, an 8 year old car should ideally have under 125,000 km.
  • Maintenance records – Proof of regular oil changes, inspections etc. make a vehicle much more attractive to buy and resell. These verify condition.
  • Accident history – Even minor accidents hurt resale value, so dealers carefully verify no insurance claims or accident reports.
  • Ownership – More owners indicates potential issues, so dealers strongly prefer 1 or 2 owners with longer ownership terms, ideally 5+ years.

 

By targeting the newest condition, most popular models with clean histories, dealers maximize their chances of quick turnover and profits on used inventory.

 

Getting Dealer Price Quotes

Before contacting any dealerships, do your research to determine fair pricing for your vehicle. Check sites like Kelly Blue Book (KBB) and Edmunds, entering your car’s make, model, year, mileage and specs. This will give you average private party sale prices, trade-in values and dealer retail pricing. Use the lower end of private party pricing to set realistic expectations before requesting quotes.

Once you know your car’s approximate value, call at least 3 local dealerships that sell used vehicles. Clearly describe your vehicle, including mileage, any repairs or maintenance done, overall condition and any extras. Then directly ask what they would offer you for the car if you sold it to them outright. You can also request a trade-in value if you are planning to purchase another car from them.

Compare the quotes you receive and adjust your pricing expectations accordingly. Go back to the dealer that gave the highest quote and use that as leverage to negotiate. For example, “Dealer A offered me $5,000 for my 2010 Civic. Would you match that amount?” Detail any minor repairs you will make before sale, and discuss removing any custom parts you may want to keep.

 

How Dealers Determine Used Car Offer Prices

The first offer from a dealer won’t be their best price, but here is what goes into their used car price calculations:

 

Wholesale auction data – Dealers won’t offer more than the current wholesale auction value for your car’s make, model, year and specs. This sets the baseline for their initial offer.

 

Condition adjustments – Vehicles in excellent condition with lower mileage, regular maintenance etc. will get higher pricing. Poorer condition cars get deducted from the wholesale value.

 

Local demand – Popular models that are in short supply in your area can fetch higher pricing due to competition among dealers trying to stock them.

 

Reconditioning costs – Dealers will estimate repairs and reconditioning costs that will be deducted from their offer – things like new tires, brakes, fluids, cleaning etc.

 

Profit margin – Dealers need to build in a profit margin for reselling the vehicle, usually 20-30% below expected retail price.

 

Maximizing Your Payout When Selling to a Dealer

Follow these tips to ensure you get the highest payout when selling your used car to a dealership:

 

Fix minor issues beforehand like windshield chips, oil leaks, worn brake pads etc so they don’t get deducted from the offer. Even small repairs can add up quickly for the dealer, so you’re better off handling them yourself before sale.

 

Gather all maintenance records and accident history to back up your car’s condition. Maintenance records prove regular oil changes, inspections and servicing which makes the car much more attractive to buy. The more documentation you have, the better.

 

Remove all personal items and restore the car to stock factory condition by taking out custom floor mats, electronics, phone chargers etc. You want the car to look as new and “blank slate” as possible.

 

Wash/wax the exterior and clean/shampoo the interior so it shows as well as possible. First impressions really count when the dealer appraises it. A detailed car looks like it was better cared for.

 

When to Sell Your Car to a Dealer

Timing the sale of your car to a dealer is an important consideration if you want to maximize your payout. Dealerships have fluctuations in their purchasing budgets and goals throughout the year that impact how much they’re willing to pay.

The best approach is to remain flexible on exactly when you sell. Avoid trying to offload your car at the very end of a month when many dealers are scrambling to meet sales quotas. There can be intense pressure on getting vehicles sold during month-end rushes, which reduces their ability to pay top dollar on buying from the public.

It’s ideal to connect with dealers early or mid-month when budgets are more open and there’s less quota pressure. Sales managers will be able to devote more time to assessing your vehicle and extending their best offer without end-of-month constraints.

Certain months and quarters tend to be better times to sell from a budget perspective as well. Late spring to early summer, after tax refund season, is often a peak period for dealership vehicle purchasing. End of year budgets also open up more flexibility in the October to December timeframe in many cases.

The best advice is to be prepared to sell in a 1-2 month window and remain agile on exact timing. Initiate your dealer discussions early in this window and let them know you’re flexible. Pay attention to any cues from sales managers on when to follow up or come back to finalize pricing. This avoids catching them at the worst times budget-wise. With some preparation and scheduling flexibility, you can time your sale to hit peak dealer buying periods.

 

Getting the Paperwork Done

Once you’ve agreed to a final sale price with the dealer, there will be some paperwork required to complete the sale. Here are some things to prepare:

 

– Review the title, registration, and insurance information to ensure they are accurate and current. Inform the dealer of any pending registration or title transfers.

– Consider selling any remaining warranty coverage if it is transferable to the new owner. This can increase the car’s value.

– Have your driver’s license, all sets of car keys, and any spare keys ready to hand over. Dealers will need these to take ownership.

– Remove your license plates after the sale if required by your local state laws. In some states, you must return plates to the DMV when selling a car.

 

Taking care of these details ahead of time will help streamline the paperwork process at the dealership. Bring any necessary documentation with you and be prepared to sign over the title and registration to complete the used car sale.

 

Payment and Pickup Logistics

Once you’ve agreed to a final price with the dealer, it’s time to handle the payment and logistics of transferring the car. Here are some tips:

 

If you still have an outstanding loan on the car, get a payoff quote from your lender so the dealer knows exactly how much is owed. They can send a bank check directly to the lender to pay off the loan and get the title released.

For payment, dealers may offer cash, bank check, certified check or wire transfer. Don’t accept personal checks as they could bounce. Cash is safest for small amounts. For larger sums, bank transfer or certified check offer protection.

Set an appointment time to complete final paperwork and hand over the keys. Meet at the dealership if possible so they can’t claim later the car had undisclosed issues. Have them sign a basic bill of sale you’ve prepared as further proof of the transaction.

Until the payment fully clears into your account, take steps to protect yourself like keeping possession of the title. Remove license plates after sale so the dealer can’t use them. Lastly, make sure to notify your insurance company that you’ve sold the vehicle.

 

Selling Multiple Cars

If you have more than one vehicle to sell, dealers may be even more interested in buying from you. By selling multiple cars at once, you can potentially negotiate an even better price:

 

  • Dealers are keen to buy multiple vehicles in one deal as it saves them time and resources.
  • You can bundle less desirable cars together with nicer ones to get better pricing across the board.
  • Make sure to get all vehicles detailed so they look their best when the dealer comes to assess them.
  • Aim to have all cars parked together and ready for inspection on the same day.
  • Discuss a potential package discount for the dealer to buy all your cars as a lot. Offering volume can give you more leverage.

 

Selling two, three or even more cars to a dealership is an efficient way to maximize your returns. Take advantage of a dealer’s eagerness to stock up on inventory in bulk.

 

If Your Car Needs Repairs

If your vehicle needs any repairs or maintenance work, be upfront about this when getting quotes from dealers. Known issues will lower your payout, but hiding problems will eliminate any trust during negotiations. Here are some tips for handling repairs:

 

– Get written quotes from your own mechanic detailing the cost of recommended repairs. Provide these to the dealer so they can factor it into their offer, rather than guessing at a deduction.

– Allow the dealer’s service technicians to thoroughly inspect your car. They will likely find more issues, but you can then negotiate how much gets deducted.

– Clearly disclose any existing problems you’re aware of, even minor ones. Transparency builds trust during the transaction.

– Consider selling your car in as-is condition if repairs are too costly. This nets you a lower payout, but saves the hassle of fixing it upfront. Just be open about the issues.

 

Properly handling any necessary repairs during the selling process ensures there are no surprises that hurt your payout down the line. You have more negotiation power if you’re fully transparent.

 

Watch Out for Red Flags

Selling to a dealership is generally safe, but you still need to be on alert for any red flags that indicate a potential scam or fraudulent buyer. Here are some precautions to take:

 

Don’t accept payment before verifying funds – Unscrupulous buyers may try to pay with a bad check or fake wire transfer notification. Never accept payment or hand over the title until you confirm with your bank that the funds have fully cleared into your account.

 

Meet at dealer lot or police station – Avoid meeting in random parking lots. For security and legitimacy, arrange to complete the sale at the dealer’s official business location. If they resist, meet at a police station parking lot instead.

 

Review all paperwork thoroughly – Read the bill of sale, title transfer forms, and any other documents line-by-line before signing. Make sure your information, the vehicle details, and terms are correct. Don’t rush through the paperwork.

 

Trust instincts if something seems off – Don’t ignore any gut feelings that a buyer seems untrustworthy or a situation doesn’t feel right. It’s better to cancel a sale than risk being scammed. Proceed cautiously if uncertain.

 

Alternatives to Selling to a Dealer

While selling your used car directly to a dealership is convenient, it likely won’t net you the absolute highest payout. Here are a couple alternatives to consider:

 

Selling Privately

Selling your used car yourself privately will involve more work, but will likely get you a higher selling price. You’ll need to advertise the car, arrange test drives, negotiate with buyers, and handle all paperwork for the sale. It takes more time and effort, but avoids the dealer’s profit margin being deducted.

 

Trading In

If you are planning to purchase another vehicle from a dealership, trading in your used car provides convenience but reduces the trade-in value. Dealers will deduct their profit margin twice – once from the trade-in value and again on the new car sale. You’ll get less money for your trade-in than selling privately or to a dealer directly.

 

Online Buyers

A newer option is using an online used car buying service. They provide quotes after you enter your vehicle details, then handle pickup if you accept the offer. Pricing is usually better than trade-in but under private sale values. It simplifies the process but still cuts into your payout.

 

Conclusion

Selling your used vehicle directly to a car dealership can be a fast, convenient way to turn your old car into quick cash. With used car prices at record highs right now, dealers have an increased appetite for buying up inventory. By following the steps outlined in this guide, you can successfully navigate the dealer used car buying process and maximize your payout.

The keys are getting multiple price quotes to understand accurate valuation, being flexible on timing and repairs, and negotiating firmly once you have the leverage of competing offers. With thorough research and preparation, you can simplify the selling process while getting top dollar for your car with minimal hassle.

Selling to a dealer means no advertising, no test drives with strangers, and no payment collection hassles. For those looking to exit their current vehicle in favor of upgrading or downsizing, this option provides an easy exit strategy. Given the red hot used car market we’re in, now may be an ideal time to explore your options.

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Questions About Selling a Used Car To a Dealer

Yes, most car dealerships in Canada buy used cars. They may buy used vehicles directly from customers looking to sell their car without a trade-in, acquire them through trade-ins, purchase them at auctions, or source them from rental car companies, lease returns, and company cars. Dealerships buy used cars to resell on their lot for a profit.

The process typically involves the dealer inspecting your vehicle, taking it for a test drive, checking its history and title records, and making you an offer based on its assessed market value. If you accept the offer, they will draw up a bill of sale, pay you, and take possession of the car. You will need to sign over the ownership.

Trading in your used car to a Canadian dealer when buying another vehicle from them may be more convenient, but typically results in a lower value for your trade-in. Selling privately or to the dealer without a trade can yield more money. Consider best offers, your time investment, taxes, and overall convenience.

Yes, you can certainly try to negotiate the initial cash offer from a Canadian dealership for your used vehicle. Come armed with details on your car’s equipment, condition and any repairs done. Research its Canadian Black Book or CarProof value first to support negotiations. Dealers must make a profit reselling though.

Many major Canadian franchised car dealerships will purchase used cars directly from the public, but not all do. Smaller independent used car lots more commonly only sell vehicles they’ve purchased at auctions. Larger dealers have more capacity to appraise, purchase and resell a variety of used cars directly.

The Canadian dealership will need the vehicle’s ownership (title), service records, a recent safety certificate if required in your province, possibly a CarProof vehicle history report, and your driver’s license or other registered owner ID. You’ll sign a bill of sale transferring ownership to the dealer.

Most reputable Canadian dealerships will pay you on the spot when buying your used car with a bank draft, certified cheque, electronic transfer or cash. Rarely, a dealer may need 1-2 days to confirm financing if not paying fully in cash, but you should not release the car until paid in full.



Most Canadian dealerships can facilitate buying used vehicles that still have outstanding loan balances or liens, which they will pay out and clear on your behalf. This may reduce the cash price offered for your trade-in. Ensure all liens are removed before releasing your car.



Dealerships have more flexibility than private buyers. Many will consider buying used cars with higher mileage and wear provided they can be resold. However, each dealer applies their own policies on age, kilometers, condition, repairs needed, title status, etc. when making offers. Less demand models see tighter limits.

In Canada you can sell your used car to any type of franchised or independent dealership brand, not just the automaker who built your vehicle. Dealers regularly buy used models from other makes. They care more about equipment, demand and potential profit than sticking to one brand of used cars.

It varies greatly, but Canadian used car dealerships typically offer 60-85% of a vehicle’s potential private sale value, if sold to an individual buyer. This allows them room for profit when retailing the vehicle on their lot after investing in reconditioning. High demand used cars may fetch closer to full value.

Unlike private sales, there are typically no listing fees or commissions when you sell directly to a Canadian used car dealership. However, if you still have auto loan payments, you may face payout penalties or interest charges from your lender. Account for these when negotiating your sale price.

While some dealerships strictly buy used vehicles in good operating shape, many others will purchase cars needing minor repairs or reconditioning if they see profitable resale potential. Be upfront about any known mechanical issues; the dealer will account for these in their buying offer.

Selling or trading a used car to a Canadian dealership likely won’t impact your taxes, as capital gains tax generally doesn’t apply to personal vehicles. However, if you run a business and have claimed depreciation, selling the car can trigger recaptured depreciation which is taxed as income. Consult an accountant.



Many major Canadian used car dealerships have online trade-in portals where you can get a ballpark idea of your vehicle’s wholesale value by entering the VIN, mileage and condition. This is a starting point for negotiations if selling outright. In-person appraisals remain most accurate for used values.

When selling your used car to a Canadian dealer, be sure to get a copy of the final bill of sale and ownership transfer paperwork indicating the vehicle details, sale date, price paid and dealership name. Keep this for cancelling registration, insurance, and your records in case of issues down the road.



Yes, Canadian car dealerships can buy out leased vehicles from the current lessee provided there is no lien, or they arrange lien payout. You will need to transfer the lease over to the dealer. Any equity between the buyout price and market value goes to you. Inform your leasing company too.

While requirements vary somewhat by province, the large majority of used vehicles sold by licensed dealers in Canada must display a valid provincial safety certificate confirming inspection within a defined period. This offers buyer protection unlike private sales.



Most Canadian used car dealers aim to turn over their vehicle inventory quickly, often within 30-60 days. But some models may sit for 6 months or longer if difficult to sell. Dealers must cover their costs, pay interest on loans, and free up lot space, so strive for high inventory turnover of used vehicles.

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