Understanding your car selling options is the first step to figuring out whether you should sell a car yourself, trade in, use a car broker, donate or salvage. So whether your priority is time, money or not leaving your house, there’s a selling method for you.
Sell a Car Privately
Why should you sell privately? It usually comes down to one word: money. Typically, selling a car yourself will get you the most money since there’s no middleman who also needs to make a profit. So, what’s the downside? It takes time to list a car for sale, screen calls, arrange test drives and figure out the details of the financial transaction. There’s also the comfort factor – the selling process can be a little intimidating.
If you’re interested in selling privately but it’s your first time, or if you would like more information, AutoTrader.com Adviser: How to Sell a Car offers step-by-step expert advice on the entire selling process, including preparing to sell, placing an ad, finding a buyer and closing the deal. AutoTrader.com’s pricing tool can also help you find the average local asking price for your vehicle.
Another option for a private sale is selling to someone you know, like a family member or friend. This type of sale often eases some of the intimidation, but it has the potential to make the negotiation process harder. You may be less willing to drive a hard bargain when you know the buyer.
The bottom line: If getting the most money is your first priority and you feel comfortable selling or are willing to learn, selling your car yourself may be your best option. See AutoTrader.com private seller ad options in your area to start selling now.
Trade In a Car
Although you may not make as much money for your car when you trade-in, for many people the convenience gained is well worth the cost. If you know you want to buy a car from a dealer, all you have to do is drive the old car in and drive your new car out. The dealer will figure out the cost of your vehicle, take care of the paperwork and hand over your new keys, usually the same day. Of course, before you go to a dealer it never hurts to be well educated with average trade-in values for your car, which you can research on sites like NADAguides.com.
One financial incentive of trading in is that you may get a tax break on your new car’s sales tax. In many states you only need to pay sales tax on the difference between the trade-in value and the price of your new car. So if you get $5000 for your trade-in and your new car costs $15,000, you only need to pay the sales tax on $10,000. Check the tax laws in your state to see if you’re entitled to this benefit.
If you owe more money on your car than it’s worth, trading in may also be a good route if you can’t wait to purchase a new car. “If you owe more than $3000 of what your car is worth and you’re looking to get a new vehicle, then trading in may be your best option. If you sell privately, having to overprice your car may present a huge delay in selling your vehicle,” says Tye Frazier, AutoTrader.com’s Customer Adviser.
The bottom line: Trading in is a great option for people who want an immediate sale or don’t want to hassle with the details.
A good broker is typically an experienced car buyer and seller who understands how dealers work, knows how to negotiate and has your best interests in mind. Unfortunately, there are people who pose as brokers who don’t have substantial experience or who are actually on a dealer’s payroll – the broker sells your car to a dealer for cheap and the dealer pays the broker an additional fee. A good broker can reduce your stress, but you need to do your homework. If you decide to use a broker, make sure he has a valid license to sell cars in your state and verify the business with the Better Business Bureau. “You may also want to ask for testimonials from previous customers who have successfully used their services,” Frazier says.
Make sure you also understand how much the broker will be charging you. “If you’re considering a broker to reduce your hassle, you may want to consider trading in as an alternative,” Frazier says. “With a broker you’ll be paying fees that will ultimately reduce the amount of money you make from the sale.”
Remember that AutoTrader.com will never sell your personal information, including your phone number to brokers or anyone else. If you receive unsolicited calls, make sure you’re registered on the National Do Not Call Registry and let the callers know they’re in violation of federal law.
The bottom line: If you don’t want to hassle with the details, a broker may be worth considering if you do your homework. You may also want to consider trading in.
Donate a Car
People typically have three reasons for donating a car: generosity, a tax write-off or they have a vehicle in poor or non-working condition that will sell for very little money. Many charities will pick up the vehicle from your house, which can be an added benefit for people with limited time.
The IRS imposed tougher tax laws on writing-off vehicle donations in 2005. If you donate to a charity that actually uses the car instead of selling it, you can still write off the full fair-market value. The fair market value is the value your car would sell for in your area; this amount may be different than the Blue Book value. To determine your vehicle’s fair market value, Edmunds’ TMV Used Vehicle Appraiser is a great tool.
But most charities don’t use cars that are donated to them – instead, they auction them off and use the profits. When this is the case, instead of writing off the fair-market value, you can only deduct the car’s actual selling price. This amount is likely comparable to its trade-in value, but there’s no way to know for sure until after the sale. The charity is required to provide you with a sales receipt within 30 days, unless your vehicle sells for less than $500. (In this case, you can deduct your car’s fair market value or $500, whichever is the lesser amount.) You’re required to send in the sales receipt with your tax return.
So how much money will you actually see in your pocket? If your car sells for $1000 at auction, you’ll receive $250 off your federal taxes if you’re in the 25% tax bracket.
If you decide to donate, make sure you research your charity thoroughly. Check out organizations that rate charities, like: Give.org, Charity Navigator and the American Institute of Philanthropy. You may also want to check out the IRS’ Vehicle Donations guide.
The bottom line: Donating is a good option for philanthropists or people who don’t think their car is worth selling, but still want to put it to good use.
Salvage & Auto Recycling
Salvage and auto part recycling companies are usually best suited for owners with undriveable cars. The company usually tows away your car for free and may even pay you a minimal amount. If your car is in running condition, you’ll probably get more money by selling it. You may also want to check into donating a car to charity since some charities will accept cars in non-working condition.
The bottom line: If your car’s an undriveable clunker, a salvage company or charity may be your only options besides parking it in your front yard.
Holly Day is a product manager at AutoTrader.com.