One of the more critical steps in buying a new car is selling your old one. You can simply trade it in at the dealer, or you can sell it yourself. You're likely to get a whole lot more money by selling it yourself, but it takes preparation and perseverance to do it right. You'll need to be willing to negotiate, able to avoid being intimidated, and ready to walk away from a bad deal.
To profitably sell your car, it is best to take a step-by-step approach.
1) Decide How to Sell
If you are looking for a quick way to sell your car, you have a couple of options. You can simply trade it in when you buy your next model, or you can sell it to a dealer. Neither will get you top-dollar, as the dealer will need to make sure that they can make a profit after they refurbish, market, and sell the car.
You might not have to pay as much sales tax on your new ride if you trade your car in. Typically, you will only have to pay tax on the difference between the trade-in value and the sales price. Selling to a dealer is easy because they understand the process and the paperwork involved in a sale. You’ll just have to sign some papers and hand them the keys. If your car is in great shape, you should check with a dealer that sells that brand to see what kind of deal they can give you.
Be careful that the dealer doesn’t confuse you by merging your trade-in into the new car deal. They can make your new car deal look great by low-balling the value of your trade-in.
If you're looking for more reward, you can take some more risk and sell your car yourself. If you do it right, you can get thousands of dollars more for your old vehicle. You'll want to follow each of the following steps to maximize the cash you get.
2) Get Ready to Sell Your Car
Buyers will pay more for models that have a well-documented history, so find as much of the paperwork from your car’s life as you can. You’ll want to have an organized folder of the vehicles service and registration history and proof that any damage has been repaired by a reputable shop. You can get more cash from a well-documented automobile.
If you have the paperwork from when you originally purchased the car, you'll be a step ahead, as buyers will typically pay more for a car that has only had one owner. Keep the car's title in a safe place, however. Having it with the rest of your paperwork or in the glovebox can make it easier to steal.
Most buyers these days will purchase a vehicle history report, such as one from Carfax, on any vehicle that they are considering. Think about buying one yourself and providing it to potential buyers. Not only will you save them some money, but it can also make you look honest, and you can search for any errors or bits of negative information in the report and address them before they become an issue.
If you still owe money on the car, you'll need to contact your lender to find out their procedures for getting the title for the vehicle and how long it will take. You will also want to get the payoff amount that you will have to pay before they provide you with the title. Some smaller lenders can give you the title right away, but larger lenders might take some time.
If you sell your car to a dealer or trade it in, most dealers will work out the details of your payoff and title directly with your lender, making the process a bit easier.
3) Get Your Vehicle Ready to Sell
Deciding how much time, money, and effort you want to put into your old car before you sell it is a balancing act. Doing too much is a waste of time and money, but doing too little means your car won’t sell as quickly or for the amount of money you want.
If you’re selling a 175,000-mile junk car that you’re hoping to get a few hundred dollars out of, you probably don’t need to put a whole lot of time and effort into it. If, however, you’re selling a luxury car that’s just a few years old, spending some time and money reconditioning it will likely pay off.
Depending on the rules in your state, you may need an up-to-date smog or vehicle inspection certificate before you are allowed to sell the vehicle. In some states, you might not need the document, but you'll need to provide a warranty to the buyer that says it will pass any tests. In some states, if the car fails a test soon after the sale, you will either need to take it back or have any required repairs done (even though you are no longer the owner).
You never have a second chance to make a first impression, so you’ll at least want to give it a thorough bath and apply some wax to make the paint shine. Vacuum out the inside as thoroughly as you can, clean the interior glass, and leave the windows open to air out any smells. If you have smoked in the car, you’ll have an extra challenge, as many buyers won’t consider a car that smells like cigarette smoke.
Get rid of your bumper stickers and empty out all of your belongings. You want buyers to imagine the car as their own – not having the feeling that they are riding around in someone else’s car.
If your car has minor cosmetic damage, such as door dings, scratched bumpers, or a cracked windshield, you might want to consider having them repaired. In many cases, paintless dent repair technicians and windshield replacement companies can come to your home to take care of the issues. Be sure to check out all of the lights (inside and out), make sure the car starts every time with ease, and top off any fluids that a buyer might check under the hood.
What you don’t want to have happen is for a buyer to walk around your car thinking about the hundred dollars they have to spend here and the hundred they have to spend there to make the vehicle worth having. Each issue they see is likely to become a point of negotiation when it’s time to set the price.
Car-selling experts suggest that an investment of a few hundred dollars and a day’s work in the driveway prepping your car is about the right amount of effort before you put the car on the market.
4) Set the Right Price
Setting a price that’s high enough that you have room to negotiate, but low enough that it doesn’t scare away potential buyers is as much art as it is science. Fortunately, there are lots of resources available to help you ask for the right amount. If your price is below others, it will get more attention, but if it is higher, it may take longer to sell.
You’ll first want to look at vehicle valuation tools online. You will typically see a few prices listed. The wholesale price is what you could expect if you trade your car in or sell it to a dealer. The retail value is what a dealer might try to sell it for. You will want to aim somewhere in the middle as a private party seller. The more accurately you describe the equipment on your vehicle and its condition, the more exact the value you can find.
Of course, you might not be the only one in your area selling a 2012 Toyota Camry, so you'll want to look at local Craigslist and eBay sites to see what your competitors are selling theirs for. If your price is significantly higher or lower than others, you’ll want to be able to quickly explain why – maybe your vehicle has new tires or has been in a couple of wrecks.
5) Advertise Your Used Car
The world of used-car advertising has undergone a seismic shift in the last decade. Newspaper classifieds are all but worthless, and while a "For Sale" sign in your window might get your attention, in some places it will also earn you a parking ticket.
Most private-party used cars are now advertised using low- or no-cost online sites such as Craigslist. Unfortunately, the online marketplace is also full of spammers and scammers, so you might set up a separate free email account and voicemail box just to use for online advertising. After the car sells, you don't have to worry about all of the junk email and phone calls coming into your primary email and phone.
Your listing should have a detailed description, including trim level, options, and mileage. You should include plenty of photos (without your license plate or your home address in the background), and what methods of payment you would accept. Be sure to say that the vehicle is sold "as is" with no warranty other than the balance of the manufacturer's warranty, if it is transferable.
You can let buyers know your willingness to negotiate using code words such as "firm" to indicate that your price is not up for discussion. The phrases "best offer" or "all offers considered" are invitations for potential buyers to try low-ball offers to take advantage of your sense of urgency.
6) Safely Show Your Car
Unfortunately, not everyone that you connect with online has the best intentions in mind, so you want to protect yourself when you show your used car to potential buyers. You'll want to meet in a place that is relatively busy, and not at your own home. Of course, when you do sell the car, the buyer will see your home address, but there’s no need to show it to every potential buyer.
Car buyers and sellers often use shopping centers as locations to meet, and some police agencies are now setting up areas where online shoppers can meet. For example, the Gresham, Oregon police department is part of a growing number of agencies to offer a safe exchange zone that is covered by video surveillance 24 hours a day.
“It’s a little more assurance that things are going to happen the way that they want it to happen,” says Sgt. John Rasmussen of the Gresham P.D., adding “people with ill intentions are going to want to steer away from it.”
When you sell a used car, buyers judge you just as much as they judge your car. Give them a reason not to trust you, and the sale will likely evaporate, no matter how good your car is. Honesty is the best policy, though you don’t need to answer any questions that they don’t ask.
If you are contacted by someone who wants to buy your car without seeing it, test driving it, or having it inspected, you should consider it a red flag and proceed very carefully. There's a good chance that you will end up with no car and a fake check.
7) Prepare for a Test Drive
Although some potential buyers might balk, it is best to accompany any prospective buyer on the test drive. Before you leave the parking lot, however, you'll want to do a few things to ensure your personal safety. Take a photo of their driver's license and text it to a friend. Don't allow yourself to be outnumbered and be prepared to suggest an alternate time or bring a friend along if you are uncomfortable.
If the potential buyer decides that the test drive is an opportunity to demonstrate their high-performance driving skills, you smell alcohol on their breath, or they otherwise drive in an unsafe manner, you'll want to end the test drive immediately. Remember, the car is still covered under your insurance, and so they are risking not only your safety but your reputation with your insurance company.
8) Prepare for a Pre-Purchase Inspection
Most buyers will insist on a pre-purchase inspection from an independent mechanic, or at least they should if they are following the rules of buying a used car. The best option is for you to meet them there or drive to the shop with them. Some mechanics who specialize in pre-purchase inspections are mobile and will come to you.
Just because an issue or two pops up in an inspection, the deal doesn’t have to be dead, and you don’t have to fix anything you don’t want to (unless it is required by law to make the vehicle saleable). Each problem becomes a point in your price negotiation, but the buyer should also know that it is a used car and perfection isn’t something that they can reasonably expect.
If you only have 10 percent of your brake pads left, for example, you might have to get them fixed or lower your price. If on the other hand, the tires aren't brand new, you're not obligated to install new tires.
9) Negotiate a Price
Negotiating the price of a used car makes many potential sellers uncomfortable enough that they just trade their car in instead of selling it themselves. However, remembering that it is a business transaction and trying not to be offended when the first offer comes in is key to a successful negotiation.
Buyers won’t have the emotional attachment to your 2013 Volkswagen Beetle that you have and won’t overlook the issues that you no longer notice. Throwing a low-ball initial offer is a strategy that experienced buyers use to make you doubt what you are asking for the car. Since you have done your research, you’ll be able to stand firm and counter with a reasonable offer.
Be prepared to walk away if the potential buyer doesn’t offer you what you feel is a fair offer. Remember to keep your emotions out of the negotiation and don’t fall prey to hard-luck stories, high-pressure tactics, or a buyer’s urgency for you to sell right now. Be sure that you have left enough time in your buying process that you don’t have to sell your car more quickly than you want to.
10) Complete the Paperwork and Get Paid
The best way to ensure that you don’t get ripped off is the meet the seller at their bank, accept payment there with a cashier’s check or cash, and sign off on the title and bill of sale before you leave. It is easy to forge cashier’s checks, so check to make sure that the check is legitimate by checking with the bank that it is drawn on before you sign off on your car’s title.
Use caution if the seller suggests using an escrow service. Some are known scams; a check with your local consumer protection bureau or attorney general's office can help you identify which services are legitimate. You can find automobile Bill of Sale forms online. Some states require specific language to be included and you’ll want to make sure that the phrase “As-is” is clearly stated on the form.
One clear sign of a scam is for a buyer to send you a payment for more than your asking price with the request to send back any overage. In all likelihood, the original payment is fake. Since you want the money now to pay for your new car, and you likely don't have the expertise or authority to run credit reports on potential buyers, never enter into an agreement where you act as a bank and take payments over time.
Some states require additional paperwork to be filed, such as mileage disclosures, liability releases, and title transfer forms. If you are selling a car across state lines, you’ll need to search the DMV site of each jurisdiction to ensure that each state’s rules are followed. Make copies of every form that you sign, even if that just means taking a photo of them with your cell phone.
You might be tempted to cancel your insurance immediately. Before you do, though, check with your agent to make sure that any new car that you buy is covered.
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