YOU Magazine - September 2008 - Dump that Car Getting Rid of a Vehicle You No Longer Want
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Kathleen Petty     Kathleen Petty
AVP/Sr Mortgage Originator
Alaska USA Mortgage AK#157293
Phone: (907)261-3458 Cell: 223-4440
Fax: (907)929-6699
License: NMLS Unique Identifier #203077
Alaska USA Mortgage AK#157293
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Dump that Car
Getting Rid of a Vehicle You No Longer Want

Dump that Car - Getting Rid of a Vehicle You No Longer Want

Getting rid of a vehicle isn't always as easy as it seems. Problems can include everything from being locked in to an ironclad car lease to the inability to sell it for a fair price. Throw in any of the reasons for wanting to dump the car in the first place and what you have is a recipe for a potentially long and frustrating process. Follow along as we explore a few of the options, including some you may not have realized.

Getting out of a car lease
Car leases can pose many advantages for consumers. Typically speaking, lease payments are much lower than payments on a car note, thus allowing a consumer to lease a vehicle that he or she couldn't afford to actually buy. Many people also like the idea of avoiding major repairs by handing back their car after a predetermined amount of years.

While the list of positives doesn't stop there, car leases also carry a few negatives. One such negative is known as a "No Cooling Off" period. Once you sign the paperwork and drive the car off the lot, you have officially entered into a binding contract. There are some consumer laws that allow for a remorse period on major purchases, but automobiles are generally not included. Unless your dealership has broken the law or has leased you a lemon, chances are you are stuck with the terms of your car lease.

So, let's say that shortly after signing on the dotted line for that high-end luxury car, your financial situation changes for the worse and you can no longer afford it. Or, the opposite happens and you find yourself longing for an upgrade. One option is something known as an "early termination" of the lease. The problem with early termination, however, is that it can be costly, very costly. Aside from paying off the amount owed on the lease, there can also be penalty fees and other miscellaneous charges padded into the contract.

Another option is to sell your leased car privately. The problems with this option are that it requires a lot of hard work on your part and it only benefits consumers with cars that have an equal or greater value than their current "buy out" price.

There is one more option for getting out of your car lease and it happens to be the best one for most people. It is something known as a "lease transfer" and the process is just as it sounds. A leaseholder finds someone who is not only credit-worthy, but also willing to assume his or her car lease. Once the terms are negotiated and ratified the remainder of the lease is transferred into the new leaseholder's name.

If a lease transfer sounds like a complicated process, it's because it can be. The good news, however, is that thanks to websites like and the lease transfer process has been fully explained and streamlined. These companies basically act as middlemen between the buyer and the seller, providing a forum for listings, as well as hands-on help with expediting the process.

It is important to know that the aforementioned websites as well as most car leasing companies will charge a fee for a car lease transfer. However, assumption of these fees can be negotiated between the buyer and the seller. They are also much less costly than the fees associated with terminating your lease early.

Whatever you do, avoid relinquishing the car to the dealer and abandoning the lease altogether. Doing so will most likely show up as a repossession on your credit report.

Selling a car that you have purchased
If you've purchased a car you either own it outright, or you are making payments to a lender. No matter the situation, you may have reasons for selling your car similar to those for wanting to get out of a lease. If this is your desire you have several options.

The first is to sell your car privately. This option is many times the one that yields the greatest financial return. You should note, however, that it also requires the utmost diligence on the part of the seller. Proper pricing and marketing of the car is completely up to you. The same also applies to the transferring of the title. If this is the route you decide to take, be sure to check the laws and procedures for selling a car in the state where you live.

Your next option in this situation is to trade the car in to a dealer as part of payment for a new vehicle, provided that your goal is to obtain another vehicle. While this will most likely be the easiest method for "selling" your car, there's a good chance it will not be very lucrative.

Trade-in values for any car are usually on the low side of its worth. At the same time, car dealers also like to mix the trade-in price into the negotiations for your new car. This procedure can make it difficult to figure out the actual amount of money you're getting for the vehicle. We recommend that you always negotiate the price of your trade-in separately from the negotiation for your purchase.

Another option for selling your car comes in the form a company known as CarMax. Operating in the manner of a car dealership, CarMax buys and sells used cars to the public. The main difference is that with both transactions there is no haggling over the price.

When you bring your car into a CarMax looking to sell it, the process starts with a complete vehicle inspection as well as a test drive performed by the company's buyers. At that point you are made an offer that is valid for seven days at any CarMax store, allowing you the opportunity to think it over while exploring other options. An added perk here is that CarMax guarantees to make an offer on your car even if you have no plans to purchase a car from them.

If you decide to sell your car to the company, bring your car along with the CarMax offer, any other paperwork concerning the vehicle, and all sets of keys into any CarMax dealer. They take care of the rest. If a payoff is involved, CarMax contacts the finance company and then issues a bank draft for the difference. If there is negative equity in the car you're selling, CarMax will accept a cashier's check or certified check from you and then pay off the lender.

Selling your car to CarMax may not bring you as big of a return as selling it privately, but when you consider the speed and ease of the transaction it quickly becomes a very good deal. By logging on to you can find out more about the company and what they offer, as well as if they have a storefront near you.

Donating your car to charity
This has become a very popular practice within the last decade. Instead of selling your car for money you donate the vehicle to a charity in exchange for a deduction on your taxes. For older vehicles in need of repair, it can many times be a better option with much less hassle. It also has the potential to benefit those in need. The problem, however, is that all charities are not created equally. The following are some of the pitfalls as well as tips for staying clear of them.

1. Make sure the charity accepts vehicle donations directly
Many charities utilize companies that act as middlemen in the process. In these situations, the companies keep a percentage of the donation as payment for their role. Sometimes their cut is quite high, so do your homework before deciding on a charity.

2. Drive your car to the charity as opposed to having them pick it up
Hiring a service or a tow truck to claim the donation will cut into the amount of money your charity ultimately receives.

3. Make sure your charity has 501(c)(3) status
If your intended charity doesn't have this type of status, your donation will most likely not be tax deductible.

4. Understand how your deduction is valued
According to new tax laws meant to keep people from inflating the monetary amount of their contribution, your deduction is based on the price the car is sold for by the charity.

5. Sign over your car to the charity
If a charity asks you to not assign ownership you should go elsewhere. The problem is that if you do not transfer the title, the car is legally still yours. Think about the liability issue this presents.

6. Get a receipt after the car is sold
It's a worthy point that requires no explanation.

7. Consult your accountant first
You should initially consult your accountant for the purpose of determining if this is a good option for you. If you proceed with the donation he or she can also be of help regarding what to do if the charity decides to keep your car for its own use, or sells it at a discounted price. And don't forget: for any car that is sold for over $500 there is an extra form that needs to accompany your yearly taxes.

We hope we've shed a little light on the options available to you. Think about which one suits you best and good luck dumping that car.

License AK# 157293 Washington Consumer Loan Company license# CL-157293 California Residential Mortgage Lending Act, License# 4131067

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