“Good luck, man. Nobody is buying used cars right now. You should’ve sold it six months ago before COVID happened.”
This is what one of my friends said to me recently. 😔 And at the time I kind of agreed. With most people working from home and limiting their travels, I thought we’d have a really difficult time getting rid of our second car.
Luckily, it turned out easier than we thought! Just last Saturday we sold my wife’s 2013 KIA Soul. Woohoo!
We got a great price – $7,700 (well, we feel great about it) after only 4 days advertising it online. It was a win/win deal for both us and the nice couple who bought it.
My friend was right about one thing though … We should have sold it six months ago. Actually, we should have sold it two years ago, the very moment we realized we could get by fine with 1 motor vehicle.
The cost of an unused car …
I ran the numbers recently and it’s quite shocking to see what this little Kia was costing us just sitting there without any use:
- CA Vehicle registration fees: $154/y
- Car Insurance: $475/y
- Annual parking permit: $34/y
- Depreciation: $1248 this year**
Total: $1,911 for the year … or $159 per month!
Keep in mind, this is without even driving it. Driving costs for gas/maintenance would have added up to even more! Cars are the worst.
I’m a bit embarrassed to be sharing all this. I sit and type personal finance articles all day, and have been knowingly leaking $159 a month out of my wallet! There’s no excuse. I guess the reason we kept the car for so long was because it was fully paid for (a sunken cost fallacy), and also a combination of laziness and falsely perceived convenience.
What’s even worse, there’s a big missed opportunity cost. For every $1 of negative equity sitting in a depreciating car, that’s $1 of equity that’s not helping build wealth for our future!
Oh well. If the best time to sell our car was 2 years ago, the next best time is right now!
**I used this car depreciation calculator to learn what average depreciation would look like for a 2013 car, worth about $8k over a 5 year holding period.
Such a cool calculator! But also very depressing to learn how fast your car depreciates. It’s much worse for expensive cars :(
Selling a car online
I’ve only sold a few cars online in my life. Each time I learn something new and get a little bit better about the process. My first step was to do a bunch of online research to find out the best approximate car value. Since our KIA had low mileage for its year (only 43k miles – not bad for a 2013 model), I knew we had a better chance of selling than similar cars this age.
I looked at Kelley Blue Book value first, and they estimated the car’s fair market value range for private sale: $6,673 – $8,190.
Then, I cross checked these numbers with Facebook Marketplace, Autotrader, and Craigslist. 2013 Kia Souls were advertised anywhere between $3000 for a crappy junk car all the way up to $9000 for dealership prices.
All in all, my wife and I decided we would list it for $8,500 and see what happens. We could always drop the asking price later if needed.
BTW did you know Kelley Blue Book does instant CASH Offers now?
I found this pretty interesting … KBB now teams up with local dealerships to offer cash for used cars. Unlike a trade-in, you don’t need to buy another vehicle at the dealership to get this cash price.
After filling out a detailed form on the site, we were emailed an instant cash offer cash of $5,662. I could take this to a participating car dealership and get rid of it immediately.
This was actually pretty tempting. The thought of taking it into a car dealer and that afternoon walking out with cash was really exciting. But, knowing we could probably make a few thousand extra for just a tiny bit more effort, we decided to do the hard work and sell it to a private buyer.
Photos, photos, photos!
Before pulling out the camera, I went and got the car fully washed, waxed, and smelling like new. This cost me $69.95 at the local car wash – seems their prices have dropped a lot due to nobody driving much these days!
Next, I drove over to a nearby parking lot and snapped photos with my iPhone. From everything I read online about selling cars, it all comes down to the photos! If you show quality photos, you attract quality buyers. (Remember to cover your license plate in any photos!)
One other strong recommendation I heard was to take a photo of the keys, original manuals, vehicle history report, title and all repair paperwork. (check out the pic below) This might seem like a useless photo to take, but showing an interested car buyer that you keep records neat and tidy goes a long way! It also makes you stand out against the other ads out there!
Did you know Craigslist charges you $5 to post Autos for sale now? When did that start!? I guess it’s in an effort to minimize the amount of fraudulent ads and users… But, it didn’t stop me getting a lot of scammer responses. About 5 minutes after I posted online, I started getting emails from people with lowball offers or asking for the VIN number without explanation.
Then finally, after 2 days we were contacted by interested buyers who wanted to check out the car.
COVID, Cleanliness, & Craigslist
Probably the thing I was most nervous about was letting strangers touch and drive the car. My wife and I agreed to meet the potential buyer, but if we got weird feelings at any point we would just politely excuse ourselves. We brought disinfectant wipes and a bunch of hand sanitizer to the meet-up.
After greeting them and having a 5-10 minute chat (social-distanced of course), they sounded legitimately interested. They took the car for a quick test drive, and offered us $7,700 cash as soon as they returned. My wife and I were happy with this, so we accepted right away. Done deal.
As much as I wanted to rub the 77 hundred dollar bills all over my face, I refrained. We washed our hands and disinfected everything when we got home. :)
Why are people buying cars right now?
This whole process was shockingly easy. I had just assumed nobody would be buying cars right now. But there ARE people out there looking for used cars …
The couple we sold the KIA to moved to LA from New York a few years back. They’ve lived without a car for the past few years – they work close to home and have been able to Uber almost everywhere they need to go.
But now with COVID, they don’t feel comfortable using Uber or public transportation. Since they are both working from home and cramped in a small apartment, they wanted a small used car simply for weekend use. They want to drive up the Pacific Coast Highway and visit the northern remote beaches. Camping, hiking, and just being outdoors and enjoying Southern California.
The guy who bought it admitted he knows he’s going to lose money owning a car. But I guess it’s better than losing your mind stuck at your house all year?
- Wifey and I sold our spare car on craigslist for $7,700.
- Should have done this years ago, we are idiots.
- Was costing us $159 to keep in the garage – cars are a money pit!
- KBB has instant offers now (they seem low), and craigslist isn’t free anymore, they charge $5 to list a motor vehicle now :(
- If you’re selling a car online, include a nice photo of the keys/manuals/paperwork. Good photos attract good buyers!
- People ARE still buying used cars apparently, regardless of pandemic hot spots.
Next up, just gotta visit the bank and transfer this $$ to our brokerage account! VTI all the way :) Feels good to check another 2020 goal off the list and turn a depreciating asset into an appreciating one!
What about you? Are you driving less and/or Uber-ing less? Thinking about getting rid of your car?
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I do need to go to the office a few days a week, and on my commute I keep seeing the paper temporary license plates my state does. People -are- buying cars! I’ve seen / heard ads on YouTube and Pandora with dealers touting info on safe test drives etc.
My insurance company gave everyone a small refund or discount for April and May knowing we were all driving less. Refund was if you pay in advance and discount was for those paying monthly.
I’m glad you had a positive experience and it sold quickly.
Great tip on insurance! For me I got a bigger discount switching companies (back to Geico now) and paying upfront gave us an even lower rate. I haven’t heard an increase in the car ads, but that might because I’ve subconsciously tuned them out all these years. Selective hearing :)
What I’ve always done is buy used cars 1 or 2 years old from a dealer I trust. Then I take care of the car really well and drive it until 180 or 200,000 miles and then just dump it for the next one. So I don’t have much experience in private party transactions. I’m always interested in the financial logistics. When you sold the Kia did you accept payment in cash? Like $20 bills? Or did they pay with a check? How do you know the check isn’t a fake?
This past fall I bought a used car from my brother as our oldest started driving and I wanted to add a vehicle to the family fleet. But he still had it financed. So he couldn’t give me the title when I took it off his hands. I gave him a check. He deposited the check in his bank. Then he paid off the car loan. Then they mailed him the title. Then he mailed me the title. THEN I could get the car title transferred into my name and get the registration and license plates done. No worries since I was dealing with family. But if we were strangers, my check to him could’ve bounced. Then he’d have no payment and no car. Or I could’ve turned over payment and left with a (stolen?) car but never heard from the stranger so never get the title.
Obviously, I’m overthinking. But curious as the best procedure for a private party transaction.
Cheers JR! – Love it that you pick up cars after someone else has suffered the first 1-2 years new car depreciation :)
In this sale, I took 77 x $100 bills. They seemed real, and went based on trust. I took a photo of the guy’s Drivers License, and we actually did the transaction at their house (address matched also). I prefer cash because it’s instant, I would never accept a personal check.
On another note, some banks give you hassle for depositing more than $10k at the teller. Since this transaction was under $10k I felt good about it all.
When I bought my Prius, the girl we got it from wouldn’t accept cash. So we went to the bank together and they helped write her a cashiers check. Relatively easy process I thought.
Wow! Great article!!
In response to J.R. you do have to be careful about fake checks. I know a lot of friends that know folks who have been burnt by that. My advice is to get cash. I sold my hold Honda Civic for cash via Craiglist. Guy and his gal met me and I got $ 5,200 in $ 100 bills. I also heard that CarLotz is a good place to sell as they take care of selling for you.
Overall, I think the article nails it!! Even if you have keep a second car there is NO REASON to buy something new or near new. My wife drives an 8 year old minivan and I drive a 17 year old Accord. My Accord has been paid off for 13 years and still runs great. Why do we need two cars that are new or near new?
Cheers – thank you! If we ever go back to a 2 car household we will definitely get an older-ish car. I’d love a mini-van actually. You have the best of both worlds with a sedan and a van.
omg cars ARE a money pit. It’s crazy!
And nice work with the photos–I’ve ALWAYS thought that is such a high-ROI activity for selling cars (AND houses of course. Folks w/ crummy pictures on Zillow crack me up.)
Hey Pete – hope all is well mate! It’d be fun to run an experiment, selling 2 identical vehicles, one ad with great photos and the ad other with average photos. See exactly how much $$ more the good photos sell for. My guess is good photos get you over $1,000 more in the end. Tiny activity, massive rewards.
Great article Joel!
But check this out — “For vehicles driven 15,000 miles a year, average car ownership costs were $8,469 a year, or about $706 a month, in 2017, according to AAA.” So at just under $2,000 a year, you were doing great — even though it probably didn’t feel like it. We have two paid for cars that are both over 10 years old and plan to keep those as long as possible.
Keep up the great work.
You’re right Jason – we were losing less than average. (still doesn’t feel great, haha). But the decision to sell was purely due to the fact that we don’t use the second car. So even if it was only costing us $1 per month, it would still be a waste. :) Great to hear you’ll be keeping your 2 cars as long as possible. We’ll be doing the same with our Prius… driving it until the bitter end!
People are buying cars, or at least I just bought a used one from Vroom, totally sight unseen over the internet. They really do drive up to your house and unload your car! Well, because I live on a narrow rural road they asked me to meet them at the local Walmart so the cars wouldn’t risk getting scratched by tree limbs in my neighborhood. The car was in perfect condition and I saved about $8,000 based on my shopping around. Now I’m selling the older car this one is replacing. It is only about a $5,000 car and I’m not getting much interest so far, but I’m in no hurry. When I do sell it I’ll only accept cash.
Nice savings! I’m loving some of these new online companies that are helping people save money. Will be interesting to see how quickly you sell your old one – and yes, I agree that cash is a good idea for a ~$5k sale :) Best of luck!
How did you handle the money transaction? Cashiers check? Cash? How to verify authenticity of either? Thanks!
I took cash. 77 x $100 bills. I counted it, they already had it in $1000 groups with rubber bands. I just eye-balled the bills, they were all different and worn a little. At the end of the day I think it came down to trust.
For checks, I would never accept a personal check (there’s no verification the person has the funds in their account – it could bounce). Cashiers checks are the way to go – and if possible, you can always go the bank WITH the buyer and watch them get the check from the bank teller. You know it’s authentic if it’s done right infront of you!
I have bought and sold many cars online. Here in non-rural Colorado counties any car over 7 years old requires emissions passed ($25) and the certificate supplied by non auto dealer sellers. A big selling point to list in the ad is that it has passed emissions. With most emission test stations closed due to COVID-19 the ones that are open are mega hour queue events if you can even get one before they close for the day. The certificates are only valid for 60 days so a slow selling car could make a seller have to do it all over again. Otherwise your experience is what I have had in the past. I do have an older car I would like to sell but I will have to wait until it becomes easier to pull off.
This is such a great point! That is a major PRO to list when selling a vehicle in certain areas. California has a bunch of weird SMOG rules too! I didn’t realize those places are in short supply right now, but it totally makes sense. Just looked it up, CA rule is vehicles over 8 years old. So looks like I dodged this rule by 1 year (Kia was a 2013 model). Cheers Tommy – have an awesome weekend!
I don’t personally have a ton of experience buying cars. I paid cash for the only two cars that I have ever owned, and they were each 10yrs old. I plan on driving my ’99 into the ground, and the hassle around buying them is a big motivation for me. That being said, I work with a company that is quite entwined with the auto industry, and used cars are expected to continue to be in demand. They were prior to Covid, but when Covid did hit people became weary of taking public transportation in larger and mid-sized cities. Then a lot of people started working from home, which would make you think that they wouldn’t be as interested. However, all the auto manufacturers also shut production down and had a rough time starting back up with their staff getting sick and also needing to rely on their suppliers to be open and producing without their staff getting very sick. Many of those Tier 1 and 2 suppliers are smaller operations often with older employees. I worked with a few in a past job up in the mountains of NC that would produce the carpet liners for certain SUVs, and I can’t imagine them being able to get up and running at full capacity that fast. 2020 models will be in short supply, and I’m sure there will be a lag in 2021 models both because Covid is still an issue and retooling for new models takes time, so that really just leaves used cars as most of the game in town. Even the car rental companies that are going out of business and putting up their supplies in car auctions have been getting decent prices if memory serves me. It doesn’t seem like there are many deals to be had during this recession since supplies are so constrained in so many categories (housing, pressure treated lumber, home office furniture, construction contractor labor, appliances, stocks, etc). Maybe you could get clothes at a discount, but we don’t need as many anymore. [Side note: I have one colleague who may not be able to get an occupational license on the new home she is custom building because all the stores are months behind on being able to get appliances in stock! No appliance, no allowed to move in!]
Hey J. Wow yes I can see how used cars are coming into more demand. I guess it’s a good thing that a shortage on new cars will mean more people buying used (and saving $)… But it’s a bad thing that there’s now probably a premium on used cars. Either way I’d prefer paying a premium for a used car than buying a new car and taking the immediate depreciation.
Its crazy to watch the ripple effects from covid shut downs in every industry.
Can your friend get some cheap second hand appliances, just to get her license, then swap them out later when supplies are back? Just thinking of a possible workaround if they need to move in asap.
That is exactly what I suggested. lol We will see how well that works. I know they are hoping not to have to do that if possible given that they are building their home an hour and a half away from our current city. The logistics become hard, but something is better than nothing. :-)
great minds think alike :)
I wanted to pick up a good used Jeep and have seen them selling for close to original purchase price for 5 year old models with 100k mikes in them. It’s borderline ludicrous. I was told it’s due to the virus.
I used to own an old and rusty ’92 Wrangler. I bet it’s worth more now than what I bought it for 10 years ago!
Somebody who works at a dealership told friends who were selling a used car that dealers are low on used car inventory so they’re paying more these days. However, we ended up buying that friends’ used car so we posted our 2013 used Escape on Facebook marketplace. Within minutes of posting, we got an endless stream of messages. We haven’t sold it yet (we just posted yesterday) but we’re pretty sure we’ll have it sold today or tomorrow.
Awesome! Good luck selling it. We had the opposite experience with FB marketplace. We posted the KIA up there too but only got 2 people view the ad in 4 days. I guess people are loving Ford Escapes right now? haha
Car dealerships are the worst! Moreso for buying but yeah they’re going to lowball you with that KBB offer. It’s a convenience but there’s a very steep price on that convenience. Craigslist/Facebook Marketplace seem like the way to go.
It’s crazy what people pay for convenience. And I’ll admit I was very tempted to take the easy option! So glad I came to my senses and put the work in properly.