When you buy a vehicle, you have the choice to sell your vehicle on your own or trade it in. When you trade it, here's what happens.

Let's say you buy a vehicle that is worth $ 30,000 and your trade-in vehicle receives $ 17,500 from the dealership. Now let's say you plan to sell the vehicle for $ 20,000 and use the cash as a deposit. The vehicle will therefore cost you $ 14,500 ($ 30,000 plus taxes - $ 20,000). When you give your vehicle as a trade, the amount is applied before taxes. So, we take the $ 30,000 and we subtract $ 17,500 for an amount of $ 12,500 plus taxes which is equivalent to $ 14,375.

As you can see, sometimes it can be advantageous to trade in your vehicle. This avoids all the complications of having to sell it ourselves, while the difference is not as huge as it looks on paper.