What do you need to keep in mind when deciding whether to sell or donate a car you are ready to get rid of? One thing you need to consider the value of the car. Another thing to consider is whether there is a charity to which you might like to donate it. Also, consider you tax bracket and how it will affect your net profit, as well as considering what you time is worth to fix it and advertise.

To determine the value of your car, you need to consider the real value of it. Many assume the Kelley Blue Book value is the real value of your car. It is not. The KBB value is only a suggested value. You need to decrease that estimate by 30%. Let’s use the example of a car that has a private party value of $1525. Cutting that value by 30% gives the new, more realistic value of $1067.50.

Whatever price you get from the estimated KBB price that has been discounted will have to be cut again based on your income tax bracket. Let’s say you are in a 25% bracket, and you come up with a value of $1000 for your car. You will have to discount it further by the income bracket percentage to get the true value. In this case, the car would really only be bringing you $750 net.

Other expenses also need to be factored in. You need to advertise. Let’s say you spend $80 on advertising. That means only $670 for the car now. You may also need to have it professionally detailed. Subtract another $70 for that. Now your car is only going to net $600.

You will want to ensure that the car is running properly. Take away another $75 for a mechanic to inspect the vehicle and write up an info sheet on the car’s condition that you can present to prospective buyers. It’s also important to remember that a car’s exterior condition may be more crucial to its sale than anything else. You may also want to repair body damage on the car as even the most seemingly insignificant everyday nicks and dings can discourage a buyer.

We are now down to $595 as the value for the car. There may still be other expenses to consider, such as body damage repairs or mechanical repairs that are necessary to be able to sell it. Then, you would be down to even less than that value.

Let’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?

I think it’s safe to assume that time is extremely valuable and precious to most of us. Selling a car can be incredibly time consuming and will often involve rearranging your schedule, dealing with strangers and answering a lot of questions. The phone may ring at inopportune times with a prospective buyer on the other end.

Let’s figure, just for an estimate, you will spend one-hour fielding phone call inquiries. You may spend an hour and a half composing ads or signs. An appointment with your mechanic or a body shop may take two hours and involve juggling around your work schedule or finding alternative transportation. Having the car cleaned and detailed may involve thirty minutes between scheduling, travel and interacting with the service provider.

You 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.

Add it all up and it takes approximately eight hours and about a dozen different steps to sell your car. In comparison, when you donate a car, it’s a matter of one phone call before a tow truck comes to haul the vehicle away. The car is put on auction and eventually goes to a person in need. You don’t think or worry about it until it’s time to claim your tax deduction. So, are you ready to donate your car?

Tags: Auto

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