Never Donate or Trade In Your Car
I recently considered my options for getting rid of my old car, since my family will be growing soon. My car is fully functional and does not need any major repairs besides maybe some new tires. My car has a fair market value of approximately $1,000 according to the free appraisal website at Kelly Blue Book. Not much, but definitely worth investigating how to get the most of my money out of it.
I quickly found out that I only had three options. First, I could donate the car to charity. Second, I could trade the car in at a dealership. Third, I could try to sell the car by myself.
If I donated my car to charity, I would receive a tax write off of the fair market value ($1,000) of the car off my next year’s taxes. Assuming that I am in the 33% tax bracket, I would save myself only $330 ($1,000 x 33%). And that is assuming that I itemize my tax returns; because if I do not, then I would receive no tax deduction for donating my old car to charity.
If I traded my car for a newer car, the dealership would only offer me $500 dollars to take my old used car off of my hands, and I would have to buy a new car at their price. My old car would probably end up in a junkyard for spare parts and eventual recycling, where the dealership would probably make more money than the $500 that they discounted from my new car purchase. Obviously, car donations to charity are not as cost effective when compared to trading in my old car.
Finally if I try selling my car, I think I could sell the car for much more than the $330 or $500 that I would get for it from giving it away to charity or trading it in. Since the car is fully functional, I think I would easily sell if for at least $700, maybe even $800. Granted it us much more work to sell the car myself, but the money that I would earn is well worth it.
As a result, it does not make economical sense to either trade in or give your old used car to charity. Instead, try selling your old used car for more money.
by Phil B.