Sometimes you may want to donate an old car and find that the tax deduction just isn’t worth it. After all, no matter how good-hearted you are, when you’re given a choice between earning a $500 tax deduction for donating your used car or earning a potential $2,000 trade-in value to trade it in for a new car, anything practical leans to go where he can. Get the most out of your old car. In this case, it may be in your best interest to consider trading in a used car for a new one that meets your current needs rather than donating a car to charity.
Some people may feel a certain sense of guilt about this. And, while it’s true that you’re not necessarily helping anyone but yourself and the car dealer, some of the money saved from your trade-in can still go toward a generous cash donation to a charity of your choice. So you can still do some good when you choose to trade in rather than donate a car. The difference is that trading in the used car, rather than donating it directly to a charity, can give you some extra money to use as a cash gift to your favorite charity that you can then claim as a tax deduction.
But, here is the trick. You can usually 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 completely clean both inside and out. Consider a professional cleaning service if possible, and splurge on the luxury cleaning package if you can afford it.
Do some research to find out the value of your car, both the NADA and the book value. Find out how much similar cars cost in your area. Use the Internet to search car sales websites to find comparable cars in your region. Print descriptions and what owners ask for their old cars. Be sure to also browse the classifieds of your local newspaper. Maybe even call or email people who have recently sold similar cars to find out how much your old car sold for. Bring as much documentation as possible to the car dealer to show them that no one will take advantage of you.
Compare with as many different dealers as you can. Chances are, each dealer will offer you different trade-in values for your old car. Of course, if the car you want is only at one particular dealership, this could be a sticking point, but even if that’s the case, be sure to check out other dealerships and find out what they’re willing to give you for your why. Having this information on hand could be to your advantage when negotiating with your dealer for the car you want.
Be as smart as possible. It might not hurt to bring a smart friend to help you read at the car dealership. Because dealers are notorious for feeding people lines that are half true or have no truth at all. For example, a classic car dealer strategy is to tell people that another buyer is interested in the car they want. Don’t buy this!
Don’t let the car dealer overestimate the repairs needed on your car in the middle of negotiations. You may want to have your car thoroughly checked out by a mechanic before you start taking it to dealerships for trade-in quotes. Also, keep in mind that visible repairs are more likely to increase your trade-in value than internal repairs.
Break the code. Car dealers often use codes for numbers they don’t want you to recognize. This is done so the dealer can show you information and not worry about you translating scribbles or shorthand on the document indicating your trade-in profit, cost of repairs, and the ACV (actual cash value) of your car.
The code can be easily cracked once you understand that car dealers are replacing numbers with the first ten letters of the alphabet. Instead of $1234, you will see ABCD. A=1, B=2, C=3 and D=4. This goes all the way to J=0. So on an appraisal sheet, if you see BJJJ, that translates to $2,000.
Lastly, try to change your car before the odometer reaches the next 10,000 miles. 140,000 miles will get you better trade-in quotes than 150,000 miles.
