Why should I trade-in my vehicle?
* Trading in your current vehicle towards another can partially offset the cost of the new vehicle. The trade-in's net value goes towards the purchase of a new car. Depending on the financing of the new vehicle and the outstanding balance on the old one, trading-in can either raise or lower the new car's price.

* When you trade-in you don't have to worry about selling the vehicle yourself or any of the associated costs (advertising, showing the car, etc).

* A dealer may offer a price you could not get yourself as an incentive to purchase a new vehicle. If you sell the vehicle yourself it could plague you later (when the buyer returns complaining), selling the car to the dealer eliminates the bother.

* Probably the biggest advantage is that you will pay less sales tax.  You only pay sales tax on the difference of the price of the new vehicle, less the price allowed for the trade-in vehicle.  If you don't trade in a vehicle, you would pay sales tax on the full selling price.

Why decide against trading-in?
If you think you can get a better price selling privately, and it's worth the time, money and effort, do not sell to the dealer. Some cars are of special interest and dealers may not have a market for that type of vehicle.

What happens to a trade-in?
Some are kept by the dealer and resold as used cars. These vehicles are reconditioned, required maintenance is performed and then they are completely detailed before they are put on the lot.  Many vehicles are sent to auction or sold to wholesalers.