Car Selling Guide - Sell Your Used Car
If you are selling a used car you should do the things that will allow you sell at the highest possible price while avoiding common problems with payment and paperwork.
Prepare your car for sale
Used car dealers know that if they clean up their used cars inside and out, they can sell for higher prices. You can use the same technique when selling your own car. You may find that you can easily recover the cost of replacing worn tires, for example, and make your car sell faster. Touch up paint scratches. Repair windshield dings. Pull out small dents. Balance the tires. If you can't do all the work yourself, pay to have it done. Your effort will result in a faster, more profitable sale.
Price your car to sell
If you don't know how much you should ask for your car, use a price guide such as NADA Guides to get your car's market value. Add about 10% on top of the value you find. This should be your "asking" price. Most buyers will expect your price to be higher than you'll accept as a selling price.
Or if you want to sell quickly, you could consider setting your price a bit lower than guide prices.
See the following article for more details, "Used Car Prices and Negotiating."
You can also find out prices other sellers are asking for cars similar to yours. Check newspaper classified ads, "autotrader" magazines, eBay.com, and Craigslist.com. Some of these cars may be your competition.
Get a car history report
Most car buyers today are very savvy about the availability of vehicle history reports such as those from AutoCheck® and Carfax. Many would-be buyers will check your car with one of these services to make sure it has not been wrecked or salvaged.
You can improve your sales odds by obtaining a history report yourself and providing copies to potential buyers, a technique used by many used-car dealers. If you know the history of your car is good, you have nothing to lose and everything to gain by giving your buyer a clean report.
Where to sell your car
There are essentially two ways you can sell your car, depending on how quickly you want to sell and how much money you want.
First, you can sell wholesale. This means you sell or trade to a dealer for a low wholesale price and the dealer resells at a higher retail price to make a profit. If you have a relatively new, clean, low/average mileage vehicle, you should talk to new-car dealers who have a used-car lot or large used-car dealers such as Carmax.
Or you can sell directly to an individual buyer ("private party sale"), which should bring you a higher price than by selling wholesale. You can expect to sell at or near the same price that dealers get for the same car, in the same condition.
Advertising to sell your car
Make potential buyers aware of your car by advertising using one of the following methods:
- Local "auto trader" magazines
- Newspaper classified ads
- Consignment sales lots
- Online used car sales sites
- Online used car auction sites
- Online car enthusiast web sites
- Online car related discussion groups
- Supermarket or community bulletin boards
- Tell friends, neighbors, and work associates
- "For Sale" sign placed in car window
Watch for common buyer's scam
If you attempt to sell your car online on a classified ad web site such as Craigslist or Autotrader, you will almost certainly be contacted by seemingly genuine potential buyers who are, in fact, scammers who have an ingenious scheme for separating you from your money. You can read all the details here in our article, Used Car Buyer Scam.
Dealing with buyers
Potential buyers for your car will want to negotiate price. Since you have already set an "asking" price that is 10% higher than the car's market value, you can let the buyer "talk you down" a bit. It lets the buyer feel he's gotten a good deal while you've gotten a fair price.
Some buyers may ask you to accept a down payment and let them make monthly payments on the balance. Even if you know the person, this kind of agreement is full of potential problems. Many people who have done it regret it. The best advice: just don't do it.
Buyers can pay you cash or get a used car loan from a bank, credit union, or online loan company. They then use the money to pay you for your car. You give them your title, signed over to them. They then go to their state DMV office, apply for a new title in their name, get a new registration and tags.
If your buyer wants a Bill of Sale, which is simply a receipt that proves they purchased the car from you, you (or they) need only write up a document, titled "BILL OF SALE", that specifies that the buyer (buyer's legal name) has purchased an automobile (make/model/year/VIN/mileage) from you (seller's legal name) and that the sale is "AS-IS" with no guarantees or warranties. Both parties sign and date, and each gets a copy. That's all there is to it.
What if you are selling a car that you still have a loan on?
This is common circumstance that occurs very frequently. The typical situation is this. You have an outstanding loan on the car you now want to sell. Your bank or lender probably holds the title, which shows that a lien (loan) exists. How do you sell the car and pay off your loan?
The answer depends on the amount of your loan balance versus the sale value of your car. If you can sell your car for the exact amount of your loan balance, or more, you are in good shape. You use the buyer's money to pay off your loan, get a "clear" title from the bank, and sign over the title to the new owner. Simple.
It's a little more complicated when you sell your car for less than your loan balance. In this situation, you are considered to be "upside down." Since you need to fully pay off your loan to get the title to give to the new owner, and the buyer's money won't cover your entire loan balance, you must come up with extra money to pay off your loan. This can often be a very large amount of money depending on how badly you are upside down.
What's the solution?
If you have the cash, or can borrow it, that will solve the problem. Don't expect your lender to allow you to continue making payments, however, unless it's a bank who will give you a personal loan to help you pay off the balance. Otherwise, you might have to borrow from family or friends, sell some things you have, or win the lottery to raise the cash. If none of these solutions work for you, you simply cannot sell your car until you work your way out of your upside down situation.
The sales process
When you find a buyer, get his cash or cashiers check (no personal checks) and sign over your title to him. If you like, write up a "bill of sale" that is simply a handwritten or typed document that contains a description of the car, the VIN, the mileage, the buyers name, the sellers name, the date, and signatures. One copy goes to the seller and one to the buyer. It is a kind of temporary proof of ownership for the buyer until he can get the title changed to his name at his state DMV office.