A specific used car will be valued differently depending on the transaction taking place. When a used car is traded in, the seller will get a lower price for the car than the dealer will get upon reselling it, usually because the auto dealership must often spend money to change some faulty components of the car and still make a profit on the sale.
The vehicle's retail value is what the dealer will sell it for after necessary changes and updates are made and his own profits are accounted for.
In between these two values lies the price typically attained in a private-party transaction. The private party selling price is typically lower than the retail price charged by a dealership, but higher than the trade-in price a seller receives when he brings his vehicle to an auto dealer, according to J.D. Power.
Though trading in an old vehicle to buy a new one may be convenient, drivers who don't want to risk losing value may want to sell their old vehicle through a private party transaction, obtain an auto loan and then shop around for a new vehicle.