Wednesday, September 30, 2009

How to sell your car

There will always come a time when you need a new car.  Whether it's a replacement for a broken car or an upgrade to your current vehicle, selling your car is a very important part of the process.  I have sold 3 vehicles, and traded in 1 vehicle in my lifetime.  Below are some lessons I have learned through this process.

There are several ways of parting with your used car.  You can trade the vehicle in with your dealer when you purchase your new vehicle, you can have the vehicle sold by a 3rd party, or you can sell the vehicle yourself.

Trade-in.  The benefits of trading in your vehicle is there is no hassle.  There is minimal addition paperwork you have to fill out, and you can drive in with your old car and drive out with your new.  Unfortunately, you pay dearly for this hassle free convenience.  I sold my Porsche for $20,000 this past July.  When I initially took my car to the dealer as a trade-in, they were only willing to offer me $13,000. 

Consignment.  There are many boutique dealerships and services willing to sell your car on consignment.  This could be a better way to go for those who are interested in getting more out of their car but dislike the interaction and the hassle of selling the vehicle yourself.  Many consignment partners also offer loans on site, so this is much more convenient for the prospective seller -- and the result of that is a higher close rate.  The seller of the vehicle is taking on all the risk during this process.  The seller is still making the monthly payments, keeping the insurance up to date, as well as any expenses associated with advertising the car.  From my experience, most consignment locations charge you both a fixed and variable cost to selling your car.  The fixed cost (usually around $200-$500 upfront) covers their cost of detailing the vehicle, as well as their advertising costs.  On top of that, they will charge a variable cost as their profit.  Since the dealer themselves do not carry the cost of the vehicle not being sold, they are willing list the vehicle at a high price to maximize their profit.  I tried to sell my Honda S2000 on consignment initially, and was looking to get $24,000 from the sale.  The consignment dealer I worked with tried to charge $28,000 for my car, and the car never sold.  On top of that, I eventually ended up posting on and selling it myself.  When I went with the buyer to pick up the car, the sales manager was trying to talk him out of buying the car from me telling him there are better deals out there -- pretty sleazy.

Selling the car yourself.  This is probably the best bet for the individual looking to maximize their sale price.  There are many paid services where you can list your vehicles up for sale.  My recommendation is to go with the tried and true,  There is enough potential buyers that visit Craigslist on a daily basis that you should not need to go elsewhere.  In addition, you can immediately see what the average price your vehicle may fetch in your geographic region.  I always recommend dealing with a local buyer.

First of all, make sure you clean the car.  First impression is important.  You wouldn't go on a first date dressed in a tank top and flip flops, you probably shouldn't show your car to a prospective buyer covered in gunk. Pay some money to have your vehicle professionally detailed (~$100) or spend the time to do it yourself.  Since you are planning to sell the vehicle quickly, this is probably the only cleaning you will need.

Make your ad short, and to the point.  Make sure to include important information like the options you may have on the car, as well as the miles the car has and the year and model.  Try to use short bullet points. You don't need to write a huge paragraph about why the potential buyer should buy the car -- the buyer cares more about your car than your selling skills.

Don't offer test drives.  I welcome individuals who come and check out the car, and I often take prospective buyers on rides, but I never let them test drive the car.  Because all of my previous cars are manual transmission, there are a lot of things that could go wrong if an inexperience driver gets their hands on the car.  Individuals who are serious about buying your car will appreciate it as well because it shows you take care of the car.  I only let the seller drive the car when they have a deposit in hand.

Have all documents ready.  I keep all of my maintenance records in a organized packet, and show them to prospective sellers when they ask for it.  Since all of my vehicles are dealer maintained, they can call the dealership if they have any questions about the vehicle.  Some buyers will ask for a local mechanic to check out the car -- this is normal.  As the seller, I would not pay for that.  This is something the buyer should pay for.  You don't want to be stuck in a situation with a buyer who's not serious.

Make sure the smog is up to date.  For a vehicle that's over 4 years old, the vehicle has to have passed smog in the last 90 days prior to sale.  This is a cost you will have to pay for out of pocket before you sell the car.  This usually cost ~$60.

Don't reserve a car for anyone.  Although I think of myself as a pretty upstanding guy, most people you will associate with during this process may be from the bottom of the barrel.  I had an individual come check out the car, shook my hand to tell me we had a deal upon an agreed price, have me drive down (over an hour) to meet him, then try to nickle and dime me and get a lower price. Don't deal with the individuals who are looking for a bargain -- they are not really serious buyers and can probably not afford your car to begin with.  In addition, they are just looking for the cheapest they can find, and my guess is if you really took good care of your car, they are not the ones for you.  Be accommodating, but make sure the sellers work around your schedule.  If the seller really loves your car at the price, he/she will work with you to make the deal happen.

Cash is king.  Cashier checks aren't what they used to be.  There are so many stories about fake checks that I would not recommend taking a cashier's check in exchange for the keys to your car.  My recommendation is to go with the buyer to his/her bank and just have them withdrawal the money and give it to you.  This will save them some money, and you will also be assured that the deal is legitimate. 

Be patient.  Eventually you will find that right buyer.  I found the right buyer for the car that came several time on their own to see the car in person (while I was away on business).  When he finally reached out to me, he was ready to buy the car.

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