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Should I trade my old car in, or sell it on my own?

When you are replacing a car, you face a dilemma:  what should I do with the old car?  Depending on the condition of the car, your family situation, financial situation, and the market value of your car, you could choose one of several options.

Evaluating your vehicle

Before you decide what to do with it, you need to know what it is worth.  There are several guides available on-line, like Kelly Blue Book, National Auto Dealers Association (NADA), and the Black Book.  Keep in mind these are guides, primarily used by financial institutions to set lending values, and are not true appraisals of your car.  Your car is only worth what someone is willing to pay.  Contact Auto Mentors to arrange an appraisal of your vehicle so you will know the actual cash value.

What is the true condition of your car?  Does it need tires?  Brakes?  What about the fan that only works on low or high, but not the three speeds in the middle?  Any upcoming maintenance?  For example, replacing the timing belts on some engines cost about $1800.  If this maintenance is due, but not completed, the value of your car will take a serious hit.  The three D’s of dents, dings, and dirt will also have a significant impact on your car’s value.  How does the interior look?  How does it smell?  Believe it or not, potential buyers may be offended by the smell of Duke the yellow lab, and will downgrade the value accordingly.

Is there seasonality in the demand for your car?  Outside of the sunny southern and coastal areas, a convertible will not bring as much money in December as it will in May.  A van will be easier to sell in late spring when families start thinking about the summer road trip.  All wheel drive vehicles will be worth more after the first snowfall than after the last frost.

Finally, don’t get caught in the mindset that your car is a classic just because it is old.  A classic car is one that was desirable when it was new and is somewhat rare today, like a 1971 Chevelle.  You might have the nicest 1981 Buick Skylark in existence, but it is still just an old, indistinct Buick today.

Decide now what you are willing and able to invest in preparing your car for sale.  If your car can’t be made front-line ready, you will have a difficult time selling it without severely discounting the price.

Your Options

If your car is still serviceable, you may want to give it to a family member or friend, or donate it to your church for a needy family.  The only drawback is if something goes wrong, you will undoubtedly be held somewhat accountable for the breakdown.  No good deed goes unpunished, right?  Make sure if you go this route, you have a bill of sale/release of interest (even for $0), and you report the sale/gift to your DMV so that you are no longer responsible for the vehicle, any accidents it may be involved in, or any tickets it may receive.

There are several charities that take car donations, and this is a very popular route to dispose of dead or barely running cars.  Many charities will send a tow truck, and you may be able to write off the actual cash value of your donation on your tax return. Finally, for the dead or dying car, a wrecking yard in your area may buy it.

But what if your car is still nice, and has some value?  You can trade it in, or sell it yourself on the open market.  Either way, you are selling your car, and you need to approach it that way.

Selling to a Dealer

When you are selling your car to a dealer (trading in your car), there are some advantages.  If it breaks down the moment you leave it there, you are not going to suffer any lost sleep over it.   You don’t have to spend any money getting it ready to sell, although washing it and cleaning the fries out from between the seats can increase your sales price.  The check won’t bounce, and you won’t have to worry about liability or title transfer issues.

If you still owe money on the trade, the dealer will coordinate your payoff for you.  If you owe more than your car is worth (being “upside down” or “humpty”), the negative equity can often be applied to the new loan.  This practice is not advised, since you are now even further upside down in your new car, but unless you have the cash on hand to pay off the difference, it could be the only way out of your old vehicle.  Also, by trading it in, there is no overlap where you don’t have a car (yours sold and you haven’t found a replacement yet) or two cars (you bought a new one, but still have the old one).

The price of this convenience is a lower offer from the buying dealer.  They will make a profit on your car.  Don’t hold it against them; they are investing the money and doing the work you don’t want to, and accepting the risk of the sale.  A reasonable profit is the return on their investment.

There may also be a sales tax advantage to trading a vehicle in.  For example, in Washington State, the taxable amount of the new vehicle sale is reduced by the value of the trade-in.  Check with your state’s department of taxation to see if there are any tax stipulations with a trade-in.

Selling it Yourself

With the advent of Craigslist and other internet listing sites, it has never been easier to list your car for sale, often for free.  Selling your car on your own requires work.  The reward for that work is often a higher price than you would get for your car selling it to a dealer.

When you sell a car, you have to be able to provide a title free of encumbrances and liens.  You have to either hold the title in your name, or be able to pay off the loan.  If you owe more than your car is worth, you will have to make arrangements with your lender to take care of the balance BEFORE you sell your car.  An unsecured personal loan is one way to cover this contingency.

Have the car detailed.  Really, you can’t get it as clean on your own, and the first impression has to be good.  Take pictures in the middle of the day when there is ample light.  Use a camera, or at least a high-quality camera phone.  Grainy, blurry, or poorly exposed pictures won’t sell your car.  Write a complete ad, including all of the equipment on the car, the mileage, and transmission (you would be amazed how many times this is over-looked).  Be sure to include pictures of damaged areas- no one will buy a car they drove hours to see only to find undisclosed damage.  Pay for a Carfax or similar report, and post it.

Survey other ads for similar cars and price yours among the five cheapest.  Most people will print off three to five ads for cars they want to see, and go look at them in order of desirability.  You don’t want to be car number six – no one ever comes to look at car number six.

A caution about test drives: no one test drives without you along.  Cars are easy to steal when you hand over the keys and give the thief a 20-minute head start.  If the prospective buyer gives you the creeps and you don’t feel comfortable going along, then reschedule when you can have someone go with you.  You don’t want to risk injury to protect your car, but anyone that causes you that much concern shouldn’t be trusted with your car, either.

Whenever possible, meet the prospective buyer in the daylight, preferably at your credit union/bank (or the bank that is doing the prospective buyer’s financing) where funds can be verified.  Never arrange to meet at your home, regardless of how inconvenient it may be for you.  Finally, make sure to have the new owner sign a bill of sale that releases you of all interest in the vehicle.  Time and date the form, and each of you keep a copy.  Make sure you notify the DMV of the sale.

It’s all too much!

We get it.  If buying and selling cars was easy, everyone would do it.  It is not.  It is hard work, and requires specialized knowledge and experience to protect yourself against fraud.  Luckily for you, Auto Mentors is here to help.  Get a real appraisal so you know what your car is worth, and a market evaluation so you can get an idea of what it might sell for on the open market.  Our consignment program may be the perfect solution for you.  The best decision is an informed decision, so get informed.  Talk to your Auto Mentors consultant today.  It’s about convenience. It’s about savings.  It’s about time.

Selling Your Car – Privately or to a Dealer?

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