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Do You Want to Donate Your Car or Sell It?

10.01.2008 · Posted in Home and Garden Articles

Having trouble deciding whether you should donate a car or sell it? It’s important to keep four things in mind when deciding if you are donating your car or selling it to whoever is willing to pay your asking price. These four things are: –What is the value of the car? –What charity could you donate your car to? –What tax bracket do you fall under? –How much is your time worth to you?nnFirst, when we say determine the value of your car, this means the “real value”. A common mistake, made by many people, is to just automatically assume that they will get whatever dollar value Kelley Blue Book reports. KBB is a good value base but it’s sometimes not realistic. You can start by cutting that KBB value by 30% to guess the amount you will most likely get from a buyer. For example: Let’s say a 1989 Mercury Topaz – in zip code 15045 with 170,000 miles – in fair condition with standard features – could have a trade-in value of $760 and a private party value of $1525. Cutting that private party value by 30% gives us a new value of $1067.50. nnThe discounted KBB price will be cut again based on the tax bracket you fall under. If you are single and have a gross income of $50,000 a year, you are in the 25% tax bracket. This means, assuming that you do succeed in selling the car for $1000, after taxes you’ll just be netting $750 from the deal.nnAn additional expense to consider when you think about selling is the cost of advertising. You will have to subtract whatever advertising expense you have from the net profit. Assume you are going to have to spend $80 to advertise in an auto magazine and $30 for a newspaper. That totals to $80. Subtract that from the $750 net, and you are not down to $670. To get the top dollar for your car you may need to get it professionally cleaned and detailed. That will cost you probably another $70. You are now down to $600 for that $1000 car. nnMost people want assurance that the car is running correctly before they offer it for sale. To get a mechanic to check it out and write you an information sheet to show the buyer, you will have to invest approximately another $75 or so. Also, the appearance of the exterior can mean a lot toward getting top dollar. You may want to do body work as necessary to give it that pristine appearance. That will be and added expense to insure top dollar.nnDo you see how the net value from selling the car now goes from $750 to $525? There is actually potential there for less than $525. What if something is wrong with the car? What if you need work done to fix some dents and scratches?nnLet’s look at the difference in profit potential for donating compared to selling. Most donated cars are sold at auction. The IRS says they must be sold at auction and in use shortly after you have given it away in order to take the full deduction. Your tax deduction will more than likely be $500 or the auction price. If you get only the $500 deduction, you will be netting just $25 less than all the trouble of selling it. Is it really worth it?nnTo most of us, our time is extremely valuable. You only have a limited amount of time, and probably could find something better to spend it on than fixing up and selling a car for such a small amount of net profit. You will have to arrange you schedule to allow time to handle the sale, plus having to deal with strangers. Is it worth it to you?nnWhat kind of time are you looking at to sell a car? Count on an hour and a half or so making signs and/or producing ads. Another one hour can be consumed in phone calls. Mechanic appointments may take two hours and may be inconvenient with work schedules. Cleaning and detailing may consume another half hour. You have easily just used up five hours before you ever get the car sold.nnYou will have to schedule times for people to come see the car, check under the hood and test drive the vehicle. You might even schedule with someone and have them no-show the appointment. Others not only want to look at the car themselves but will also request that you take the car to a mechanic that they trust for an inspection. And, most of the time, people with these type of demands are the ones who don’t close the deal! It is said that someone selling a car can optimistically expect five to ten inquiries that go nowhere before the car is sold. Let’s estimate that a total of three hours is spent meeting with people.nnThe total time involved so far, with conservative estimates, is approximately eight hours. You have to go through several things that may not be something you really are interested in doing, just to get a buyer. In contrast, to donate the car it takes only a phone call to get someone to come get it. You will also have the satisfaction of helping a charity. So which is the better deal for you, selling or donating?

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