Everyone has to sell their car sooner or later, whether it's to fund a new ride, pay off some debt, or get a clunker off their hands. Before you trade your vehicle in or sell it to a dealer, however, you should think carefully about whether selling is worth it.
Should I Sell My Car?
Before selling your car, make sure you know how much it's worth. Vehicle valuation sites such as Edmunds and Kelley Blue Book can give you a reasonable idea of your car's fair market value. Compare that value to the costs of ownership to determine whether your vehicle is no longer a good investment. Some costs to consider include the vehicle's license and registration fees, maintenance costs, fuel and parking costs, insurance fees, as well as the interest rate on any outstanding auto loans you may have.
__Once you have a good idea of how much you're spending on your car every month, consider these five signs that it might be time to sell:__
1. The Car Doesn't Feel Safe
Safety is a serious consideration for any car. If you don't feel safe behind the wheel anymore, it's probably time to get rid of the vehicle. Some common safety concerns include unresponsive brakes, a lack of airbags, and a concerning amount of engine noise. Even if you feel safe in the driver's seat, you might worry about your friend in the passenger's seat or your kids in the back. Maybe you're no longer happy with how the car maneuvers on icy roads or how the steering wheel handles, or perhaps you feel the seats aren't as stable as they once were.
New vehicles have a slew of safety features that might make selling your old ride worth it, including blindspot monitoring, lane departure warnings, and electronic stability control systems. Newer models also have more reliable airbags, high-quality antilock brakes, rearview cameras, automatic parking systems, and forward collision warnings for a much safer time on the road.
2. You're Going to Default on Your Car Loan
Another sign that you should sell your car is if you're close to defaulting on your car loan, which puts you at risk of a critical ding to your credit score. If you default, the bank may even repossess your vehicle. Even if you're upside-down on the car loan — that is, you owe a lot more than the car is worth — it might be best to sell the vehicle and pay off a big chunk of the loan, so you don't get behind on monthly payments. Keep in mind that banks typically sell repossessed cars at auctions to pay down your loan, and auctions rarely net as much money as private buyers. Also, the auction houses often get part of the sale price, and you may have to foot the bill for the repossession process.
Another option is to trade in the car to a dealership. That way, the dealer can pay off the old car's loan and tack its value onto the loan for your new vehicle. However, this move is risky, because the new loan is harder to pay off and because you have to pay more interest in the long run. If you're upside down on the loan, it might be best to keep making payments until you owe less than the car's value so that you can sell it outright. Don't forget that refinancing is also an option.
- 3) The Car No Longer Meets Your Needs
A good sign that it's time to swap out your car is if it no longer meets your needs. Maybe your lifestyle has changed, or perhaps you want to cut back on your expenses. Even if your car is in good condition, it may no longer suit your style or satisfy your comfort level. Many people upgrade their cars when they need more room, such as when they start a family or get a job that requires transporting equipment. If you plan to move further from your workplace, maybe a more fuel-efficient ride can cut down your commute costs, or perhaps you don't need a vehicle at all and can get by on public transport or a car-sharing service such as Uber. If your kids have left home, it might be the right time to get something smaller. Alternatively, maybe you came into some money and want to spoil yourself.
- 4) You Haven't Hit 100,000 Miles Yet
Typically, the value of your car depends on how many miles it's traveled. Once a car hits 100,000 miles, its value tends to plummet. Even if such a vehicle is still in reasonable shape, many potential buyers assume it may need comprehensive repairs soon. There are some important milestones to keep in mind when judging car worth. As soon as a car comes off the lot, its value drops about 10 percent. Usually, it then loses another 10 percent of its value over the next nine months and 15 to 25 percent every year after that, depending on how well it's maintained.
Unless you're desperate for the cash, you probably shouldn't sell your car if it shows fewer than 30,000 miles, as it still has plenty of life left. At the 36,000-mile mark, car warranties expire, and vehicles start to require more exhaustive maintenance, such as tire and brake inspections. At the 60,000-mile mark, you may need to get new tires and replace the timing belt, so selling before you reach this point may be a smart move.
- 5) The Car Still Feels Like New
Ironically, one of the best times to sell a car is when you least feel the need to sell it when it still drives like a charm. That's when you're most likely to get the best deal from a car dealership or private party. Selling your current car before it's necessary also gives you more time to find potential buyers and frees you from the pressure to meet a deadline. If you wait until the car needs significant maintenance or repairs, you may have trouble selling the car for anything close to its current value. It's also better to sell a car when the market is ripe rather than at a moment's notice.
Other Considerations Before Selling a Used Car
Before you sell your current ride and start looking for your next car, there are a few other factors to keep in mind. First, the season in which you sell your vehicle matters. Throughout the winter and especially during the holidays, families usually can't afford to splurge on a new car. Plus, many people prefer to go car buying on Black Friday, when dealers offer some of the best prices of the year. September and March are exceptionally competitive months for car selling. If you want to get an older car off your hands, try to sell it between April and August. Also, before selling your vehicle, take stock of the overall health of the economy, including the price of gas. If you have a fuel-efficient car when gas prices are soaring, you should have no trouble finding eager buyers. Likewise, when the economy is flourishing, people are willing to pay a higher amount of money for a luxury vehicle. Also, look at how much loans for new cars cost in the current market. If they're expensive, car buyers are typically more willing to settle for used vehicles.
Before selling your car, remember to clean it as well as you can. Give it an oil change if needed, and make sure its fluids are all topped up. Clean the upholstery as well, and give the car a thorough wash. Also, find a place that repairs dents and scratches cheaply, and get those fixed if necessary. Making your car look good doesn't just boost its value. It attracts more potential buyers. Also, when deciding whether to sell your vehicle, don't just look at its market value. Think about your fuel expenses and car insurance costs as well. If you're driving a fuel-hungry SUV to work every day, you might be hemorrhaging more money than you think. You might also want to sell your car for ethical reasons, such as if you want a more eco-friendly ride to help the environment.
Should You Sell Your Car or Trade It In?
If you want to get a vehicle off your hands, you have two options: selling it or trading it in. A trade-in is when you give your current car to the dealer and use it towards the purchase or lease on a new vehicle from them. One perk of trade-ins is that you might be able to deduct your current car's worth from the new car's price when determining your sales tax, reducing the amount you have to pay. However, dealers tend to base a car's trade-in value on its wholesale rather than its retail value. So, you're not likely to make as much money as you might selling your vehicle to a private party. Unfortunately, selling a car can be a hassle. On top of cleaning the car, taking it in for maintenance, putting up ads on Craigslist and other sites, and pulling together all the paperwork, you have to investigate the market and all potential buyers carefully. Overall, though, you have much more discretion when selling your car, and you can wait as long as you want for the best deal.
Selling your car is a daunting decision, but breaking down your needs can make it easier. If you're about to default on your car loan or the vehicle no longer meets your needs, you should probably sell it. However, if the vehicle still feels safe and you're not close to hitting any odometer milestones, it might be a good idea to keep it for a while.