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Trading in your current vehicle to a car dealership is an easy way to part with it when it’s time to buy or lease a new or used car. You’re essentially selling your old car to the dealer, and the amount they pay you goes toward the price of your next vehicle. There are pros and cons to trading in your car, and we’ll explore them in this article and show you how to trade in a car.

Here are the trade-in topics we’ll cover:


Why Should You Trade Your Car In?

If you’re looking for the easiest way to get rid of your old set of wheels, trading it in to the dealership where you are getting your next car is a great option. Though it’s not always the best way to sell your car, there are a number of benefits to doing so.

It’s Quick and Easy

Just tell the car salesperson at the dealership you’re buying or leasing a car from that you want to trade your old one in, and they'll take it from there. A used-car manager will test drive and appraise its value, then they'll make you an offer as part of your overall car-buying transaction. If you accept their offer, you’ll sign the car’s title over to the dealership and be all done.

When you sell your own car, there’s a lot more hassle involved. You have to take the time to market, show the vehicle to potential buyers, negotiate the car’s sale, and then do all of the paperwork.

You Complete the Transaction in One Place

If you sell your car to another dealer or a third party, you'll have to drive to multiple places to complete the deal. If you trade your car in, you just drive it to the dealership and drive your next car home. No need to call a friend or an Uber to take you from wherever you sell it to the new car dealer.

Car Dealer filling out online documents
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While you should have a pre-approved financing deal in place before you visit the car dealer, you can set up your car loan right at the dealership. In short, you can shop for a new car, get rid of your old one, and sign for a new auto loan all in one stop.

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They’ll Pay Off Your Loan

A frequent question consumers ask is whether they can trade in a car with a loan that they still owe money on. Yes you can, and it is common for dealers to handle the payoff amount and get your old financing taken care of.

If you still owe money on your trade-in, the dealership will pay off the balance of your loan and get the title to the vehicle directly from your lender. You won’t need to run all over town shuttling documents and checks to the dealership. Any positive equity that you have in the vehicle will be used as a down payment toward your new lease or purchase.

Even if you owe more on your current vehicle than it is worth, trading it into a dealership is a simple way to rid yourself of it. It’s not the best way to deal with an underwater car loan, as we’ll discuss a little later in this article, but it is easy.

The Paperwork Is Taken Care Of

There are heaps of paperwork to sign when you sell a car. If you trade it in at a dealership, they'll take care of all of the paperwork for you, though you'll pay for the convenience as part of the doc fee that is part of most car buying or leasing transactions.

When you sell a car in a different state than you live or the vehicle is registered, the paperwork can get extremely complicated. Car dealers deal with complex transactions all the time and will know just what documents need to be filed with which DMV. You’ll just need to sign the papers.

You Can Save on Sales Tax

A potentially massive benefit of trading in your car at a dealer is the money you can save. Depending on how your state taxes vehicle sales, the value of your trade can potentially be deducted from the price of your new car for the purpose of computing sales tax.

toy car on calculator
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Let’s say, for example, that you're buying a new vehicle and have negotiated a new-car price of $30,000. The dealer has offered you $12,000 for your trade-in, so the net cost you have to pay is $18,000. In many states, you'll only have to pay sales tax on that $18,000, rather than the entire $30,000 cost of the car.

You’ll want to balance the tax savings with the amount of money you sacrifice by trading the car at the dealer rather than selling it yourself, which frequently will get you more money.

Why Shouldn’t You Trade Your Car In?

While trading your car into a dealership has many advantages, it’s not always the best way to jettison your old ride. All the convenience comes at a price, both in terms of dollars and by adding complexity to your new car deal.

You Won’t Get Top Dollar

When you trade your car in at a dealer, you’ll likely only be offered the wholesale value of the vehicle, which can be significantly lower than the price you can get if you sell it to a private party. If you want to get the most money out of your used car, and you have the confidence in your selling ability to do so, you should sell it yourself. Take a look at our guide to selling a car for advice on how to prepare, market, and complete the sale of your old ride.

Depending on the vehicle’s age, class, condition, and mileage, the difference between its wholesale and private-party resale value can range from a few hundred to thousands of dollars. If it’s just a couple hundred bucks, it’s probably not worth the time and hassle of selling it yourself.

It Adds Confusion to the Deal

There are three major components of a car deal: The price of the vehicle, any trade-in allowance, and the terms of the financing or lease. Most car salespeople will want to mix them all in one big, confusing pot and sell you on a monthly car payment. That’s a great way to sell a car, but it’s a horrible way to buy one.

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Instead, you want to keep all of those components as separate as possible. Adding a trade-in to the mix allows the dealer to make the price of the car look spectacular by lowballing your trade-in value. On the flip-side, they can offer you a great price on your trade-in by marking up the price of the car or the cost of financing it. Making a car deal becomes a shell game, where numbers can be moved from one box to another.

The simplest way to keep your negotiation with a car salesperson focused on the price of the new car is to sell your old car yourself and get pre-approved for financing before you start car shopping.

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If You Are Severely Underwater on the Car

When you owe more on your vehicle than it is worth, you have what is called having negative equity, being upside-down on your loan, or being underwater. In this situation, trading your vehicle in at a dealer makes less financial sense. If you can’t sell your current car and use that money to pay off your existing loan, the cash to pay it off has to come from somewhere else.

Here’s an example: Say you owe $15,000 on a car that the dealer is only offering you $12,000 to trade in. That leaves you with $3,000 that you will immediately have to pay your lender if you sell the car.

It’s not a big deal if you're flush with cash and can cover the payoff amount of your loan. If your finances are stretched, though, your options are more limited. This is where some car dealers and lenders will be more than happy to “help” you out. They’ll simply add the $3,000 balance onto your new car loan and use it to take care of paying off the loan on your old car. Unfortunately, that is a financially treacherous way to buy a new car. With rare exception, you’ll start your new car loan off having negative equity before you even leave the dealer’s lot.

In essence, you’ll be paying for two cars, while you can only drive one of them. Since your new vehicle will rapidly depreciate the moment you drive it off the lot, it will force you even further underwater.

Worried woman
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Expanding on our earlier example, we’ll say that your new car cost $20,000. Add the $3,000 from your old loan, and the balance of your financing is $23,000. Next, assume that a new car depreciates 10 percent the moment that you drive it off the lot, or $2,000 in this case (it’s likely more, on average). Before you even get your new car home, you will have $5,000 negative equity.

If you total your car or it is stolen while you have negative equity, you are still responsible for paying the entire loan balance back to the lender. Even if you have gap insurance to cover the amount you’re underwater, many policies will not cover balances rolled over from previous auto loans. Having any hiccups in your life that cause you to miss a payment or go into default on an underwater auto loan will quickly appear on your credit reports and devastate your credit scores. Buying a car when you have bad credit will result in higher interest rates and stricter loan terms.

When you are upside down on your car loan and you want a new car, a better idea is to sell the old one yourself instead of trading it in. You’ll want to do everything you possibly can to maximize the amount of money you get from the buyer, hoping you can get close to the balance of your loan out of the sale.

Another option is to put off the purchase of a new or used car until you have paid off enough of the existing loan that you're no longer underwater. Our guide to How to Get Out of an Underwater Car Loan is a great resource to help you through the details.

Trade-Ins and Leasing

Many people think that trade-ins and leasing don’t mix, but there are a couple of ways that they work together. You can apply your trade toward a lease, or you can trade in or sell your leased vehicle for more than its residual value.

Can I Trade In My Car for a Lease?

Absolutely, and you can end up with a lease that doesn’t cost you much money 3. By applying the money that you receive from a trade-in as the down payment on a lease, you can reduce the size of your monthly lease payments, the amount due at signing, or both. To show you how to do that, we'll start off with a reminder of how leasing works.

Car for change
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Car buyers have to pay the entire negotiated price of the vehicle and usually take out a car loan to finance the purchase. On the other hand, lease customers only have to pay for the depreciation that occurs during the term of the contract, plus interest (called the “money factor” in leasing) and fees. That amount is broken down into an amount due at signing, and the rest is divided over a series of equal monthly payments. When the lease ends, the vehicle usually is returned to the dealership where the contract was originated. If the lease allows, you may also take it to another of the brand's franchised new car dealers.

To see how to use the value of a trade-in to pay for a chunk of the lease, let’s look at an example. We’ll say you currently have an SUV with a trade-in value of $10,000, which you want to use to finance the lease of a new model. We’ll assume you have negotiated a price of the new vehicle – also called its capitalized cost in leasing – down to $40,000, and its residual after a three-year lease is $24,000. That means you have to pay $16,000 plus interest and fees over the term of the contract. By applying your $10,000 trade-in to the lease deal, you bring the amount you have to pay for your lease down to just $6,000, plus interest and fees. Even if you pay nothing more at signing, with a money factor of .0025 (equal to an interest rate of 6 percent), your monthly lease payments would be an affordable $183 per month, plus fees.

From this example, you can see just how affordable leasing can be if you have a high-value trade-in to put toward your lease contract. Keep in mind, however, that at the end of your lease you won’t have any equity to put toward a down payment on your next car.

Can You Trade In a Leased Vehicle?

Yes, you can trade-in a leased vehicle, but it’s not often a good thing to do. The experts who forecast the future values of leased cars usually do a rather precise job of making their predictions. However, if the trade-in value of your leased vehicle is significantly higher than the buyout cost of your lease as you near the end of it, you can trade in your leased vehicle, pay off your contract, and use the cash as a down payment toward your next car.

The best chance you have of a trade-in price being higher than a buyout cost is if you have driven significantly fewer miles than the lease allows, there is no damage, and the vehicle is in high demand. Since you can typically get more money out of a private-party car sale than a trade-in, you might try to sell the car yourself to get the highest resale value out of it. Of course, you’ll want to check with your leasing company to ensure that there are no prohibitions on selling or trading in the vehicle.

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Preparing Your Trade-In

When you trade a car into a dealership, you are selling it to them and hoping you get the best possible price for the sale. Though it’s a little different than preparing it for a private sale, many of the things you want to do are similar. The biggest difference is that you don’t want or need to put in the same amount of effort to ensure that the car is spotless as you would with a private-party sale. You’re selling it at wholesale, and the dealer will do the work to refurbish it to retail condition.

Here are a few tips to get your vehicle ready for trade-in:

Gather Your Paperwork: Your car is more valuable if you can prove that you have completed all necessary preventative maintenance at each service interval. By keeping all of your service records in one place, you'll be prepared to hand over copies of receipts that demonstrate you've taken care of the car. Also, provide receipts on things like tires and brakes so you can show if you've replaced them recently.

Organizing paperwork
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If the vehicle was in an accident, be prepared to show the appraiser paperwork showing the repairs that were performed. They may not ask for any of the paperwork, but being prepared may land you a sweeter deal.

Car owners who have paid off their loans should find their title and have it with them when they visit the dealership, though you never want to leave the title in the vehicle. If you store the title to your car in a bank safety deposit box, be sure to retrieve it on a weekday so you're not stuck if you decide to buy a car on a weekend when the bank is closed.  

Clean It Up: First impressions are important, even to experienced automobile appraisers. However, experts disagree on just how much cleaning you should do. Take in a car that's spotless, with everything taken out of the glovebox and trunk, and you've just indicated to the dealer that you're planning on completing your purchase that day. Bring in a car with a few of your belongings in it, and you will have an excuse to go home to clean it out while you're considering their offer.

The costs of refurbishment will be factored into any trade-in offer they give you. Dealers know that they’re going to have the expense of detailing the car before they can put it on their lot, regardless of whether you’ve done it or not.

In short, you don’t need to clean up your car to showroom condition, but you want to clean it up enough that it looks like you have cared for it. Get rid of the fast food wrappers, give it a good wash, vacuum out the interior, and you should be good to go.

Cleaning up a modern car means more than getting your stuff out of it. If your vehicle has a navigation system, be sure to clear out your home address and any destinations. Unpair your mobile phone from the vehicle’s Bluetooth connection, and make sure that your calling history is wiped. When you are sure that you're trading the car in, contact any data connection providers and have the data link terminated. You may even get some money back on your data or satellite radio subscription when you cancel.

If your car has a Homelink transmitter that is set up to open your garage doors or gate, be sure to consult your owners manual for the procedure to clear the system, so it will no longer give easy access to your home. You don’t want an unscrupulous buyer to find your home address in the navigation history and have access to your garage using the Homelink transmitter.

To Fix or Not to Fix: When you are preparing for a private sale, you might deliberate on what damage to repair or maintenance to perform before you sell the car. When you're trading a car in, the answer to the question of repairing or not should almost always be to save your money and let the dealer take care of things. Because the dealership will have the work performed in their shop, they generally won't take the retail cost of a repair off the amount they'll give you for the car. There will probably be a deduction for repairs, but since the dealer pays less than the going rate for repairs, that deduction is usually lower than what you would pay out of pocket before trading in.

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For example, a car needing new brakes might cost you $200 to fix, but the dealer will only deduct $150 because it's an easy fix in their repair shop. Car dealerships typically work with third-party companies that visit their lots to repair small dings, chipped glass, and damaged wheels at a fraction of the cost that an individual consumer would pay.

Learn Your Car’s Value: It is critical that you know the approximate trade-in value of your car before you head for the dealership. If you don’t, you’ll have no way of knowing if you’re getting a fair deal or a lowball offer.

Pay Those Parking Tickets: While many people think they can get out of paying parking tickets by trading or selling their car, that’s not the way it works in most places. Having unpaid parking tickets may prevent the transfer of title, so you'll need to take care of them before it's time to sell the car. In some areas, unpaid parking tickets are turned over to collection agencies who will come after the registered owner of the vehicle at the time of the infraction to collect payment.

What to Expect at the Dealership

Once you tell your salesperson you are trading your car in, they’ll have someone from their used car department look over your trade, test drive it, and prepare an offer. They may run a vehicle history report, and you'll want to be ready for any questions that they have after studying it.

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Most dealership used-car appraisers have looked at hundreds or thousands of cars during their careers and are skilled at identifying issues that you may not notice. If they suspect a mechanical problem, though, it's a good idea to take it to a trusted mechanic to get it checked out before allowing the dealership to low-ball your trade because of the problem. You can also do a quick internet search to see if the problem that the appraiser suspects is common to your model.

Playing tricks to try to hide flaws from an appraiser is likely to backfire. Hosing your interior down with air freshener to mask the smell of cigarettes will just make it smell like you were smoking in a garden. Taking it in on a rainy night to hide scratches or dents won't help you a lot either, as they can just pull it into the well-lit service lane to take a closer look. If an experienced appraiser thinks you're trying to hide something, they'll either refuse your trade or give you a low-ball offer.  

There are several things that the dealership’s used-car appraisers will be looking at:

Vehicle Age: The older a vehicle is, the less it will likely be worth (unless it’s a classic). If there’s a new generation of your model or the vehicle has been significantly updated since you purchased yours, you can expect your trade-in value to be lower.

Mileage: The more miles there is on the odometer, the lower your trade-in’s value will be. Vehicle value estimates are typically based on 10 to 12 thousand miles per year. If you’re way over that, your value will take a hit. If you’re way under the average mileage, you can potentially get more cash out of your ride.

Ownership: Vehicles with only one owner are typically more valuable than vehicles with multiple owners. The vehicle history report will show the dealer how many owners there have been.

Vehicle Condition: If a vehicle looks like it has been properly cared for, it will be worth more as a resale on the dealer’s lot. If serious reconditioning needs to be performed, the dealer will have to pay for it, and their offer will be lower to account for that added cost.

Matching Tires: Do all of the tires match, and do they have good tread life left on them? Answer yes, and it’s a positive for your car’s value. Answer no, and the appraiser may factor the price of replacing the tires into the vehicle’s value.

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Options and Add-Ons: If the vehicle you are trading is loaded with factory options, it will be more valuable than a base model of the same car. Appraisers will also look at any equipment that you have added to the vehicle. While you may think that the massive wheels and low-profile tires add a ton of value, used-car buyers see them as luxuries, requiring expensive tires that don’t last very long.

Any equipment that you have added to increase the performance of your car will usually be seen by a used-car buyer as an indication that the car has been driven hard or abused, whether it has been or not.  In other words, boring is good when it comes to having your car appraised.

Mechanical Condition: The appraiser will look and listen carefully to get an idea of how the vehicle is running. If they suspect a problem, they’ll likely just knock a chunk of value off the car rather than taking it into the shop to be further diagnosed. They’ll also look for a recently passed vehicle inspection or smog check to assure themselves that costly repairs are not in store.  

Seasonal Demand: Different vehicles are in higher demand at different points of the year. Try to trade a convertible in December, for example, and the dealer will see a car they need to sit on until spring, or sell for a discount at the auto auction. On the flip-side, selling a four-wheel-drive SUV in early winter may get you some extra money.

Paint Color: While that fuchsia paint job may have been all the rage when you purchased the car, it limits the number of buyers who will be interested. Classic, neutral colors sell best as used cars.

The appraiser will be looking solely at the car when determining its value. Whether you are underwater on your loan, what your credit scores look like, and what new or pre-owned car you are considering should have no bearing on the amount offered for your trade.

Red Flags

How you are treated during this phase of the process will tell you a lot about the dealership. While most will strive to come up with a fair offer that’s generous enough to get you to buy a new car, others will play games with your trade-in.

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There are a few tactics to watch out for, though fortunately, they are becoming less common as car buyers have more information at their fingertips about trade-in values and more ways to sell their vehicles than ever.

Making You Doubt Your Car’s Value: Imagine you’re on the dealer lot, and the salesperson is looking at your old car. They’ll walk around the vehicle, but they usually won’t say anything. Instead, they’ll gently touch every ding, scratch, or other flaw to give you the impression that they know there’s something wrong. Some will even ask you whether the vehicle has options that they know aren’t even available, just to sow more doubt in your mind about the car’s value.

Fortunately, because you've done your research about the vehicle's value – and have the printouts to prove it – you'll be prepared and confident when the time comes to negotiate.

The Ancient “We Can’t Find Your Keys” Game: Although this tactic doesn’t happen very often anymore, it does still happen, and you'll want to be prepared for it. Here's how it works: You give your keys to the salesperson or used car manager so that your car can be test driven and appraised. You’ll be negotiating with the salesperson or their manager while your car is gone, but for some reason you decide it’s time to leave. Perhaps it’s because you don’t like the deal you’re being offered, but it can really be any reason. Unfortunately, they can’t find your car keys, so you can’t leave. They’ll continue to try to work a deal while you’re stuck there, and some buyers will give in just so they can go home.

There’s an easy way to defeat this tactic. Just carry your second set of keys with you, which you’re likely to do anyway since you’re thinking of trading the car in. Get up and walk away, telling the salesperson to call you when they find your keys or you’ll expect a replacement for the key that they lost. Often, your key will magically reappear, but it’s still a good time to walk away from the negotiation for a while.

Negotiating the Best Trade-In Price

It’s always a good idea to keep each of the components of a car buying separate. When you have a trade-in, it can be difficult to do. The salesperson will usually try to keep you focused on the monthly car payment, but you’ll want to focus on the new or used car’s purchase price, the trade-in offer, and the financing deal – but keep them separated. When they are all mixed together, it’s easy to move something from one box to another and make it appear that you’re getting a good deal.

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Your best bet is to take a notepad with you to track each of those components. By researching a fair purchase price and the value of your trade before you start shopping at dealers, you can be confident in advocating for the deal you should get. By having a pre-approved financing offer from a bank, credit union, or another lender, the dealer will have a benchmark to beat if they want to make your new loan.

If the salesperson throws out a value for your trade, it’s assumed that they can’t go any lower. They’ll ask you what you want to get for the car, trying to get you to put forth a number. That way, you can’t go any higher. There’s liable to be some back and forth. Each time you present a new number, back it up with concrete reasons why you want that price. When they give you a reason they can’t go any higher, give them a reason you won’t go any lower.

While you are entitled to get a fair price for your trade, the dealer is entitled to a certain level of profit on the transaction. Be polite, remembering that it is just a business transaction, but also be prepared to walk away if you don’t feel they are negotiating in good faith. It’s never a good idea to approach the negotiation with the intent to bully the salesperson into making you a good deal. If you give them a reason to dislike you, it makes it that much easier for them to justify sticking it to you with a horrible deal.

Just as you should talk to more than one dealer to get offers on the price of your next car, you should speak to multiple outlets to get the best offer for your used car. If a dealer has plenty of the same model you’re trading in on their lot, they're only going to offer you a low price for your trade, as they'll be turning around and selling it to another dealer at the next auto auction.

Your greatest power in the negotiation for a new-car price and a used-car value is your ability to walk away from a bad deal. Even if you have put in the better part of a day at the dealership, walking away from your time investment is a small price to pay compared to making a bad car deal that can cost you for years.

Finalizing the Paperwork

Once you have come to an agreement, it's a good time to take a break before signing the final paperwork. You can use the time to finish cleaning out your car, think about whether the deal you just made is really the deal you want, and even call a friend to bounce it off them. Though you might have initialed or signed an offer sheet, you really haven't done anything binding until you approve the final paperwork, hand over payment, or sign new loan documents.

finalizing paperwork
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When you are cleaning out the car, be sure to check to make sure (again) that your personal information is out of the vehicle’s electronics. Check every nook and cranny of the car for your stuff, taking care to look in eyeglass compartments, check hidden compartments, and remove any garage door openers. Take anything with personal information out of the glovebox, though you’ll probably need to leave the registration. Often, when you buy a new car, the salesperson or service department will write your information onto some pages in your owner’s manual packet. Be sure to tear out any pages with your name or home address on them.

The paperwork signing usually happens in the dealership’s finance office. Though you might be worn down by a day of car shopping and negotiation, you’ll still want to take the time to read every document that’s put in front of you to sign. Check to ensure that all the numbers match the deal you agreed to and that there are no errors or blank spaces on the documents. If you find any errors or omissions, ask that they are corrected or completed before you sign, even if the finance officer promises to fix them later. It’s much easier to correct a document before you sign it than it is to revise a contract with your signature on it.  

Be on the lookout for expensive add-ons and fees that you don’t understand. Some dealers will have the cost of the add-on packages pre-printed on the sales documents to make them look like they’re a part of every deal. If you see them listed, you should cross them out and ensure that they are removed from the price. While some fees are fixed, others are negotiable, and you should negotiate to try and get them reduced.

After You Leave the Dealership

There are a few more things you’ll want to take care of in the days after you trade your car in. The most important is calling your auto insurance company to cancel your old car policy and ensure that insurance is in place for your new vehicle. Don't automatically assume that the same coverages and limits you had on your old car are appropriate for the new one.

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Our guide to auto insurance will help you find the appropriate policies and coverages for the right price.

Though the dealership will promise to pay off your existing car loan, you should check with your lender to ensure that it happens promptly. Until your lender receives payment, you're still legally responsible for the balance, and interest will continue to accrue on the balance. The dealer does have a great incentive to get the loan paid off quickly. They’ll need the car’s title so that they can get the vehicle onto the lot and resell it.

Alternatives to Trading In Your Car

Trading in your car for a new vehicle is a no-fuss way to dispose of your old car, but it’s not the only way to unload it. If you want more cash than the trade-in value the dealership offers you, consider one of these other ways get rid of your car.

Other Car Dealers

Just because the dealer where you are buying your new car can't give you the car trade-in value you want doesn't mean that no car dealer will. If your vehicle has low miles, a collision-free history, and is in good shape, selling it to a franchised dealer from its own brand may get you more money. For example, try to sell your three-year-old Hyundai to a Hyundai dealer, because they can resell it as a certified pre-owned (CPO) car, while a different brand’s dealer cannot.  

It’s a good idea to look at dealerships where the car you’re buying isn’t as popular as it is in other areas. Likewise, you should try to sell your used car to a dealer where the model is popular. Instead of trading your Ford F-150 to a dealer in the city who will just resell it at the next auction, for example, take it to a rural area where the dealer can get good money for an F-150 on their lot.

Before you start driving to different dealers, call their used-car manager to gauge interest in your vehicle and make an appointment to have your car appraised. Showing up without notice on a busy weekend isn’t a good idea, as the staff will be focused on selling cars.

Used Car Superstores

Relatively new in the automotive marketplace is the used car superstore. These multi-acre operations have a voracious appetite for buying used cars and have streamlined processes to make it easy. While you probably won’t get as much for your trade as you would if you sell it yourself, the process is quick and easy. It also allows you to eliminate the used car trade-in negotiation from your new-car buying process. That way, you can keep the dealer focused on the cost of your new vehicle.  

Selling It Yourself

If you have the confidence and patience to do so, selling a used car yourself will usually get you the highest price. However, this process usually requires you to invest more time and effort than the other methods. You’ll have to list the car for sale yourself, show it to prospective buyers, and decipher all of the paperwork that a dealer would take care of when you trade your car in.

car for sale
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If you are underwater on your current car loan, selling your car in a private sale is the best way to go, as you’ll have a much better chance of getting a price that’s closer to positive-equity territory. Talk to your lender before doing this so you know all the steps you’ll need to complete the sale properly and pay your loan off.

Before you decide to sell your car yourself, read our guide to selling your car to learn more about the process.  

Donating Your Car to a Charity

If you are just looking to get rid of a clunker that's taking up space in your driveway, and you're not expecting to get much cash out of it when you sell it, you might consider donating it to a charity. You can potentially get a small tax deduction, and you’ll know that the vehicle (or its scrap value) went to helping others.

There are specific IRS rules for how to donate a car and the amount of money you can deduct. Check out IRS publication 4303 to learn more about the process. Be wary of charities that only seem to exist to take in car donations, and inquire with local charities to learn their procedures for motor vehicle giving.

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