WIRED! Philippines

Selling Your Car
by Gary Foreman gary@stretcher.com

 

Every month, you will be reading Gary's column in WIRED! Philippines, called the
Dollar Stretcher ( http://www.stretcher.com ). While the column's title might be way off the e-zine's name, or while the Philippine currency is the peso, our Filipino subscribers abroad use the dollar. It is with these people in mind that WIRED! Philippines opens this column. Aside from this, practical tips on how to spend money wisely (dollar or peso or any other) and live frugally are what makes Gary's column have a bit of Filipino flavor.

Dear Dollar Stretcher,

My husband and I were living in two different states for two years, as I was taking care of my sick parent. We both had newer cars because of the travel reliability. I have a '96 Dodge Stratus and he has a '97 Dodge Dakota. We would like to get rid of the Stratus. We both are now in one state together and we are having a difficult time making both car payments. My car payment is $367.07 per month and I have 21 payments left with a payoff of $8,067. I put it in the local papers for one month, no replies at all. What is the best way to get out from under the two payments? Can I give it back to Chrysler? Thanks for your help.

Laura

 

Laura poses an interesting question. Is there some easy way to just walk away from a three-year old car? Let's begin by looking at some of the numbers. According to Laura's letter, she still owes $8,067 on her car. Based on her monthly payment and the number of payments left, it appears that she doesn't get any discount for paying the loan off early. So, she needs to get $8,067 for the car to be able to walk away even.

What's the car worth? We took a look at two services that provide wholesale and retail auto pricing information. There are two models for the Stratus. We assumed that she had the ES model. According to the Kelley Blue Book, the car would be worth $7,790 as a trade-in or $9,080 at market value. Edmund's says that the car's trade-in worth is $7,730 and estimates the retail price at $10,040. All figures are for a car in 'good' condition.

So Laura stands a reasonable chance of selling the car for the amount that she still owes. That's fortunate. Many people in her shoes find out that after three years of making payments they still owe more on a car than it's worth. It's rough to find out that you can give up your car and still end up owing money on the deal.

So now the question becomes "what's the best way for Laura to sell the car?" She started with the newspaper. Without seeing her ad it's hard to tell why no one responded. Price is one obvious possibility. Typically, a private party selling a car would expect to get between the trade-in and retail price. As a reference point, the retail price is the amount that you would expect to pay if you were buying the car at a dealership. The trade-in price is what you would expect the dealer to give you if you sold it to them.

It's possible that another ad will sell the car. Writing an ad isn't difficult, but there is a right and wrong way to do it. Your asking price needs to be low enough to attract callers, but high enough so you can reduce it a little in negotiations. You also want to try to mention something that's attractive about the car. It could be something as simple as "excellent condition" or "low miles".

Laura might want to consider other ways to advertise her car. A simple sign in the car's window could get the job done. So, too, might a small ad placed on the right bulletin board.

Sometimes it's a matter of thinking creatively. Who is the most likely buyer for Laura's car and where do you find people like that? If college students are good prospects, put small ads on college or dorm bulletin boards. Maybe the college paper accepts classified ads. If a young family could use the car, a bulletin board at a local toy store might be a good choice.

Don't forget to tell your friends that you'll be selling the car. One of them might know someone who will become your buyer. One advantage here is that the referred prospect will be much less suspicious of you and the car.

One problem that will be hard for Laura to overcome is that she'll want to find a buyer with ready cash. It's fairly easy for car dealers to arrange financing for the buyer. Laura doesn't have that advantage. She may be able to find a buyer who can make their own arrangements for an auto loan, but that's not often easy. With a less expensive car the problem isn't so great. But not too many buyers have $8,000 cash available.

What about turning it back to the dealer? It is possible to sell a car to the dealer. But, remember that they need to buy a car at wholesale and sell it at retail to make money. That means you need to sell it to them near the trade-in price. They owe you no obligation to give you a special deal just because you bought the car from them originally. You can't just turn the car in. Laura should not only ask the new car dealer, she should also find out what a used car lot would give her for the car. A used car lot doesn't get trade-ins so they buy from auctions and individual parties.

Once Laura has an interested buyer, she needs to think like a salesperson. Try to get callers to come and see the car. If possible, get their name and phone number. Interested buyers won't mind giving it to you. Having their phone number allows you to call them back. If you can't get your original asking price, you can call later and offer to take less if they're interested.

When the buyer arrives try to find out what they want in a car. Then you can show how your car will fill those needs. Stress how the car has met similar desires in your life. Maybe it's the perfect little sports car to get away from it all. There's no reason that you shouldn't let the buyer know how good your car can be at making them happy.

Expect the buyer to ask why you're selling the car. Have a good reason ready. Don't let people think you're selling it because it's about to quit running. You want to be honest when a buyer asks questions, but you don't need to point out every minor flaw. After all, you're not selling a new car.

Finally, Laura needs to recognize that buying a new car and getting rid of it in three years is the most expensive way to own a car. Financially, the worst day in a car's life is the day you drive a new car off the lot. It loses more value that day than in any other. The longer you own a car the less depreciation occurs on a daily basis. What that means is that by keeping a car longer you'll lower your average cost to own that car.

Laura's taking a bold step to take control of her finances. We hope she finds the right buyer.



[Gary is the Editor of
The Dollar Stretcher website. You'll find the web's largest collection of free articles to save you time and money. There's even a free weekly email newsletter. Visit Today!]


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