In an ideal world, selling your car is quick and painless. The dealership quotes you the price it’s worth, handles all the paperwork, and you walk off a few thousand dollars richer. Unfortunately, this isn’t always the case. Read on to learn about the pros and cons of different avenues that’ll help you sell your car in a jiffy.
Advantages to Selling Your Car Fast
You get your money sooner
Selling your car quickly is a great way to catch up on bills during financial hardship or to upgrade your car without forking out all your savings. If you can no longer afford payments on your vehicle, selling it can be an easy way to pay off the debt and cut your losses.
Depreciation rates vary considerably by vehicle type, but one thing’s certain, every vehicle’s value falls by a certain percentage each year. A car’s value drops a few thousand in the time it takes to pull off the dealer’s lot!
Carfax explains, a car’s value typically decreases, “more than 20 percent after the first 12 months of ownership. Then, for the next four years, you can expect your car to lose roughly 10 percent of its value annually.” After 10 years, a car is usually only worth 10% of the price you paid when it was new.
You can drop the insurance coverage
Some states, like Texas, require that private sellers have liability insurance on the vehicle at the time of sale. Finding a serious buyer quickly ensures you don’t waste hundreds of dollars on insurance or are charged for a lapse in coverage.
You don’t have to devote as much time
This may seem like a no-brainer but some people don’t realize how much time and effort it takes to sell a car privately. According to Autotrader, it takes an average of 2 months to sell a used car privately.
The actual time frame can differ substantially, and often hinges on the flexibility of your price and the type of vehicle you’re selling. The area in which you live also plays a factor. For instance, the demand for soft-top vehicles is low in rainy climates like Washington but are very popular in warm-weather states like California.
You don’t have to pay taxes on the car
No matter what state you live in, if you’re in the US, you’re going to have to pay an annual tax on your car. Vehicle taxes, property taxes, and license plate taxes all equate to the same thing—money you owe your state yearly just for owning a car. Getting rid of your car before that tax letter arrives is an easy way to make sure you don’t have to pay those fees.
Sell it to a Dealership
Going through a dealership can eliminate a lot of the headaches associated with a private sale, but there are some disadvantages.
The great thing about dealerships is they normally handle all the paperwork for you—all you have to do is sign and hand over the keys. A dealership won’t waste your time either, they’ll normally tell you off the bat whether or not they’re interested. You’re also less likely to be scammed when going through an accredited business rather than an individual.
Now for the not-so-great-news. Due to their profit margins, dealerships will offer you much less than a private buyer—and even less for a trade-in. A fair dealer will generally offer around 75%-79% of the car's Kelley Blue Book value, even less if it needs repairs. Used car dealers may spend up to $500 just detailing the car before moving it to the lot.
If you’re still making payments or have a vehicle lien you won’t be able to sell it to a dealership until it’s paid and you have the title in-hand. Expect it to take around 10 days to receive your lien release and up to 30 days for a paper title if filed by mail.
Sell it Yourself
There are a ton of ways to market your car privately. You can advertise your car in the newspaper, post on social media, pay for a craigslist posting, or just pop a for-sale sign on the window. Advertising locally will be your slowest option but you’re less likely to encounter a scammer than with an online marketplace.
Online marketplaces like Facebook or craigslist will expand your customer base and increase the likelihood of finding a buyer quickly. One downside to this is it can be annoying. Be prepared to haggle and know you’ll still receive responses during non-waking hours.
Be on the lookout for scammers, while Craigslist and Facebook do their best to eliminate these users, some find a way to slip through the cracks. For more information, check out this article on how to spot common Craigslist scams.
Selling your car privately is time-consuming, even if you manage to find a serious buyer early on. You’ll still have to get the car ready for sale, locate your title, arrange meet-ups, draft sales documents, and fill out paperwork at the DMV and county tax office to finalize the transaction.
Sell It to Someone You Know
The nice thing about selling your car to someone you already know is you don’t have to be quite as cautious as you would with a stranger. There are some downsides, though.
An acquaintance may expect you to give them special treatment, like requesting a “friendship discount” or to pay in installments. When selling a car to a friend, it’s important to remember that it could cost you your friendship if the transaction goes bad.
Make sure your friend knows you aren’t responsible for any mechanical issues that may arise after the deal’s done. It may be a good idea to include this in writing on the bill of sale. With that being said, you should be honest about any existing issues or accidents that the car has been in. Being honest in the beginning can spare you from a lot of hassle and back-peddling later.
A Warning About Installment Plans
Making payments is more convenient and manageable for buyers on a budget, but it can set you up to be shorted--particularly if you hand over the keys before they pay off the car. There’s not a lot of legal protection for private sellers who take payments and there’s a chance the court system won’t recognize your written agreement.
Consider asking a lawyer to write up the paperwork for you rather than doing it yourself. A professional will ensure the contract will be upheld in court should an issue arise. The average attorney cost to draw up a contract is upwards of $300. Although pricey in the short-term, it’ll serve as an insurance policy if the buyer can’t make the payments.
If you must draft the contract yourself, be sure you follow a template (like this) and write out the payment schedule in the document. Both you and the buyer will need to sign the contract in the presence of a notary, who will also sign and stamp the document to make it legal.
Use a Car Buying Service
Car Buying services like Carvana advertise themselves as “the safer way to buy or trade your car.”
This emerging industry is the newest channel for buying or selling a car without ever leaving your rolly chair. Most of these companies will even pick up your old car and deliver it right to the buyer’s doorstep.
For sellers, Carvana is a pretty solid option. They’ll factor their offer by taking the KBB value and adding or subtracting the adjusted market value of your vehicle type in your area. Their offer will also take into consideration the physical condition of your car by running a vehicle history report and asking a series of questions like if the vehicle has been smoked in or experienced hail damage.
Accredited car buying services like Carvana do seem to be much safer and more convenient than dealing with strangers from craigslist, especially if you arrange for “hands-free pickup” at one of their vending machine sites.
So what’s the catch?
For one, the direct delivery fee for buyers is a non-refundable $400. This can be a major loss for your buyer if the car isn’t what they expected. Speaking of which, the buyer can’t even see the car in person or drive it before making their purchase, which increases the likelihood of a return.
Secondly, Carvana won’t buy your vehicle if it was manufactured before 1992, has mechanical problems with the odometer, or if it doesn’t pass their inspection. Another issue with Carvana is that the number you’re quoted online may not be what you receive. If the inspector deems the car to be in a different condition than which factored into the initial online quote, the value could go up or (more likely) down.
Interested in selling your car without the hassle? Try PrivateAuto.
PrivateAuto makes it easy to sell your car privately and close the sale on your own.