Friday, December 15

How to Sell Your Car Yourself

Dealerships just love it when you trade in your old vehicle. Why? They give you "wholesale" for it or less. Then, they sell it "retail" to another customer. Even if they sell it to an auction or wholesale broker, they still make money on it. Selling trade-in vehicles is an important profit center for most dealerships.

Why should the dealership make that extra money? Why not pocket that money yourself by "retailing" your car to an individual rather than trading it? You may particularly wish to consider selling your vehicle if it's older but nice and reliable. Many people are looking for very affordable, but reliable transportation. So you can take a vehicle that a dealer might give you just a few hundred or thousand for and make more money. Both you and your buyer can come out ahead. Of course, you can also do well selling a newer vehicle.

Here's the way to sell those wheels yourself.

Preparing to Sell Your Vehicle

  • Clean it up. Most buyers pay more attention to how a vehicle looks than to how it runs. So even if your old vehicle's engine and drive train are in great shape, you're throwing away money if the vehicle doesn't look as good as you can make it. Clean it inside and out. Take cleaner and a toothbrush to the dashboard and headliner, for instance, and outside to the grill, the exterior trim, the wheels/wheel wells. Use bug-and-tar remover. Touch up small nicks and scratches if you can do so unobtrusively. Wash, wax and buff to a shine.

    If you're too busy to clean every inch of it yourself, have the car "detailed" at a cleaning center. Experience shows that a used car that is spotless, from under the hood to the trunk, always sells for more money.

  • Fix all the minor problems. If the radio or air conditioning doesn't work because of a fuse, for example, change it. If the floor mats are really worn, get new ones. Worn belts and hoses? Change them. Have the oil changed. Consider getting a full inspection and report from your mechanic to show potential buyers; it may help you make the sale. If a buyer gets an independent inspection, it can help you negotiate with regard to the car's condition and appropriate sale price.

  • Determine an "asking" price. Search online dealer advertisements for cars like yours, and make your asking price close to theirs. If you still owe money on your vehicle, call your lender for the payoff; your asking price needs to be high enough to pay off your loan and provide a profit. (If you discover that you owe more than your vehicle is worth retail, consider not selling until you are no longer "upside down.") Most buyers expect to negotiate the price down a bit so your asking price should have some negotiation room in it, unless you are willing to say your price is "firm" and stick to that.

  • Determine your vehicle's true wholesale value. Wholesale value is the amount a dealer would give you for your old car if you traded it. There's only one way to tell exactly what your car is worth in your local market: After you've cleaned the car up, drive it to three or four used car operations at new car dealerships or stand-alones and tell them you are thinking of selling your car outright. Ask them to put a "buying" figure on your car. The highest offer you get is your car's "wholesale" value.

    If you don't have the time or desire to do this, then you can get an average price using an online pricing guide such as Kelley Blue Book (kbb.com) NADA Guides (nadaguides.com) or Edmunds.com, but remember these are only "average" wholesale prices and don't necessarily accurately reflect the true value of your particular vehicle in your specific market at a specific time. You will get the most accurate picture, however, if you accurately fill in the requested details about your vehicle's condition, mileage, etc. Many owners may think their cherished wheels are in “excellent” condition—in reality, only a very few vehicles fit this category. So be honest for the best result from using an online estimator.

    Again, if you still owe money on your auto loan, call your lender and get the payoff. Do you owe more on your vehicle than it is worth wholesale? If so, then the minimum price you accept must cover your loan payoff and the profit you desire.

  • Determine the minimum profit you want to get if you sell it yourself. That profit probably should be at least $500 more than your old car's wholesale value. (If you're making less than $500 for trying to sell it yourself, it may not be worth the effort unless you owe more on your loan than the vehicle's wholesale value. You decide).

  • Write a very short advertisement: Phrases like "One owner," "very well-maintained" are what work. Use online car ads that catch your attention to help you write it. And always include the phrase "no trade." Don't forget your contact information. Photos in online ads help attract potential buyers.

  • Place an ad. Almost all ads are posted online these day. Two big sites are autotrader.com and cars.com, but there are other smaller sites including online classifieds of local papers. The most effective listings on such sites typically cost a modest fee. Whatever the site, be sure you check out its privacy policy.

    What about a free site like Craigslist? Such ads can work well but you must guard even more carefully against fraudulent approaches. Some people have good success selling to a wider market using eBay Motors, which for a fee offers some tools for helping individuals make out-of-state or nonlocal sales more easily and potentially more safely. However, you still need to guard against fraud. A popular scam is spoofing an eBay “official” or site after you post an ad to try to steal money and personal information.

    Our FoolProof recommendation: Sell locally—within driving distance—so that you can meet the buyer in person. Accept only cash or certified checks.

    Other advertising opportunities: Don't forget to use Facebook, Twitter, and the like to let your social network know you have a vehicle for sale. Posting a print ad on work and community bulletin boards can also be effective.

  • Get ready to sell. Gather together your vehicle's records. If you have the service records, that can be a real selling point. You may want to purchase a vehicle history report (such as those offered by Carfax.com or AutoCheck.com) to show that the vehicle has not been in an accident, etc.

    Get a bill of sale ready. Click here for a sample bill of sale. Go ahead and fill in the make, model, year, and VIN number of the vehicle and your information. (Even if you have the title, FoolProof recommends also using a simple bill of sale for extra clarity and protection in the transaction.) Also check with your state's Department of Motor Vehicles to see if they have specific forms or steps for use in the transfer. Most states have such information online.

    Locate the title, if the car is paid for. If you still owe money on your auto loan, the lender has the title; you can't get it until you pay off the note. Call the lender and get the payoff, tell them you are planning to sell the car yourself and ask where and how you can most conveniently pay off the loan and how quickly they can give you the title.

Showing the Car

If you have a desirable vehicle, have determined competitive asking price, and have written a good ad, you're ready to field inquiries from potential customers.

  • Screen potential buyers first. When people inquire about the car, take time for a little preliminary phone conversation if possible. Don't depend just on emails or texts. On the phone, you can both encourage prospects who seem a possible match for your vehicle and discourage those that sound like they are wasting your time or for some reason send up a red flag.

  • Arrange for the potential buyer to see the vehicle. Most serious customers will want to see the car. Make an appointment for the buyer to come to you at a public place such as a local coffee shop or parking lot, rather than your home. We also recommend that you have someone else with you when you receive the potential buyer.

    Be prepared to present the vehicle's good points. If it gets great mileage, say so. If you changed the oil religiously and performed all the maintenance recommended by the manufacturer, say so. If there's an "up side" to apparent detractions (like high miles), share that. For example, If the vehicle has high mileage, but they were mostly highway miles, highway miles cause less wear and tear on the engine than stop-and-go town driving. Be prepared to answer questions about the vehicle's condition honestly. If you have an inspection report from your mechanic, show it to the prospect to support your description of the vehicle.

  • Take a test drive. Don't let strangers drive your car without you or your representative with them. It's a good idea to let someone know where you are going and with whom. And check the prospect's driver's license and insurance before you let them drive at all. Write down the license number and the prospect's name and address and keep this information until the sales transaction is complete, then delete or destroy it. If they don't wish to show their license, stop the transaction right then—such unwillingness is a major red flag.

  • Together, set up a professional vehicle inspection if requested. Smart buyers will wish to have the vehicle checked out independently by a mechanic. Although the buyer should arrange and pay for this service, you should drive the vehicle to the diagnostic service. However, it doesn't hurt to have handy the name of a nearby good mechanic or a mobile diagnostic service (they come to the car and check it thoroughly).

Negotiating the Sale

When a potential buyer is ready to make an offer on your vehicle, prepare to negotiate. In fact, the shopper may have been throwing out hints or asking questions about price and your willingness to dicker or come down while they look at and test drive the car. In the FoolProof Car Buying Guide, we show you as a buyer how to take control of the bargaining. Smart shoppers for your vehicle will try to do that, too. But you are now the seller. You want to keep control of the negotiations, too. That's why it's important that you know the value of your vehicle, your payoff (if any), the minimum price you will take, and the profit you want to make.

  • Most used vehicle buyers these days have access to online pricing guides. Expect them to have checked the average wholesale and retail values of the vehicle you are selling. Some guides also give estimates of what buyers ought to pay if they are buying directly from a private owner, not a dealership. A smart buyer will typically open with an offer that's well below your asking price and probably below what you want for the car.

  • You should be prepared to give a little (unless your price is "firm"). But don't respond to their low offer by adding a figure to it. Instead, counter their offer by naming a discount from your "asking price." Here's how the conversation might go if you've got an asking price of $11,000 on that family sedan you're selling but you'd be real happy with $9800 and would go to $9500.

    • Buyer: I'd like the car if you could come down to $8300. I think that's fair value for this car and it's condition. (Buyer is about $300 under the wholesale $8600 a local dealer offered you when you shopped its value).

    • You (with a friendly laugh): I'm glad you're interested but my price of $11,000 is fair. The car's in terrific mechanical shape and looks great. But I can come down a little, let's say $10,700.

    • Buyer: Yeah, it is in good shape, but it's got high miles. I wouldn't want to go that high. What's the lowest price you'll take?

    • You (dodging this loaded question): What did you have in mind? (Don't give away your bargaining power. Put the ball back in their court.)

    • Buyer: Well, I've checked out the prices of these models pretty thoroughly, don't you know, and something in the range of $8800- 9000 might be close.

    • You: If you've shopped around then, you know that local dealers are asking around $11,300 to $11,600 for these models or similar vehicles. So coming off my price to $10,700 is fair. Of course, I want both you and me to come out ahead in the deal. We'd need to be closer than $9000, however-more in the range of $10,200.

  • Continue negotiating until the buyer offers an acceptable figure. If you do hit your pre-determined lowest acceptable figure and the buyer does not agree, then stand firm. Just tell them they'll have to look elsewhere, that you really can't sell for lower than that. And let them walk. If the buyer really wants the vehicle, they may call you back and meet your price—that happens more often than you might expect.

FoolProof Warning: Particularly when selling your vehicle online (though it can happen in face-to-face sales), you must stay alert for fraudsters. If someone agrees instantly to your asking price, then says they want to send you a certified check or money order for more than the price (an overpayment) and have you send them the balance, say "no sale." This variation on the "Nigerian Scam" has spread widely. In another variation, they may ask for your checking account number so they can "wire the money" to you. Instead, they will steal your money and possibly your identity. Your best protection: If any one wants you—the seller—to give them—the buyer—money or your personal financial information, don't do it. Also if you are considering using an escrow service, check the service out thoroughly, do not automatically accept the one proposed by the buyer. Unfortunately escrow scams abound, too.

Closing the Sale and Transferring Ownership

When you agree on a sale price, take the following steps to seal the deal and transfer ownership of the vehicle.

  • Let the buyer know, if you haven't already, that you can accept only cash or a certified check in payment. Don't take personal checks. Accept only cash or a certified check. If you accept a certified check, insist that the check be drawn on a bank with a local branch and accept it only during banking hours. If the buyer can't or won't meet these terms, don't sell your car. (If your buyer is going to pay a large sum in cash, you might wish to conclude the sale in the office of your financial institution, so you can deposit it immediately. Of course, don't show your personal information to the buyer.)

  • Make out two copies of a bill of sale that identifies the vehicle (make, model, year, VIN#), sale price, and buyer and seller (with addresses/phone numbers). You will also eventually transfer the title to the buyer, but not until you have your money and, if you have a loan, have paid it off and received the title from your lender.

  • Make an appointment with the buyer to receive payment, complete the title transfer, fill in any other forms your state requires (such as a smog statement) and turn over the vehicle.

  • If the buyer pays by certified check, when you receive it, call the issuing bank and verify the check before turning over your car. If the check is good, fill out the title to complete the transfer.

  • If you must pay off your auto loan before you can receive the title and transfer it to the buyer, you may be able to complete the sales transaction with the buyer at your lender's office. If not (perhaps your lender is out-of-state), then you and the buyer can go to the Department of Motor Vehicles which will issue the buyer a temporary permit to operate the car. Make arrangements with the buyer to complete the title transfer when you've received it; the buyer will need it to properly register the car in his/her name.

  • Handle the transfer or removal of your tags/registration in accord with your state's laws. After the sale is complete, discontinue the insurance on the car you no longer own. (Of course, you have your new wheels insured, right?)

Is All This Work Worth It?

You decide: on average, fifty percent of the people who try to sell their car themselves succeed, and those usually make at least a thousand dollars more than if they had traded it. How hard do you work to earn a thousand these days?

Personally, I've always enjoyed the transaction. My favorite happened many years ago when I owned a noble set of wheels named, Catfish, a mud-brown American Motors Gremlin. (I said this was many years ago!) I had purchased Catfish used when I unexpectedly needed some nonfancy, reliable transport for a little while. If I had traded Catfish in, a dealer would have paid me $100 if I was lucky. So I advertised Catfish myself. A nice lady who needed reliable—if somewhat funky looking—transport was delighted to get the noble Catfish for about a hundred or so more than I paid for it. Moral of my story: It doesn't hurt to try selling your car yourself and you too might wind up with a great "fish tale."

FoolProof Education

FoolProof Education is a highly interactive, self-grading group of online lessons called "Modules." The Modules teach consumers of all ages about money, financial responsibility and the realities of the free enterprise system.

High School, College & Home School Curriculum

Closely aligned to the Common Core standards and state personal financial literacy requirements.

Educate Yourself, a Friend or Family Member

Choose from a wide variety of topics. Start and stop and continue at anytime.