Tax benefit (in most states afaik) has nothing to do with whether the purchase is a new or used car. To explain (for anyone not familiar since the way you phra

Tax benefit (in most states afaik) has nothing to do with whether the purchase is a new or used car. To explain (for anyone not familiar since the way you phrased it might be confusing): New car price: $30,000 Your trade in: $10,000 Net price: $20,000 So Sales tax 6%20,000 vs. 6% 30,000 (example of a state with 6% st) If you sell the car yourself you can still use it as a trade in if you can coordinate with the dealer and your buyer and do what is known as a courtesy trade. But you have to get the buyer to show up and take your used car when the dealer delivers your new car. The dealer does the paperwork and usually charges a few hundred dollars or less for handling the sale. It is well worth the trouble if you can get the cooperation from the buyer.