Your Guide to Getting Rid of an Old Ride
Out with the old and in with the new -- car, that is. We asked Kelley Blue Book analyst Alec Gutierrez to decode three options for getting rid of your old car, so you can make room for a shiny, new one.
There are perfectly good options for selling a used car privately, trading it in or donating it. We mapped out the pros and cons of each, so the process can be as easy as a Sunday drive.
Assess the Worth
Before deciding which option is best for you, you’ll want to get a realistic idea of what your car is worth. "Be honest with yourself, and with the vehicle’s worth," says Gutierrez.
On KBB.com, you can input your car’s specific details, such as the year, make, model, whether it has all-wheel drive or leather seats, etc., to get an estimate of what your car is worth. “Don’t skip over any of the details, because they can increase the value of the car,” Gutierrez says.
Then, it's time to explore your options for selling your vehicle:
Selling the Car Privately
Pros: Selling your vehicle on your own usually will get you the most money. "You can make about $1,000 to $2,500 more by selling your car on your own, but you have to ask yourself if the time and effort you put into selling it is worth (it)," Gutierrez says.
Cons: This route does take some sweat. First you’ll have to do some research to set your selling price, and then you have to market the vehicle and show it.
The Process: When setting your price, you should take into consideration the Kelley Blue Book value as well as the local competition. Check out how much your car is going for in your local market and position it in between the KBB worth and the market value.
“If you leave out the flaws, all you’re doing is setting yourself up for a lower value,” Gutierrez says.
Then you’ll have to market the vehicle. There are many websites where you can list your car for sale, like Craigslist, KBB.com and AutoTrader.com, or you can always take out an ad in the local newspaper. Take pictures of the good and bad parts of the vehicle and be descriptive in your write-up.
Finally, you’ll have to be available to show the vehicle. (Gutierrez recommends showing the car in a public area, like a shopping center parking lot). Set up a few back-to-back appointments, and hopefully you’ll find a buyer.
Trading Your Car In
Pros: It’s simple: If you are purchasing a car from an auto dealership in order to replace your used car, the dealership will often buy your old car from you. You simply agree on a price for each car, fill out the paperwork and then turn in your old car and drive away in your new ride.
Cons: If you trade in an old car, you will almost never receive as much as it’s worth, or as much as you could make privately selling it.
The Process: Call local dealers with the make and model of your old car to see if they have any interest in buying. "If you do take it in to the dealer, deal each portion of the deal individually," says Gutierrez. “First get the price of the new car locked in; then lock in financing; then bring up the trade. There are too many pieces, and they can easily get lost in the deal.”
Donating Your Car to Charity
Pros: Donating a vehicle does not maximize your profit in terms of dollars, but you definitely get something out of it -- the good feeling that comes from doing a good deed. Besides upping your altruism, you are also able to deduct the gross amount for which the charity sells it on your taxes.
Cons: If the car is worth more than $500, you will have to wait until the charity sells the car to present the value to the IRS (so be sure to get a receipt).
The Process: Choose a reputable charity to donate to. If you are not sure about your charity of choice, check out its rating on CharityWatch.org. When filing with the IRS, you’ll want to itemize your deductions in Form 1040 and Form 1098-C, according to Anthony Burke, of the Internal Revenue Service. Visit the IRS website for more information.
This guest post comes from the editors of The Allstate Blog, which helps people prepare for the unpredictability of life.