To sell or not to sell? Let’s begin with the sale of a new vs. used car. Like most things in life, the value of your vehicle depreciates just as that ‘new car smell’ quickly fades. Depreciation, although inevitable, can be minimized if you’re smart about it. Considering that new cars depreciate at a much faster rate than used cars (15-30% in the 1st year and over 50% after 3 years) it wouldn’t be wise to sell them in the early years of ownership. Keep your new car as long as you can to avoid steep depreciation rates. If you’re a used car owner and wish to sell, there are many factors to be taken into account to ensure prime timing. The more you know, the better.
A lot of used cars are put up on sale in September and March as people trade up new registration vehicles, so the market is pretty saturated in those months. Try selling earlier to reduce competition.
Hot and cold seasons also tend to influence which kind of cars are bought. During spring and summer there is a higher demand for convertibles, roadsters, classics and sports cars whereas the winter asks for off-roaders, 4×4’s and SUV’s. Categorize and sell your vehicle accordingly.
Holidays and events naturally impact the desire to purchase cars as gifts. This could work in your favor, if you’re careful with your timing. You wouldn’t want to sell too early before a holiday as it wouldn’t hold much relevance in comparison to a few weeks before when buyers are doing last minute shopping. ‘Tis the season to be jolly indeed if buyers are accepting the price you wanted because their need for the purchase is greater! On the other hand, events like the international CO-VID 19 should discourage any seller. People aren’t thinking about buying cars when they’re quarantined or losing employment in a crashing economy.
Climb into the mind of your buyer. Ask yourself if the price and condition of your car is appealing. Ensuring that the car is regularly serviced and maintained adds so much more value to it than if it weren’t. Sure, it’ll cost you money but buyers are vastly put off by mechanical issues. The common buyer probably won’t be an automobile expert and mathematically derive a fair deduction on your selling price. To them a problem is a problem made all the more problematic by their lack of expertise. Often case they will either request a considerable price reduction or show no interest at all. On that note, you’ll want to know the value of your car by using the car depreciation calculator.
Bare in mind that buyers look at mileage and the lower it is, the more attractive your sale appears. You’ll want to start selling before your car hits key mileage points like 100 000 miles, for example. Beyond mileage there are other aspects that are personalized to your car model. Car models have differing problems so it’s good to be clued up about inefficiencies associated with your car in particular. Spend some time researching online forums to identify significant failures. Then prepare to either sell before these failures arise or pay for repairs consequently.
Auto loan payments take time but eventually you’ll find yourself in one of 3 positions, namely: underwater, in positive equity or paid-off. If your auto loans are paid-off, congratulations! The time to sell is now. You have nothing to lose and everything to gain! In positive equity, your vehicle is worth more than you owe on it. This is also an ideal position to sell from in that you can use your sale income to pay off your loans and the remainder of which to invest in the purchase of a new car.
In contrast, being underwater refers to the market value of your car being lower than what you owe on it. Inevitably you will need to pay what is owed on it but selling your car privately may ease the loss. For one, selling your car before you default on your auto loan could be the deciding factor between a mild or sever affliction on your credit score. This depending severity could affect your eligibility in taking out auto loans in the future. Secondly, in the case of an auto loan default, it’s more likely than not that your car will be repossessed and sold at an auction for much less. Furthermore, the auction company takes a percentage of the sale proceeds and the repossession agency will charge the lender a fee which is added to the balance you owe. By selling the car yourself in a private sale, you can minimize this loss.
All in all, regardless of your standing in your loan payments it’s not a bad idea at all to sell (although your restriction in selling privately or to a second hand dealership may vary). Just keep in mind the time of the year, what’s happening then and how this could impact your sale. Lastly, hypothesize what your buyer would expect and then, deliver…