Should You Donate a Car Or Trade it In?
Sometimes you may want to donate an old car only to find that the tax deduction just isn’t worth it. After all, no matter how good hearted you are, when given the choice between earning a $500 tax deduction for donating your used car or getting a possible $2000 trade-in value to put towards a new car, all practicality leans towards going wherever you can get the most for your old car. In this case, it may be within your best interest to consider trading-in a used car for a brand new ride that meets your current needs instead of donate a car to charity.
Some people may feel a certain sense of guilt over this. And, while it is true that you aren’t necessarily helping anyone but yourself and the car dealership, some of the money saved from your trade-in can nevertheless go towards a generous cash donation to a charity of your choice. So you can nevertheless do some good when you opt to trade-in instead of donate a car. The difference is trading-in the used car, instead of directly donating a car to charity, can provide you some additional money to use as cash gift to your favorite charity that you can later claim as a tax deduction.
But, here’s the catch. You can typically donate an old car as is. However, when trading in a car, several steps must be taken to ensure that you get a worthy value. The car must be thoroughly clean both inside and out. Consider a specialized cleaning service if possible and splurge for the deluxe cleaning package if you can provide it.
Do some research to know the value of your car — both the N.A.D.A and the blue book value. Find out how much similar cars are going for in your area. Use the Internet to research car sales websites to find comparable cars in your vicinity. Print out descriptions and what owners are asking for their old cars. Be sure to also browse the classifieds of your local newspaper. Perhaps already call or email people who have recently sold similar cars to find out how much their old car sold for. Bring as much documentation as possible with you to the car dealership to show them that you won’t be taken advantage of.
Shop around with as many different dealerships as you can. Each dealership will most likely offer you different trade in values for your old car. Of course, if the car that you want is only at one particular dealership, this could be a sticking point, but already if that is the case, be sure to check out other dealerships and find out what they are willing to give you for your car. Having this information on hand could be to your advantage when negotiating with your salesman for the car that you want.
Be as savvy as you possibly can. It may not hurt to bring a street-smart friend to help you read the car dealer. Car dealers are notorious for feeding people lines that are either half-true or have no truth at all. for example, a typical car dealer strategy is to tell people that another buyer is interested in the car they want. Do not buy into this!
Do not let the car dealership overestimate repairs needed on your car in the middle of negotiations. You may want a mechanic to check you car thoroughly before you begin taking it to dealers for trade-in quotes. Also, keep in mind that visible repairs are more likely to up your trade-in value than internal repairs.
Break the code. Car dealers will typically use code for numbers that they do not want you to recognize. This is done so the dealer can show you information and not worry about you translating scribble or shorthand on the document that indicates their profit on the trade-in, the cost for repairs and the ACV (actual cash value) of your car.
The code can easily be cracked once you understand that car dealers are replacing numbers with the first ten letters of the alphabet. Instead of $1,234 you will see ABCD. A=1, B=2, C=3 and D=4. This goes all the way up to J=0. So, on an appraisal sheet, if you see BJJJ, it translates to $2000.
Lastly, try to trade in your car before the odometer rolls over to the next 10,000 miles. 140,000 miles will get you better trade-in quotes than 150,000 miles.