I buy a new car, what should I do with the old one?

When shopping for a new or used car, there are several things you can do with your old 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 the car to charity. There are pros and cons with each choice.

Negotiating the purchase price of a car with the dealer is difficult enough without haggling over the trade-in amount. Most car buying guides indicate that you can probably get a better deal without a trade-in. If your old car needs a major repair or doesn’t run, the dealer may not offer you much in trade simply because you don’t really want it.

Selling your old car privately comes with its own set of problems. First, you need to advertise it and wait for people to respond and arrange to watch it. So, you have to wait for them to appear. If your car doesn’t run or is in poor condition, you may need to do some repairs in order to sell it. Once you have an interested person, you need to negotiate the sale price. After deciding that, you need to set the payment terms, i.e. will you accept a check, will you 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 a few other concerns associated with the private sale of a car. Everyone has heard horror stories about the buyer who sued to get their money back claiming that the car had some major problem that the seller didn’t disclose. Fortunately, in most states, private sales are considered as-is and these types of lawsuits are generally unsuccessful. The other concern is that the buyer will drive the car without transferring the title or registering the car in their name. This can particularly happen in states where license plates remain on the car.

At first glance, gifting your vintage car to a friend or relative seems like a very generous gesture. However, this can really backfire and do irreparable damage to your friendship, especially if the car develops a major problem that you weren’t aware of shortly after the gift. Aside from the possibility of losing a friendship, you won’t get any financial benefit from giving away a car.

Car donation can be the least stressful of all the options. The financial benefit to you is the tax deduction you will receive when you donate your car. You 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 must be collected free of charge. Some car donation charities will allow you to donate a car that is in poor condition or does not work. If that’s the case for you, you may need to do some research to find a charity that will accept it. To avoid cheating, you should only donate a car to a reputable car donation charity. That way, you won’t have to worry about any documentation issues.