What I Did With My Old Car After Buying a New One
My wife and I recently purchased our first new car together, a sexy 2007 Honda Odyssey with 43,000 miles on it. We went through a pretty intensive search process before deciding upon this particular car, and I wrote all about our decision-making process in the hopes that it would help you buy a car for yourself when it came time.
One thing I haven’t talked about yet is what I did with my old car that we were replacing. There are a few different options, each with different pros and cons. So today I’d like to go through the different options I considered and explain the rationale behind my final decision.
Evaluating the car’s condition
My old car was a 1998 Honda Civic with just over 142,000 miles. It also needed a new alternator, and until it had one I literally couldn’t even turn it on. The air conditioning was also broken, and there were several other little things that weren’t working properly, like the lock on the front hood. In short, it wasn’t in very good shape.
According to Kelly Blue Book, my car would be worth about $1,600 in a private sale if it was in “fair” condition. My interpretation was that I would need to replace the alternator to get it to even be “fair” (i.e. driveable). I called a few mechanics to get a quote on that kind of job, and it came in around $500. So my net profit on a sale after repairs, if all else went well, could be somewhere around $1,100.
Option #1: Trade-in
When you buy a car from a dealer, you have the option of trading your old car in to them so that they can then try to sell it as part of their used fleet. The price on the trade-in will offset some of the cost of the car you’re purchasing.
In my car-buying series, I explained all the details about how we negotiated with the dealers though email. As a part of those email exchanges, I would ask the salesman to quote me a price for a trade-in of my old car as well. The best offer I got was $500 and the worst offer I got was a refusal to take it because it wasn’t currently functional.
With a more functional car, I’m sure there would have been some room to negotiate the price here. But given that I couldn’t even drive it to the lot, I didn’t feel incredibly optimistic about my chances of getting a better offer.
Option #2: Private sale
A private sale is simply a direct sale to another person, without going through a dealer. An example would be selling your car on Craigslist.
This was the most appealing route in terms of securing maximum profit. Comparable Honda Civics without the defects mine had were listing for $2,000-3,000 on Craigslist. I didn’t think I could get that much, but it made me hopeful I could get close to the $1,600 value from above.
My worry here was with liability. My car has been slowly breaking down over the years and I was worried that something would go really wrong right after selling it, and in a worst-case scenario that someone could be hurt. It was unlikely, and even more unlikely that I would be found liable in such a situation, but it was a risk.
Option #3: Salvage
My final option was selling the car to a salvage company for parts. My brother had just done this with his car and received $500. Same as what I could have gotten from the dealers. And they would come to my house and tow it away for me, which was nice because I couldn’t turn it on and all. Easy money with pretty much no work required from my end.
The final decision
In the end, I decided to sell it for parts. Deciding not to trade it in was easy, since I could get just as much for salvage with less work. My decision not to really even try for a private sale came down to two things:
- I would have had to put more money into it first to replace the alternator, and that was pretty unappealing. I was DONE sinking money into that thing.
- I didn’t want to deal with the potential liability. Sure the chances were small, but I was realistically looking at making maybe $500 extra from a private sale than salvage. Was that worth the extra worry? To me it wasn’t.
So there you go. I passed up the potential for a little more money in exchange for peace of mind and security. This line of thinking is almost exactly the same as why I’m one of the most heavily-insured people I know. I will happily pay a little extra in the short-term to know that I won’t meet financial ruin in the long-term.
What would you have done in my situation? Would you have tried for the bigger profit?
Photo courtesy of Grey World
I would have done the same thing, and I plan on doing the same thing whenever my car dies (which could be in the near future as I have 215k miles on it).
Wow, now that’s impressive! I’d love to get there with our new car.
I think it’s awesome that you are heavily insured car insurance wise. After working as an insurance agent for more than a year I can tell you that you absolutely need to have high liability limits on your car insurance. 100-300-100 or more. It amazes me the number of people who want state minimum insurance which is a measly 12.5-25-12.5 in Ohio. Those limits are not going to cover a typical car crash. I’ve seen too many people have their insurance limits exhausted. It’s a pretty scary fact.
We’ve got 250/500 for liability. That’s by far the most valuable part of car insurance and unfortunately it’s the part that most people skimp on. The common perception is that the main insurance is for your car, and that couldn’t be further from the truth. I’d much rather self-insure the car as much as possible and just take the liability.
Another option on getting rid of a used car is to donate it to charity. Many organizations are in need of quality used vehicles.
Very good call Brian, and it was a mistake to forget that option here. I did look into it quickly and I was worried again about the liability of giving a car with so many problems. Probably an unnecessary concern, but I didn’t want to deal with it.
Isn’t insurance the opposite to that? I would say it is paying more in the long-term to ensure you don’t become financially ruined in the short-term…
Buying insurance leaves you less money today (because you’re spending it on insurance) to make sure that your long-term financial security is kept intact (e.g. you replace your income if you become disabled). Or another way you could look at it is that you’re willing paying a relatively small amount of money to protect yourself from the possibility of losing a much larger amount of money. Either way works.
The first car that I got from my mom I managed to sell for $500 to a friend. I gave them fair warning that it was having issues as it was older, so I didn’t feel too bad about it. My parents have salvaged their cars in the past, but Craigslist was’t popular back then. I think you made the right decision, especially for your conscious. Since I plan on using my car until it’s not worth it anymore, I’ll probably salvage it depending on the shape it’s in. I’d like to be able to give it to my younger cousin, but that depends on if they would want to work on it.
I did get one offer from a guy who wanted to work on it (he randomly stopped by my parents house, where it was sitting on the lawn until I figured out what to do with it). But he only offered $300, so that was an easy no.
I think you did the right thing in this situation. I don’t know that it would work for all cars, but there is such a huge market for Civic parts — partially because the power train on many models seems to just last forever — that you could get a pretty solid deal. If you really wanted to make a good deal more, you could have parted it out yourself and sold each bit privately, but then you quickly bump into what’s a reasonable amount of time for making a little more money.
That’s a good idea, and not one I had thought of. To be honest even if I had I probably would have passed. You’re probably right that I could have made more money, but I’m not sure I would have wanted to spend the time to do it.
I would have done the same. I wouldn’t have wanted to invest more money into the car either and it would have made me nervous to sell as is too. While you shouldn’t be liable if something did happen but most private sales are just handshakes and an exchange of money, so to speak. No formal contract to sign stating they purchase as is and you aren’t liable. There is a lot to be said for peace of mind. 🙂
I definitely agree that the chances of being held liable for something were pretty small. But so was the potential extra money, so to me I just decided it wasn’t worth it.
If you’ve driven the car to the point where it is salvage material, then yeah– you likely went the correct route. Also, you are a frugal superstar for keeping your car that long!
Haha, I was actually upset with myself that I couldn’t keep it longer. A good car like that should be able to last upwards of 200k miles. I just didn’t take good care of it when I was younger (and dumber). Live and learn.
Did you consider donating it to charity? If a car was worth that little at that point I think donating it to charity would be easier and more worthwhile to us than dealing with the time and effort of selling it, even to a salvage yard.
Brian mentioned that too and it’s a good call. I did look into it briefly and still had the same concern about liability (probably an unnecessary one). I probably should have spent a little more time investigating it to ease my concerns, but I was mostly just focused on getting rid of the car.
We’re also on the over-insured, risk-averse side of things. At a certain point your time and the potential upside don’t match up with the effort involved.
For what it’s worth, if the alternator ends up going on your new Honda, it’s a pretty easy fix. If you can change your oil, you can change out an alternator. Both jobs involve basically loosening and tightening bolts.
I did look up the process for the old car and it seemed pretty doable. It still just wasn’t worth the cost or effort to me though. It was time for a new car. And besides, what man can resist the temptation of a minivan?
I just sold my ’94 Civic with no A/C and issues (and 275,000 miles) for $1,400. Civics are selling like crazy because the MPGs!
But I hear you, liability sucks, never want to worry about something happening. I sold mine to a mechanic who was going to fix it up for his son. Haggled me down a bit, but worked out well.
Either way, it’s nice to be rid of the old car, huh?
They’re incredibly popular, which is why I was hopeful to get anything out of it. I was probably too cautious based on my own perception formed from repeated negative experiences. Probably could have gotten at least $1,000.
But yeah, it’s nice to just be done with it. And it’s REALLY nice to drive without the constant fear of something breaking.
I can understand why you didn’t given the condition it was in. Sounds like you got a lot of miles out of that old car so it was time to have it rest in peace. 🙂 I’ll probably go through private sell when I sell my current car, considering how much money I put into it in the last year.
I think that’s the best route in terms of getting the most money. It can also be the biggest hassle, but the return can be worth it for sure.
I private sell all my old cars. I’ve been purchasing salvage title Honda or Acura and they seem to hold it’s value for a long haul. As for the insurance, I only get the liability on them.
I only had liability on the Honda as well, and uninsured motorist. No collision or comprehensive. It’s just not worth it when they aren’t worth much.