A new year allows us to reclaim our roots by reminding us why we’re on a certain path. It makes us take a step back and analyze all the things we did over the past year and all the decisions we’ve made. Most of us live and work the same and relationships with family and friends haven’t altered much. So, is it time for change? What do we want to change versus what needs to change?
It all starts with the emotional question of what do we not like or don’t want anymore in our life. The most common is that almost every car owner becomes emotional at some point to feel its time for a new car. You start to realize that you went from and excited and exhilarated feeling of buying the car you wanted to be a disgusted owner of a problem that’s costing you money and time.
This feeling is brought on when you are disengaged from your car ownership responsibility; it’s easy to have your vanity take over the value you already own. As a consumer, we know how to buy a car, we understand how to sell a car, but we have no idea how to own a car.
It’s crucial that we buy based on functionality and not emotional wants. This puts you in a venerable position to buy when instead of sustaining the value at hand. Purchasing a vehicle isn’t about fulfilling self esteem or how people perceive you based on what car you own. Instead we need to buy sensibly and get comfortable to maintain your happiness.
Ask yourself, is it time for change?
What is the ultimate value of the car you purchased: transportation or looks? Think back to the day you bought it, did you really know what you were buying? You either bought it on desperation, looks or functionality. When you are looking to purchase a vehicle, do you really know what you need or are you acting as if you believe you know what you want?
Once you audit your reasoning, you will begin to understand what value you own. When you’re purchasing a vehicle, the questions are always about color choice, options and price. When that question is presented, you are automatically boxed in to choose one side of a two sided binary choice. At that very moment you have made the choice that vanity is the ultimate value. It’s very clear that newer technology targets a notably unfaithful target, CONVENIENCE…How valuable is your time??
In our automated age, its painstakingly difficult to grasp at how and what is involved in maintaining and properly owning a vehicle. And, with the rise of convenience culture, we easily can fall in love with something. However, we find it incredibly difficult to be a committed car owner.
The content I share is not to stop you from buying or selling your car if you believe it’s truly time for change, it’s to empower you to understand being a car owner is more than just buy it, insure it, gas it, get rid of it.
So let’s get down to understanding the parallels of when to let go..
There comes a time for change that you ask yourself when the best time to sell is? Before you go down that rabbit hole of desperation, let’s take a moment and audit the facts at hand. First understand that the car owners fear is in the unfamiliar, the shift in perspective comes from encountering the truth. Several factors go into the timing of when to sell a car. And they’re not all related to getting the most money from a used car buyer.
HERE ARE SOME POINTS TO CONSIDER
1) Before You Need To
It might sound a little strange, but the best time to sell your car is before you need to. You want to have the time to develop an informed decision that you’re not forced into making. You want to have time to consider all of your options without a ticking clock. What you don’t want is your decision to be driven by the fact that your car is broken down on the edge of the highway or is days away from being repossessed by your lender.
Sometimes the need for a major repair, a financing issue, or a life event forces you to sell your car at an inopportune time. The time crunch can compel you to sell when market conditions aren’t right, or your vehicle has lost substantial value. Trying to sell or trade-in a car that’s not running is a sure way to scare potential buyers away or get a bargain-basement offer.
2) When Everything Is Working, and No Major Maintenance Is Needed
A good time to sell your car is when everything is functioning properly and there are no service due lights on the dash. Put yourself in a potential buyer’s shoes. They’ll want to deduct the price of the needed repairs or maintenance from the amount you’re asking. That’s if they don’t just walk away without even making an offer.
You can look at owners’ forums online to see when cars similar to your typically experience significant failures. If you’re approaching those mileages, or just feel that something’s not right, it’s a great idea to listen to your intuition and sell the car.
3) There’s a Right Season
In general, the best time to sell a used car is in the spring and summer. That’s when most buyers and sellers are in the marketplace, and your chances of getting top-dollar are high.
On the other end of the scale are winter holidays and the colder parts of the year. During the holidays, families are busy, and budgets are tight. With Black Friday car sales and dealers striving to hit sales goals, dealer lots are typically flush with used cars. They’re unlikely to offer you top-dollar on a trade-in.
Another thing to look at is the demand for the type of car you’re selling at different times of the year and in different places. Selling a convertible in the middle of summer in Arizona would be a tough proposition. Selling a four-wheel-drive SUV could be a lot easier.
A good way to gauge market demand is to look at online advertising. If there are loads of vehicles similar to your vehicle on the local market, you might want to hold off on selling. If there are few, you’re chances of getting better offers go up.
4) When You Need a Different Kind of Car – Or Don’t Need One at All
There are plenty of reasons a car may not meet your needs. It can be too big, too small, or too expensive for your budget. If it’s not serving its original purpose, switching to a vehicle that better fits your lifestyle is a compelling reason to sell your car.
Many life events can lead us to need a different type of car. Starting a family or becoming an empty-nester are just a couple of them. Fortunately, with life events, you’ll generally have some lead time before you need to sell, so you can match your timing to when market demand is at its highest.
Keeping a car that doesn’t work for you or you’re not driving very much comes with a high price tag. No matter how much you drive, you still have to pay for upkeep, insurance, and parking. Even sitting still, a car loses value through depreciation. It’s a good habit to save all your repair and maintenance receipts to allow you to annually audit yourself. Add your receipts and divide by 12 to give you an honest perspective of what your vehicle costs you monthly. If your averaging under $200.00 a month, do you really need a new car? A payment of $400.00 or more plus higher insurance? Or do you just want it because your emotions are talking you into it?
5) Before You Default on Your Auto Loan
If you are on the verge of defaulting on a car loan and having your car repossessed, it is almost always better to sell the vehicle and pay off as much of the loan as you can. That’s true even if you owe more on your car that it is worth.
It can be the difference in having a minor ding in your credit and seeing a devastating drop in your credit score that makes it impossible to get another auto loan at a reasonable interest rate.
If the value of the car is higher than the balance of the loan, you can pocket the money and use it for your next vehicle or alternative transportation. If the balance of the loan is higher than the car’s value, you’ll still owe the bank the difference. By selling the car yourself in a private sale, rather than trading it in to a dealer or letting the bank take it back, you can minimize that difference.
Here’s what you need to understand: When you default on a loan, and your lender repossesses your car, they will likely sell it at auction and put the proceeds toward your loan. It’s unlikely your car will sell at auction for as much money as you can get with a private-party sale. In addition, the auction company will take a percentage of the sale proceeds, and the repossession agency will charge the lender a fee that is added to your balance.
6) Before You Hit Key Mileages
If you have gone through our self audit and you’ve broken down your financials and have taken control of your emotions you still see a need to sell, then remember if your vehicle is pushing the mileage milestones, it’s a good idea to sell or trade well before you hit them. Most car owners realize that once a car passes 100,000 miles, its value will drop substantially. That’s not the only mileage that causes a significant drop in value, though.
Vehicle values also plunge as they approach the end of warranty coverage, as car shoppers know that any repairs will be cash out of their pockets. Some cars have different lengths of basic and powertrain warranty coverage, so they’ll have multiple drops in value as each of those milestones approach.
Be smart and understand to research the mileage where different cars typically experience mechanical problems. You won’t get top dollar for an old car that has 80,000 miles on it if its timing belt usually fails at 70,000 miles, and you don’t have maintenance records to prove that you’ve replaced it.
Again, put yourself in a buyer’s shoes. Would you pay a ton of money knowing that the car you’re considering could have a major mechanical failure just a few thousand miles after you transfer ownership?
7) Before It’s Another Year Older
Mileage isn’t the only factor that will cause a drop in a vehicle’s value. You will get more money before a new model year arrives than after it does. Consumers simply value a car that’s a year newer over one that’s a year older.
It’s important to remember that car model years don’t match calendar years. If you’re trying to sell before your vehicle reaches another birthday, you’ll probably want to have it on the market by the end of the summer. It’s very important to know that over the first three years of car ownership, a new car will typically depreciate about 45 percent and drops to about 25 percent over the next three years. On average, a used car will lose 15 to 20 percent of its value each year over the long haul
8) When You No Longer Feel Safe
If your mechanic is telling you that your old car is no longer safe for you or your family, it’s a great time to sell it and buy something that you’ll feel more comfortable with. Advances in safety have made new vehicles significantly better prepared for collisions than older cars.
In addition to passive features, such as electronic stability control, airbags, and antilock brakes, many newer cars come with advanced driver assistance and safety technologies that can step in to prevent or reduce the severity of collisions.
If you live in a 4 season state that can have snowy climate or you have a new job that requires you to be at work no matter the weather, trading your older two-wheel-drive car for an all-wheel-drive crossover could be a safer choice.
9) When You Have Positive Equity
It’s a good rule of thumb only to sell a vehicle when it is worth more than you owe on it. While you can sell a car when you owe more than it’s worth (also called being upside-down or underwater), it’s not a good idea unless you’re facing default or repossession.
When you sell a car with positive equity, you’ll have money to put toward your next vehicle. If it’s underwater, you’ll have to dip into your savings to pay off the balance of your existing auto loan. Even if you have to make several more payments to make it into positive equity territory, the delay is worth it in the long run.
I’m sure we have all seen ads that promise to pay off your existing loan when you trade your current car in for a new one. Unfortunately, what they’re doing is rolling the amount you still owe onto your new car loan. That’s a horrible way to buy a car. Not only does it guarantee that you’ll be underwater on your new loan, but it puts you in severe financial jeopardy if your new vehicle is declared a total loss or is stolen.
And One Last Point
Make sure to consider market conditions. What kind of shape is your used car in? Is anything going on in your life that would make selling your car a good (or bad) idea. Sure, it’s easy to be emotionally attached to your car. It’s been a part of your life for many years, you mustn’t allow your feelings cloud you’re your financial judgment. Every car owner needs to take their limitations and turn them into innovations by empowering themselves with understanding of the truth. Sometimes we hear and know the truth, but we simply do not understand it!
Understand that a question opens your mind and a statement closes it. When your value is clear, your decisions are easy.