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.

An 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.

Most 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.

It is easy to see how your car goes from the $1000 you initially valued it at to the $525 it is not worth to you. You may even have to lower the net value even more if you have to fix a mechanical problem. If you have to do any body work to fix dents and scratches, you will have to subtract even more. Can you see how the value rapidly decreases?

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?

Selling a car can be quite time consuming. You will have to deal with strangers and answer all their questions and concerns about the car. You may get phone calls at all hours, some being very inconvenient for you. Your time counts for something.

Selling a car may mean having to deal with phone calls at whatever time the phone rings, whether it is convenient to you or not. You could well spend an hour or more dealing with potential buyers and their questions. Planning and producing ads and signs can easily consume another hour and a half. Taking the car in to the body shop and mechanic may take an additional two hours and may even involve having to miss some work or arrange another means of transportation while it is in the shop. Having it cleaned and detailed may involve another half hour or so.

What kinds of tasks must you schedule for? You have to schedule time for the potential buyers to come and check out the car and give it a test drive. Often, you will set aside time in your schedule to show the car and the potential buyer never shows. Sometimes you will be asked to take the car to a potential buyer’s mechanic to have it inspected. You can easily consume an additional three hours this way.

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?

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?

First, 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.

Depending on your tax bracket, you will have to cut your net profit by whatever percentage you fall under. If you are in the 25% tax bracket and you get an offer for $1000 for your car, just know that after you decrease it by the 25%, you will only have a net profit of $750. You need to take this in to account when determining the net profit. This may well affect your decision as to whether to donate or sell.

And we haven’t even got into factoring common expenses accrued when selling your car. Advertising isn’t free. Let’s say that you ran an ad in Auto Trader magazine for $50 and a local newspaper ad cost $30. Take $80 from that $750. You may also want your car professionally detailed and cleaned up. This means subtracting another $70 to have your car washed and detailed.

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.

What if the financial benefits to donating the car? Would it compare at all to the $595 you anticipate getting if you sell it? Most cars donated to charity are sold at auction. A new IRS rule says that to get the full deduction a car must be sold and in use immediately after donation. You will typically get a $500 tax deduction or possibly even more, if the car sells for more. You see that if you donate the car, at the most you would come in with only about $25 less than what you would get for selling it. Possibly, you would get even more as a deduction. Even if there is only a $25 difference, is it worth the time and hassle you go through to earn only $25?

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.

What 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.

What kinds of tasks must you schedule for? You have to schedule time for the potential buyers to come and check out the car and give it a test drive. Often, you will set aside time in your schedule to show the car and the potential buyer never shows. Sometimes you will be asked to take the car to a potential buyer’s mechanic to have it inspected. You can easily consume an additional three hours this way.

It is plain to see how at least eight hours are consumed in selling your car, with only $25 expected profit. Can you really afford it? If you donate the car, you just have to call someone to come tow it away to auction and you are done. You never have to think about it again until income tax time when you take that deduction. It is obvious that donating your car makes much more sense than selling it.