If I am not going to trade in my car what are other good options to convert it into cash?
I'm going to directly contradict Chris W Rea and say that donating your car is a good idea. I did this and it worked for me. However I'm going to admit that I did it in Canada, and that the car was a clunker. The charity was a reputable one that itself refurbished the cars and sold them, and the receipt was certainly for no more than the market value. The charity valued the car and set the receipt amount themselves, so there was no question that I could defraud the tax office. Nor did the sale generate an audit (though the value was nowhere near the $5000 value of property donated that we are warned triggers an audit).
So why was this a good idea rather than just selling the car and getting the full market value rather than a tax credit for it? First, being a clunker, the dealer wasn't going to give me the market value for it. Second, the charity came and drive the car away, rather than me having to advertize the car and spend days waiting at home for potential buyers who decided not to show up. Third, the charity was one I liked to support anyway.
So in short, this method won't make you the most money, but it has other advantages.
One scheme to beware of is the idea of donating your old car to charity for a large donation receipt. There are many perfectly good charities that can use your car, but there are also some fraudulent outfits that promise a large tax deduction in return. It's usually too good to be true, and the IRS is onto these schemes in the U.S., as is the CRA in Canada.
Here are a couple of articles discussing such schemes:
- (U.S.) Forbes.com: Good-Bye To A Feel-Good Scam
- (U.S.) CNNMoney.com: Hot tips: Avoid the IRS hot seat: 5 audit red flags ...
- (Canada) Edmonton Sun: Watch for charity scams
If you do decide it's not worth your trouble to sell your car and you don't need the money and you'd like to donate your car, find a reputable charity yourself – for instance, the Canadian Diabetes Association or The Kidney Foundation of Canada. The charity will either take your vehicle and put it to good use, or sell it and use the proceeds.
When done right, any tax receipt you may receive for donating a vehicle won't exceed the fair market value of the vehicle, and since such a tax credit is worth much less than 100 cents on the dollar, donating your vehicle only makes financial sense if you want to be charitable.
Disassemble the car
If the car has a low market value and you're handy you could take the car apart and sell the various bits and bobs as used spares. It does mean you have to work for the money but some rare parts in your car may be hard to find from other sources. If you're good and the car is common enough your profits can easily exceed the market value of the formerly assembled car.
You will need some space for the car while you're working on it, public parking spaces usually don't allow for non-functional cars. Check with your local regulations. If you have access to a garage it's a great place to work on it but for storage in between the salvaging sessions you're better off parking it somewhere where it won't be in the way or catch attention. Remember to protect the car from heavy weather conditions as moisture inevitably will build up inside the car when it sits for a while.
What to salvage
A few examples are interior parts and non-engine parts in the engine bay. These are relatively easy to get at and won't interfere with the basic mechanical functionality of the car. Take care when removing electronics as some will render the car undrivable, start with the headlight assembly and go from there. How much each part is worth requires some research, but if you sell a lot of parts it may pay off to bundle up small related parts in boxes.
Have a look at the market and see what sells, generally the better the condition of the car the more interest the parts will receive. It also helps if your car is of a common color combination as both interior parts and exterior parts has to be color matched with the buyers car.
Also remember to be patient. Making money off a car this way takes time and there's no need to rush the process. Broken parts are close to worthless so it pays off to take it slow when working on the car.
The end result
When you're done you should have a nice stack of cash, hopefully exceeding the market value of the car you started out with and a rolling chassis ready to send to the junk yard. If you have expensive rims or tires they may turn a large profit, however most junk yards will apply an extra fee if they have to drag the chassis on its floor. Spare steel rims with worn out tires can be used for this purpose if you have them.
Peace of mind
The yard will still make money off the remains since they get their return from raw metal contents (both the chassis itself and the engine is quite heavy) and people browsing for odd parts at the yard. Sometimes the yard will take out the engine or other parts if they appear to be in good condition, if you miss that one useful part the yard may salvage it instead. They also have access to heavy tools which makes it a lot easier to take out the large parts.
This is a fictional scenario. While I haven't disassembled a car for profits myself I frequently visit junk yards and perform repairs on my own car with used parts bought online.
Car: SAAB 9000 CSE '97, 30 000 Km, lit check engine light Market: Sweden Assembled value: $100-$300 Parts: $100 Front fenders (slightly rusted, requires a bit of work but very valuable) $100 Complete interior (seats and door panels) $100 Rims with tires $50*2 Headlights assembly $50 ECU (Engine Control Unit) $20*2 Mirrors $30 Ignition cartridge $30 ACC (Automatic Climate Control) panel $20 Optional factory spoiler $20 Front grille $20 Box of various light switches $15 Indicator lights $10 Windshield wiper arms with blades $10 Wheel covers $10 Dashboard lid $10 Factory front speakers Total profits: $635 from just the easily removed parts