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Getting Maximum Value for Your Current Car:
Carmarket clarifies the great debate
Oftentimes the hard part of your new or used car search comes when it is time to dispose of your current vehicle. Selling your car yourself will, more often than not, bring a better price than trading it in to the dealer. Trading in, however, is easier and avoids all of the hassles that accompany selling the car yourself. Carmarket will help decide which option is right for you, and even present a third option that you probably had not considered. After comparing the three, you will be informed enough to make the decision that is right for you, personally and financially.
Selling Your Car Privately
If your primary concern is receiving the highest possible price for your used car, you will definitely want to sell the car yourself. The discrepancy in price between what the dealer will offer you and what you can sell the car for yourself is a result of the costs that the dealer will incur to make the car ready for sale (plus some profit). Do not forget that you will likely need to make some of these same minor repairs yourself if you are to receive a fair price. Before you decide to sell the car yourself, be prepared for the work and costs involved in making the car sales ready. Honestly assess the vehicles current condition and decide what repairs you will and will not make. Find out the costs associated with these repairs and whether or not you can do them yourself. If you do make repairs yourself, do so adequately enough to avoid the legal problems that can arise from a private sale.
Once you get the car into a condition suitable for sale, the next step is to value it. Carmarket includes a link to the Kelley Blue Book (KBB) home page, an excellent source for vehicle pricing information. Be honest about the condition of your vehicle, as the cars value can fluctuate substantially depending on small inadequacies. The KBB will give you both the trade-in and suggested retail values for the vehicle. Most asking prices fall between these values. Another good source of information is your local classifieds or trader magazines. Look for cars that are similar to yours in make, model, age, and mileage. These owners asking prices are a good indication of market value, as some of the prices have probably been adjusted after a period of non-sale. Use as many pricing sources as possible when setting an asking price for your vehicle. This way you are assured of a realistic offer.
Once you decide what your car is worth, begin to advertise it through as many channels as possible. Advertising on Internet sites such as Carmarket is a low cost way to advertise your vehicle to a world full of customers, including those in your community. Another place to start is with your local newspaper classifieds or trader magazines. The bottom line is that the more places that you advertise your automobile, the quicker it is likely to generate interest and sell. Although these advertising costs are minimal in the short run, make sure that you can afford to continue advertising if the car takes longer than expected to sell. This should be a contributing factor in your decision to sell or trade-in.
Once the ad is run, do yourself a favor and set aside some time daily during which you can return phone calls and arrange appointments to show the car. Mentally prepare yourself for the negotiations by asking yourself one question. How low will I really go? Once you come up with an answer, be firm for the time being. You have gone through the aggravation of selling the car yourself, so do not succumb to price pressure unless interest in the car is so little that it will cost more to continue advertising than to concede on the price.
Once you finally negotiate a deal with a buyer and have cash in hand, the final step is to transfer the vehicles title and registration to the new owner. This step is the most important, as you could still be held liable for any accidents or tickets that the automobile is involved in while still in your name. Lastly, cancel your insurance on the vehicle.
Taking matters into your own hands and selling your car privately can be financially rewarding, but can also involve a lot of hard work and inconvenience. If your purpose is to get maximum value from the car, however, you must be willing to toil.
Trading In Your Vehicle
Trading in your old car as part of a new or used car purchase is far and away the most convenient option. Most dealers, who hope not only to profit on the resale of the car, but also on your purchase of a new vehicle, make trading in your car incredibly simple. The salesman values your old car based on its condition, age, mileage, and other contributing factors. The figure that he presents you with can be haggled over, but generally dealers profit very little from the cars resale. Ultimately, the trade in value is deducted from the price of your new car.
The attraction to trading in old cars is in its convenience. You are not forced to repair, advertise, arrange test drives, or deal with the repercussions of selling a "lemon". This type of convenience does not come for free, however. Trade-in value is almost always lower than the amount that you could sell the car for privately. Although the dealer profits sometimes, most of the higher retail cost goes towards refurbishing and marketing the used automobile. Do not forget, however, that once the car is in the dealers hands, it is their responsibility to prepare and sell the car. You are, at this point, completely absolved of all responsibility. Therefore, those people who do not have the time or just do not feel like shouldering the responsibility for selling their car should take advantage of the ease of trading in.
In addition to its attractiveness as a time saver, trading in may also offer a tax advantage. In most states, when you simultaneously trade-in and purchase a vehicle, you only have to pay tax on the difference. For example, if you buy a new $15,000 car and trade in your old one worth $5,000, you are only responsible for the tax on $10,000. When you begin talking about trading in expensive automobiles in states with a high sales tax, the savings can be substantial enough to warrant trading in, even when a higher price could be gotten selling privately. The dealer pays the sales tax on the trade-in, similar to if they had purchased the car from you.
The Unknown Alternative: Donating Your Car to Charity
By far the most misunderstood means of disposing of your used car is giving it to charity. Most people think that this is just a gift, a giveaway based on a charitable attitude. Others give their old cars to charity when they are of virtually no value and would otherwise require a lot of effort to dispose of. What most consumers do not know is that donating your old automobile to a charitable cause may result in a substantial income tax deduction at the end of the year.
That said, what types of organizations constitute a qualified charity? These charities include most churches, synagogues, temples, monasteries, and other religious groups as well as government programs at all levels, non-profit schools, and hospitals.
The second component in the equation is the value that you claim that the car had when you donated it. This is the figure that will be compared to your adjusted gross income for the year. If the value of the donation reaches a certain percentage of your income, then the amount is deducted from your income taxes. The IRS defines fair market value as "the price at which property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all relevant facts." Basically, this means that you value your car in the same way that you would if you were selling it privately. This means using the KBB and other local resources.
You need to keep in mind that these tax breaks are only beneficial to certain people in certain situations. There are minimum limits below which contributions may not qualify for deductions. For example, if you have a high adjusted gross income and donate a car with little fair market value, then the chances are that the percentage of your income represented by the cars value will not be substantial enough to qualify for a deduction.
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