Should you sell your car?
Gas prices are still steep. Used car prices remain high. Learn whether selling your car might make sense for you.
Gas prices are still steep, and used car prices remain high. Various parts of planet Earth are literally on fire. So is this a good time to save some money, make some money, help save the world, and / or maybe free up some space in your driveway for a basketball hoop? And if it is a good time to sell your car, how should you go about it?
Below, learn why you should consider selling your car, and how to sell your car if that’s what you decide.
In this article:
Why you should sell if your can
“Automobiles can be absolute budget-busters, between the mammoth monthly payments brought about by escalating sticker prices and minimal down payments, rising insurance costs, regular maintenance and occasional repairs,” says Greg McBride, CFA at bankrate.com.
It’s also worth mentioning that the older and cheaper your car, the less “occasional” the repairs and maintenance will be. And then there’s the opportunity cost. Money you spend on buying, maintaining, fueling and parking a car is money you’re not investing or saving. It’s just money you’ll never see again.
The American Public Transport Association says that a household can save almost $10,000 a year by using public transport and having one less car. Therefore, as McBride says, “if you can do without a vehicle or have the luxury of waiting to acquire one, you’ll have a lot more financial breathing room.”
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But can you?
While the current high price of used cars makes this a good time to sell your car, it also means “this is not an ideal time to buy another one,” says Tom McParland, founder and buyer’s agent at Automatch Consulting. Sell now and “you may get more for it in this market than you would otherwise,” but that only makes sense if you’re sure you won’t be buying another one in a few months.
To avoid that scenario, “it is important to consider the follow-up question of ‘Then what?’ before selling your car,” says McBride, “much as you should before selling a house or any other use asset where prices have spiked. Getting rid of a car altogether or downsizing from a 2-car household to a 1-car household is not a viable consideration for many households, particularly families, those with long commutes, or those who use their vehicles in their jobs.”
Therefore, once you’ve answered the question of “then what?,” it’s time to road test your solution. Before getting rid of a car, says McParland, “folks should really examine their transportation needs closely and be sure that they have easy and convenient access to transit or rideshares. Do a trial run for a week or two of not using your car at all before deciding to sell it.”
“Do a trial run for a week or two of not using your car at all before deciding to sell it.”
—Tom McParland, founder and buyer’s agent at Automatch Consulting
How to sell it
If you’ve thought through how you’d manage without a car and you’re happy with the solution, how should you go about selling it? “It really depends on the age and mileage of the vehicle,” says McParland. “Generally speaking, for cars over 15 years old your best bet is a private sale via Craigslist or Facebook Marketplace,” because the amount of money involved means you’ll lose too much if you use a third-party vendor.
“If you have a newer car, a private sale could still be lucrative but there are companies like Carvana, Vroom, Carmax and others that will not only make the process easy, but often will give you a very competitive price,” he says. “I recommend using the online platforms for multiple outfits to get a number of bids and see who will offer top dollar. I have seen several cases where one company offers a bit more than the other, but it all depends on the vehicle and the region.”
If you’re not in a hurry, you can start online and switch tactics if you don’t get any offers, says Sam Dogen of personal finance website Financial Samurai. “I have purchased and sold over 10 cars on Craigslist,” he says. “You can get the most for your car by selling it privately. You will get the least for your car trading it in or selling it to a dealer.”
He adds that “I would first try to sell your car on Craigslist for a month. You will get as close to the Kelley Blue Book value this way. However, after a month, if you can’t get anybody then you can go to the car dealer and try to negotiate. Car dealers are hungry for used cars at the moment and should give you a better deal than before the pandemic began.”
Should you donate your car instead?
Yep, you can donate your vehicle to charity. And no, the donation process doesn’t involve driving to your local Goodwill and trying to squeeze your hatchback into the dropbox.
Simply investigate whether any area nonprofit organizations accept vehicles, and reach out about arranging a donation. Once you do, you can deduct fair market value for the car on your taxes — this might or might not make financial sense for you, depending in part on the state of the vehicle, but it’ll ensure your car enjoys a second life doing something good. (And hey, no one ever said no to a tax deduction.)
What you need to sell your car
Whatever method you choose, you’ll need to gather your paperwork: Here’s a list of what you need.
You should also try to get a general sense of what your car is worth, so you can make an informed assessment of offers and sales options. Find the Kelley Blue Book value of your car. (It’ll be more accurate if you use the VIN and license plate number, but even the make, model and year will tell you a lot.) Also look for sales of similar cars online in your area.
It’s also worth dealing with any minor repairs that may be needed. Although you don’t want to invest a lot of money in something you’re hoping to never drive again, your car will be attractive to more buyers if they can use it at once, and for a while, before putting money into it.
And finally, clean it inside and out before you take pictures and show it to prospective buyers. You may be tired of having that car, but to actually get rid of it you’ll need to attract someone who is excited to get behind the wheel.
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
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