Planning to sell your old car? The first step: Temper your expectations. Unless you have a car that's truly a hot ticket item, or one that's in perfect "like-new" condition, potential buyers are unlikely to see it through the same rose-colored glasses. Any feature that's a deviation from normal or average, such as an unusual color combination, an especially high-maintenance drivetrain, or any aftermarket modifications can also turn-off potential buyers - even if you feel like your unique taste makes the car worth more.
Fortunately, there are some tried-and-true ways to make selling your car go a little more smoothly. So, before you slap a "for sale" sign in the window, consider the most (and least) profitable methods of getting rid of your old car. Most Profitable Method: Selling Your Car on Your Own
Selling your car yourself is the most labor-intensive method, but it's also likely to be the most profitable. You can expect to net a price about 15 percent higher than you would if you were simply trading it in.1
However, you'll also be at the beck and call of potential buyers, and responsible for the legal documentation that completes the sale.
Some tips for making the most of a private sale:
Somewhat Profitable Method: Trading In at the Dealership
- When it's time to list your car for sale, use online tools like TrueCar and competitors' listings to assess your car's features and condition to come up with a fair price. It's a good idea to clean the car before you take photos, and then keep it clean until you sell it. It's OK to keep driving it, but be conscious of the fact that its condition, and therefore its eventual sale price, will be affected if anything happens while it's on the road.
- After you come to an agreement with a buyer, you'll have to handle the paperwork. So check with your state's Department of Motor Vehicles (DMV) ahead of time to find out what paperwork you'll need and have it ready. And, if you have a loan on your car, you'll have to pay it off before your bank or credit union will release the title to the buyer.
- If your new car purchase depends on the sale of your old car, expect the sale process to take about six to 10 weeks. If it's in poor condition, it could take even longer.
If you need to sell your old car fast, take an approach that favors convenience over sale price. Trading your car in at a dealership may not get you as much money as selling it on your own, but you can get the job done a lot more quickly.
As with a private sale, give the car a basic cleaning and research trade-in values online, keeping in mind that a dealership's appraiser is unlikely to be as favorable toward your car as you are. The reason you'll get less money from a dealership is simple — the difference between what they pay you and what they eventually sell the car for is their profit. A dealership needs to make money on all cars they take on trade, so they tend to pay out less — sometimes quite a bit less — than the price that'll end up on the windshield.
If you plan to trade in your car the same day you buy or lease your new car
, make sure to negotiate the deals separately. Ideally, you should negotiate your new car purchase before the topic of your trade-in even comes up, because it's a common sales tactic to confuse the two deals to increase the dealer's profit (and salesperson's commission).
Though trading is viewed as the fast and easy way to get out of your old car and into something new, a little extra effort can increase your return. Try getting offers from several dealerships. This can be tricky if you've already picked out the new car you want at a specific dealer, but you can always ask them to match a higher offer from a competitor. Some dealers will provide a trade-in offer without any obligation, so you can choose to sell there without buying your new car there. If you haven't decided on a new car and are torn between going gas, electric or hybrid, take our quiz
Least Profitable Method: Giving Your Car to a Charity
Donating a vehicle to a charitable organization may be the least profitable (by far) and involve some legwork, but some charities will take a car that doesn't run, so do keep this option in mind if you have a car that you can't sell because it won't start.
The financial payoff from a donated vehicle comes in the form of a tax write-off, so your actual benefit from it depends on your personal financial situation.
The amount you are allowed to write off depends on how the charity uses the car, and unless you work the details out beforehand, you might not know until the organization sends you a receipt afterward or at tax time. Even then, a tax write-off will simply reduce the amount of tax you owe, so your bottom line, in the end, will be a percentage of the car's value based on your household's tax bracket.
The truth is, it's very unlikely that donating a car will ever be more profitable than selling it yourself or trading it in to a dealer, but at least you'll get the warm, fuzzy feeling you get when you help out a nonprofit.