What to Do With Your Old Car

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NEW YORK (MainStreet) — When car owners decide to replace their rides, they often focus on getting new car estimates, costing out prospective insurance policies and calculating how much money they might need to afford the extra features they want. When it comes to disposing of an old vehicle, however, the focus seems to be more on convenience, less on cash. 

But is there really a way to make a profit off of that old jalopy taking up space in your driveway? MainStreet consulted the experts and discovered that your options are, admittedly, somewhat limited. 

John Sternal, spokesperson for LeaseTrader.com, pointed out that selling a car for its metal is not likely to generate much cash these days, especially in light of Japan’s recent earthquake and tsunami, which increased the "inventory" of destroyed cars and drove down the current value of scrap metal.

According to Phil Reed, senior consumer advice editor for Edmunds.com, trying to sell a car’s individual parts can be equally unprofitable, and even more time-consuming. “It might work for older cars, but you need to be experienced working with vehicles,” he says.

This essentially leaves consumers with two options: Donate your old car to charity, which qualifies for a tax deduction, or try to sell the entire car yourself to an independent buyer.

“The car may have no value to you, but there’s almost always a buyer out there that it does have some value for,” Reed says, citing, for instance, car aficionados who make a hobby out of flipping old vehicles.

“Old cars are actually worth more today than many people may think, due to the economy,” agrees LeeAnn Shattuck, owner of Women's Automotive Solutions, a consulting firm that helps women buy and sell cars. She relayed a story in which a client recently replaced her old 1996 Jeep Cherokee with a new car.

“The Jeep had a bad header on the engine and did not run at all. It would only have been worth $100 on trade or about $200 to a junk yard,” Shattuck recalls, adding that ultimately, the owner sold the car on Craigslist for $1,100.

Reed suggests that those electing to sell their old car privately list the vehicle on sites like Craigslist for about $,1000, though you can get rough estimates for the fair market value of your old car on websites like Kelly Blue Book, AutoTrader.com or eBay Motors.

“The key is full disclosure,” Reed says, pointing out that owners need to tell prospective buyers what exactly is wrong with the car before they take their money.

Of course, the real drawback to this option isn’t a residual ethical dilemma. Reed admits that selling your own car can be time-consuming and daunting to those who aren’t experienced at doing so.

“You are making a ton of work for yourself,” he says, adding that you can expect to field a lot of phone calls and seemingly weird requests. The legwork is why most individuals get rid of their old vehicles by donating them to a charity.

“It solves a problem for [car owners],” Reed says, explaining that most charities that accept car donations come directly to a person’s house to pick up the car.

Additionally, the charitable contribution does qualify owners for a tax deduction. However, it’s important to note that under IRS guidelines, the amount of this deduction is based on what the charity actually sold the car for once they take it off your hands. Most organizations will provide you with the receipt following the car’s sale. You are not entitled to know what the car is being sold for before you agree to give them the vehicle.

This amount can be a far cry from the car’s fair market value at the time of the donation, but the Internal Revenue Service has a special rule that allows car donors to claim a minimum deduction of $500 on their tax returns.

This is not to say that you are going to get $500 (or more) deducted directly from what you owe the government. The amount is actually influenced by your tax bracket, the other deductions you are applying for and the value of the donated vehicle and, as such, varies widely.

“It’s not a one-to-one reduction,” Reed says, adding that you are not going to see the money until the end of the year when you file your taxes. You can actually find the IRS’s full explanation of how the tax deduction works here. Those basing whether or not they are going to donate their car on the type of tax deduction it will get them can get a better estimate from a certified public accountant before giving the car away.

Other things to keep in mind when going down this route: You’ll need to itemize all your deductions to qualify for any reduction in what you owe. You’ll also need to have donated the vehicle to a qualified 501(c)(3) organization, such as charitable, educational or religious organizations. You can find the IRS’s current list of these charitable organizations here.

To help you find an organization that is right for you, MainStreet rounded up a few national charities that have car donation programs in place.

Salvation Army

The Salvation Army takes old vehicles off of owners’ hands through a program run by its Adult Rehabilitation Centers. Representatives will come to pick up the car, and any that are salvageable are repaired and sold at auction, while the ones that are not are sold for scrap metal and spare parts.

The money, along with what the Salvation Army receives from its http://www.mainstreet.com/article/smart-spending/how-shop-thrift-store  thrift store operations, pays for the organization’s program to help men and women overcome drug and alcohol addiction. You can find an Adult Rehabilitation Center near you by calling 1-800-SATRUCK (1-800-728-7825).

The National Kidney Foundation

The National Kidney Foundation has a longstanding car donation program that allows owners to turn in their used car, van, truck or boat to benefit kidney disease research. Check the website to set up a pick up in your state.

ASPCA

Animal lovers can donate their car, truck, recreational vehicle or boat – in any condition – to the American Society for the Prevention of Cruelty to Animals, and the ASPCA will arrange to have the vehicle picked up from anywhere. You are initially provided with a tax receipt for your records and are later notified of the exact sales amount when the organization receives the proceeds from the car. Interested car owners can donate by phone at (877) 999-8322, or online.

Local Veterans Associations


Most local veterans associations have car donation programs in place that make it easy for owners to get their old cars off of their hands. The Minnesota Vietnam Veterans Association, for instance, picks up all vehicles for free; some are repaired and resold while others are broken down for parts. You should check to see if your local veterans association runs a similar program.

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