A trade-in vehicle is applied before taxes when returned to the dealership. On the other hand, any deposit is calculated after tax. Let's see this with an example.

Say you sell your vehicle for $ 10,000, but the dealership gives you $ 8,000. You decide to apply the $ 10,000 toward the price of your next vehicle, which costs $ 30,000. The $ 30,000 plus tax equals approximately $ 34,500. Your $ 10,000 will be reduced by $ 34,500 to give you a net cost of $ 24,500. Conversely, the exchange is applied before the tax. This means that we take $ 30,000 and we reduce $ 8,000, which equals $ 22,000. The tax is then added to the $ 22,000, which equals $ 25,300. In the end, selling the vehicle yourself earns you only $ 800.

Selling a vehicle on your own can take weeks if not months and is time-consuming in addition to hiding some unexpected expenses. Sometimes it is more beneficial to just give our vehicle to the dealer and avoid all of the complications.