Is It Better to Donate or Sell Your Car?

I have a 1994 Mercury Grand Marquis (His name is Marquis Mark!). I purchased it from a friend a year and a half ago for $500. Since that time I have put about $1,500 into it. This was done about a year ago to keep it safe and to fix a couple of oil leaks.

I have been saving money for another car once this one dies. But given my situation (living in a fairly rural town without any friends or family nearby), I am worried about being stranded should it break down on me. Therefore I have been thinking about getting another vehicle before it actually dies on me. Also, it is hell on gas consumption.

Sell or donate marquis mark

Marquis Mark is showing signs of struggle. I have to add oil to him every month, sometimes as much as 3 quarts. It has been totaled twice in it’s life time, the last of which was not repaired. Three of the automatic windows do operate properly, the material on the ceiling is hanging down in the back and probably most noteworthy is the leak. When it rains, my car floods! I have had, literally 2 inches in the back of my car. It appears to be coming in from underneath. Due to some internet searching that I have done, I think there is a leak in the rear window and the water is flowing in under the seats.

Needless to say, Marquis Mark is not going to last for very long. I have been trying to put away some money to buy another car very soon and in the meantime, I’ve had this crazy idea to help defray some of the costs. But what do I do with my car when it is time to get rid of it?

ย Should I donate or sell my car?

I think I could sell my car fairly easily for about $500. Kelly Blue Book says that the value, in Fair Condition is about $1,200 but I don’t think I’d list is as fair. It runs, for right now.

I could donate my car to charity and use it as a tax write off. I’m self employed and can use all the exemptions that I can get.

So which do I chose?

When donating a car, there are a couple of points that are beneficial to know.

1. In 2011, the IRS began to require a proof of sale with your tax return when you donate your car to charity and plan to deduct more than $500 from your taxes. When doing this, you’ll need to wait until the charity sells the car to find out the sale price of the vehicle. That is the amount that you can deduct from your taxes.

2. Often times the charities need to use a third party to actually sell the vehicle. This reduces the amount of money they receive.

3. Be sure to research the charity that you are donating to, there are many who may not be using a large percentage of the revenue to benefit those in need. Contact the charity directly before donating and if you still have questions, contact the Better Business Bureau to truly determine if they are a worthy cause.

In the end, if you truly want to make a difference for the charity, sell the car yourself and give them a check for the full amount of the sale price. You will still get the tax deduction and the charity will be able to save money by only receiving the cash.

My Decision?

I think when the time comes I will sell the car and put all of the money that I make into a savings account. That way I can earn some interest on it until it is time to pay taxes. I would like to be able to donate more money to charities but right now, while I’m still in debt, I think it needs to be put on hold.

Anyone want to buy a car?

About Jessica

12 Responses to “Is It Better to Donate or Sell Your Car?”

Read below or add a comment...

  1. Michelle says:

    I agree, while I’m in debt, I hate to say it, but my donating is lower than I would like.

  2. Stacy says:

    What about donating it to a vo-tech school or some other place where they work on cars? Can you get a value from it that way? Just curious…

    The whole car thing bugs me to no end, I recently recapped how much I HATE owning a car after having to put over two grand into some routine maintenance and fixing an oil leak. Blah ๐Ÿ™

    Good luck on your quest!!!

    • Jessica says:

      That is an excellent suggestion but due to the IRS regulations, I wouldn’t be able to deduct anything over $499. To deduct over that amount, you would need a Bill of Sale from the charity. And frankly, in my situation, I need the cash. I do wonder if they need cars to fix though. I could use a tune-up to see if I can keep it road worthy for awhile longer.

  3. Stacy says:

    Sorry about the duplicate comments.. my internet is freaking out today..
    I’ve recently learned about the $500 limit on donations. I give a lot of old clothes (kids’ mostly) to charity, but never claim more than $499/year. Otherwise you have to fill out a whole additional form when you are itemizing. Since I pay a guy (minimal amount) to organize and file my taxes, it’s seldom worth the deduction if only slightly more than $500. He charges by the form and this would require an extra one.

  4. One of our cars wasn’t running consistently, and so we purchased a new (to us) car. We would have traded it in, but we weren’t sure that we could get it to the dealer. The old car sat on the street for a few months, until we got a courtesy notice that we would be ticketed or towed if we didn’t move the car in three days. Given the unknown amount of time it would take to sell it, we opted to donate it to a non-profit that would come and tow it for us.

    We expected them to get less than $500, but we were surprised when we got our letter in the mail saying it had sold at auction for $725! Maybe we should have tried to sell it after all!

    • Jessica says:

      That is a good point Bryan. It is a slight risk if you donate to charity. If you want $750, you better sell it to make sure you get that. If you aren’t too worried about the amount, then donating it will work out for you.

  5. Petunia 100 says:

    “Marquis Mark”, I love it! Very clever. ๐Ÿ™‚

  6. I would sell and save the money towards buying a new car.
    We had the same “leaky car” problem with our old Hyundai Accent. Whenever it rained, the drivers floorboard would get FILLED with water…several inches worth. We’d have to scoop out the water and and try surface drying things with a towel. We didn’t repair the leak, but we replaced the car within a few months. There was just too many things that needed fixing!

  7. Brad Chaffee says:

    Great post Jessica! I have done both. I have been gifted cars before when I was in a pinch and so I try to base what I do on what kind of position we’re in financially. If we can afford to we try to (and have) given some of our cars away once we’re in the market for a new (used) one. A pay it forward kind of thing but we have sold our cars too if we were trying to reach a financial goal.

    If you’re trying to get some extra cash to fund your next purchase you should definitely sell it. Even if you only get $250 for it — it’s something — and it will help.

    I’ve personally never worried about the tax benefit especially since it’s so much of a pain. If you do end up donating it just sign the title over and draft a bill of sale to be signed by the recipient saying you gifted the vehicle.

    I think it’s kind of silly that the government wants you to track the purchase of a donation in order to claim a tax deduction. You SHOULD just be able to base it on the blue book value depending on the year, mileage and condition, but I’m not surprised that our government does something backwards. LOL

  8. Ryan says:

    I had that same car. I loved it. My kids hated it.

    Maybe you can strip it down and sell the parts on eBay or something similar.

  9. Donating the car would be nice (& probably make you feel good too), but you mentioned you really need the money more than you need the deduction. So, you’ve answered your own question- sell it!

    It’s okay to be a little selfish when you’re paying off bills/debt.

  10. jone says:

    this site realy help me to donate my used car

Leave a Comment...