When it Does Not Make Sense to Fix Your Car

During these hard economic times, we are all trying to stretch a dollar. One way we are doing that is by keeping our car longer. That of course means we now have to make repairs to a car that we may have simply replaced a few years ago. That puts many of us into the uncharted waters of car repair. So, when does repairing the car fall into the category of throwing good money after bad? The answer depends on a lot of things and is different for everyone.

Obviously, one major contributor to that decision is the cost of the repairs. If the cost of those repairs is more that the car is worth, is does not make much sense to fix it. If you do not know the value of your car, you can find out from the Kelly Blue Book. The Kelly Blue Book only goes back twenty years. If your car is older than that, you can find out its value from The NADA Guides classic car section.

If the costs of repairs are less than the value of the vehicle and you are fairly handy, you may be able to save the labor costs by doing the repairs yourself. If you cannot do the repairs yourself, there are many things to consider when deciding what to do with the car. If your car has high mileage, is very old, has been giving you a lot of trouble or is generally in poor condition, it simply may not be in your best interest to repair it. Ultimately, the decision will come down to you level of comfort with your car.

If you do decide to replace your car, you then have to figure out what to do with it. You can trade it in. However, most car buying guides suggest that you are likely to get a better deal without a trade in. Also, the car dealer will probably not give you much for it because it needs repairs. For the same reason, it may be hard to sell it privately. Most car buyers do not want to purchase a car that needs repair, particularly if it does not run.

You can sell it to a junk yard. They might give you a couple of hundred dollars for it. They will then sell all the workable parts from it for a lot more money than you received, then crush it and sell the scrap metal.

You can decide to dismantle your car and sell the parts yourself. That will cost you a lot of time along with some money for advertising. Then you have to decide what to do if someone claims the part you sold them does not work. You also have the problem of disposing of the left over parts and the carcass of the car. And, many communities will not allow you to have a dismantled car on your property.

Another alternative is to simply donate your car to charity. If you donate car, you will get a tax deduction of the greater of $500 or the amount the charity sells your vehicle for.

I am Buying a New Car, What Should I do With My Old One?

When purchasing a new or used car, there are several things you can do with your older car. You can use it as a trade in, you can sell it privately, you can give it to a friend or relative, or you can donate car to charity. There are pros and cons with each choice.

Negotiating the purchase price for a car with the dealer is difficult enough without having to haggle over the trade in amount. Most car buying guides indicate that you can probably make a better deal without a trade in. If your used car needs significant repair or does not run, the dealer may not offer you much of a trade in for it simply because he does not really want it.

Selling your used car privately comes with its own set of problems. First, you have to advertise it and wait for people to response and make arrangements to look at it. Then, you have to wait for them show up.  If you car does not run or is in poor condition, you might have to makes some repairs in order to sell it. Once you have an interested person, you then have to negotiate the selling price. After you settle on that, you have to establish the terms of payment, i.e. will you take a check, accept payments, etc.  Accepting another method of payment other than cash, a money order or a certified check is never in your best interest. There are some other concerns associated with the private sale of a car. Everyone has heard horror stories of the buyer suing to get their money back by claiming the car had some major problem that the seller failed to disclose. Fortunately, in most states private sales are viewed as being as-is and these types of lawsuits are generally unsuccessful. The other concern is that the buyer will drive the vehicle without transferring the title or registering it in their name. This can happen particularly in states where the license plates stay on the car.

On the surface, giving your older car to a friend or relative seems like a very generous gesture. However, this can really backfire and cause irreparable damage to your friendship particularly if the vehicle develops a major problem you were not aware of shortly after the gift.  Besides the possibility of losing a friendship, you will get no financial benefit by gifting a car.

Car donation may be the least stressful of all the choices. The financial benefit to you is the tax deduction you will receive when you donate your car. You do have to itemize on your federal tax return to claim it. The car donation process is very simple. Usually, you only have to make a phone call or go online to donate your car. Your car should be picked up for free. Some car donation charities will let you donate car that is in poor condition or does not run. If that is your case, you may need to do a little research to find a charity that will take it.  To avoid any pitfalls, you should only donate car to a reputable car donation charity. That way you will not have to worry about any documentation issues.