If you’re like most people, you probably don’t think about selling your car until you have to. Since your car is probably your biggest financial asset (next to your home), you may be surprised to learn that selling it can actually improve your financial standing – and do so relatively quickly.
While you may not get as much money for your car as you would if you held onto it for a few more years, the infusion of cash can be just what you need to get out of a financial bind.
Here are a few scenarios in which selling your old car can help improve your financial standing.
You Can Pay Off Your Debts Quickly
If you’re struggling with debt, selling your car can be a quick way to get some extra cash to help pay it off.
Even though you might not be able to use all of the money from the sale of your car to pay off debt, using a portion of it can help you get ahead.
This is particularly helpful if your car is old or damaged and can’t be used as collateral for a loan.
Luckily, you can easily sell it to a junk car buyer and get a fair price for it. Many companies are now offering cash for junk cars which means you don’t have to go through the hassle of finding a buyer yourself.
They will even come to pick up the car from your home so you don’t have to worry about towing it.
And once you get the cash, you can immediately start paying off your debts.
You Can Use the Money to Boost Your Savings
If you don’t have any debt, or if you’ve been able to pay it off quickly, using the money from the sale of your car to boost your savings can be a wise move. This is especially true if you don’t have an emergency fund.
By selling your car and using the money to build up your savings, you’ll be better prepared for unexpected expenses – like a house repair bill or a medical emergency.
And, since you won’t have a car payment, you’ll have even more money to put into savings each month.
Just be sure to keep the money in a high-yield savings account so it continues to grow.
You Will Have More Money For A Down Payment For A New Car
If you’re planning on buying a new car, selling your old one can give you a nice down payment.
This will help lower your monthly payments and keep you from having to finance as much of the car. It can also help you get a lower interest rate on your loan since you’ll be borrowing less money.
And, if you sell your car before trading it in, you may be able to avoid paying sales tax on the new car. Just be sure to factor in the cost of repairs when determining how much money you’ll net from the sale of your old car.
If you are not mechanically inclined, you can also take it to a dealership and they will give you an estimate based on the make, model, and year of your car.
You Can Invest The Money
If you’re not planning on buying a new car and don’t have any pressing debts or savings goals, you may want to invest the money from the sale of your old car.
This can be a great way to grow your wealth over time and set yourself up for a more financially secure future. Even if the money is only invested for a few years, it can make a big difference down the road.
However, make sure to research different investment options before committing any money so you can find an option that best suits your needs and risk tolerance.
And if you are not sure how to go about investing, consulting with a financial advisor can be helpful.
You May Get A Better Interest Rate On A Loan For A New Car
If you do decide to buy a new car, you may find that you can get a better interest rate on your loan if you sell your old one first.
This is because lenders typically consider the value of your trade-in when making a loan.
So, if you sell it outright, you may be able to reduce the amount you need to borrow – and get a lower interest rate as a result.
Keep in mind that you’ll still need to have good credit to qualify for the best rates.
If your credit isn’t great, you may want to work on improving it before applying for a loan.
The easy way to do this is by using a credit monitoring service, which will help you keep track of your progress and identify any areas that need improvement.
Sell It As An Oldtimer
If your car is a bit older – say, 30 years or more – you may be able to sell it as an oldtimer.
These cars are collector’s items and can be worth a lot of money. Of course, you’ll need to do your research to find out how much your car is worth and whether there is a market for it.
But if you have a classic car that’s in good condition, it could be worth quite a bit. You may also want to consider restoring the car before selling it so you can get even more money for it.
For instance, you may be able to get a higher price if you sell it as a “barn find” that needs some work.
Just be sure to factor in the cost of restoration when determining whether or not it’s worth pursuing.
You Can Get A Tax Deduction
If you donate your old car to charity, you may be able to get a tax deduction.
This is usually only the case if the car is sold for less than its fair market value, but it’s still worth considering if you don’t need the money from the sale.
The amount of the deduction will depend on the fair market value of the car at the time of donation.
To get an accurate estimate, you’ll need to have the car appraised. Once you know the value, you can claim it as a charitable contribution on your taxes.
Just be sure to keep all documentation related to the donation – including the receipt from the charity – in case you are audited.
As you can see, selling your old car can be a great way to improve your financial standing – regardless of your current financial situation.
And whether you have a debt to pay off, savings to build up, or a new car to buy, getting rid of your old car can be a smart move.
So, if you’re thinking about selling, be sure to consider all of your options so you can make the best decision for your unique circumstances.