Buy & Sell: Why Buy When You Can Trade Up?

Story By Andy Reid

I have covered how to buy at auction, how to buy from a person, and how to use a broker to get the car you want. There’s another way to get that desired car, too, and often at a great value. I’m sure a lot of you have used a trade-in to offset the cost of your next new car, but did you know you can use the same technique when buying from a classic dealer? This may seem obvious, but I’ve found that many people haven’t even considered it as an option. Better still, you can also do a trade deal between owners, circumventing the dealer altogether.

This happens more often than you’d think, and at the stratosphere of the hobby, it happens quite a lot. Say you want to buy a Ferrari 250 GTO and have the money to pay for it, but there aren’t any on the market. Do you just wait until one goes up for sale? Not likely. Cars like the GTO are very scarce and rarely offered for sale.

However, there may be a GTO owner out there who’s searching for something else. Perhaps you have a car they want and can do a trade–and in the case of the GTO, it would likely be a trade plus cash. This is a pretty common occurrence, but it isn’t limited to the upper end of the market. Let’s say you have a No. 1 condition flat-floor Jaguar E-type and are looking for something different–say, an Aston Martin Mk III. You may find an Aston Martin owner looking for a Jag just like yours. There could be a price difference, but maybe not. Maybe one owner is simply looking to trade horses. In the end, you both end up with just the car you want with little hassle.

There’s another advantage to trading cars instead of buying outright. When you buy a car– either new or used–you have to pay taxes to register it. The cost is dependent upon the price paid, and on more expensive purchases, it can add up to tens or hundreds of thousands of dollars. This tax consequence is something many car buyers fail to factor in when buying a car, and it can come as a very unpleasant surprise.

In many states, when you trade cars, you only pay tax on the difference in cost. If it’s a straightup trade, your tax liability may well be zero. Check with your state’s DMV to see whether they offer this option.

I’ve made a few of these trades in my time. The first was when I handed over my 2001 Boxster S for a 1984 Porsche 911 Carrera coupe. This is the same car that our editor, David S. Wallens, owns now. The owner of the 911 could no longer deal with the clutch and wanted a Tiptronic car like mine. After a few emails, we met in person to testdrive each other’s cars. Satisfied, we exchanged keys. I was more than happy with my end of the bargain, and I hope he was as well.

This year in Monterey, I’m doing a similar trade. My friend Rob Sass wants my Aston Martin DB7 and offered up his Jensen Interceptor coupe in return. I tried to buy the Interceptor from him last year, but he wasn’t yet done with the car. We made a few additional arrangements, but here’s the basic plan: I’ll arrive with my DB7 in Monterey, where I’ll get to spend half a week with the car to say goodbye. Then I’ll hand the keys and title to Rob, and he’ll give me the keys and title to the Jensen. Finally, we’ll both end up with the car we’ve each wanted for quite a while. The next time you have the itch for something new, keep your eyes open. You may find your next dream car on the show field instead of in the classified ads. It could be just a trade away.

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