5 Reasons You Should Donate Your Car

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Donate Your Car - Free Towing!If you’ve bought yourself a new car and are looking to get rid of your old one, or simply want to get rid of a car, consider donating it to an organization that accepts car donations. Selling the car will almost always be better than donating from a financial standpoint, but donating offers benefits that may trump the money depending on your situation. After detailing five reasons why you should donate your car, I’ll give a few scenarios where donating is better than selling.

Here are five solid reasons why you should donate your car:

#1. Selling Is A Pain

Selling a car is a pain in the ass. First, you’ll need to advertise somewhere. You can put it on Craiglist or eBay and do the new school thing, or go classic and chalking up “For Sale” on the windshield and leaving it by the road. If you go with Craigslist, you have to deal with all the local flakes, crazies, and lowballers who are looking to snatch up a good deal. With eBay, well, you have to deal with the national flakes, crazies, and lowballers who may or may not rip you off. If you leave it by the road, it might get towed, it might get broken into, or you simply won’t get enough interest. It’s no secret that selling a car is a pain.

#2. A Wonderful Tax Deduction

If you’re already a charitable person, consider donating your car rather than cash. While it is a bit more work for your charity, it’s still a win-win for both parties. Most charities that accept vehicle donations know what to do with them, so really there is minimal headache on your part. Most will be able to appraise your car or simply offer a receipt that lists the Kelley Blue Book, NADA or Edmunds private party value as long as it’s under $5,000. If it’s over $5,000, then you’ll need an independent appraiser but that’s usually not a big deal.

#3. It’s Done As-Is

If your car needs improvements, then the organization will make them and list the improvements on the tax receipts. You won’t have to fix up problems with your car beforehand. While you could sell your car as-is on the open market, chances are the number of interested parties is going to diminish tremendously. Prospective buyers will want to have a mechanic check it out, they’ll take it for a test drive, and they’ll otherwise need to go over the car with a fine toothed comb. You can’t fault them, if you were going to drop a few thousand dollars on anything, you’d go over it with a fine toothed comb too.

#4. It’s Fast

Want to donate? Call up the organization and let them know. They take care of it all from there. Think of all the time you’ll have saved by not having to show the car, not having to go on test drives, not having to meet prospective buyers in a random parking lot, not having to give out your private information to strangers, and not having to worry about whether you’ve missed anything (taxes? sales receipt? title?). The organization takes care of it all (many offer free towing too!).

#5. It’s A Good Thing(tm)

At the end of the day, you know that you’re doing something that helps an organization and its members. By selling, you don’t get as much for your car as you would by selling it (presumably). If your car is worth $5,000, you get a $5,000 charitable deduction off your income for the purposes of taxes. If you’re in the 25% tax bracket, then the deduction is worth $1,250 of cold hard cash. If you sell the car for $5,000, then you get $5,000 of cold hard cash. It’s a significant difference but ultimately you’re doing a tremendous service to that charitable organization.

When Donating Is Better $$$

If your car needs extensive repairs before you could sell it and you don’t have the funds to repair it, donating is going to be a better option for you. My wife’s car had a blown head gasket that pretty much killed the engine on her car. If she wanted to sell it, she’d have to overhaul the entire engine and that would’ve cost a significant amount of money. So instead, she donated the car to the local school so that the shop class could work on it. She received a sizable charitable donation receipt, the school received a car they could work on, and everyone was happy.

(Photo: orinrobertjohn)

{ 5 comments, please add your thoughts now! }

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5 Responses to “5 Reasons You Should Donate Your Car”

  1. Haven’t yet ever donated a car. Our modis operandi has always been to sell our car in Craigslist while it’s still in good shape. But you have given me something to think about! Great post!

  2. Not to rain on the tax deduction parade, but most charities that receive donated cars re-sell them for the cash. This creates problems for the donor because of new IRS rules introduced in 2005. If the vehicle is worth more than $500 and if the charity re-sells it, the deduction is limited to the amount received in the re-sale by the charity. That could be a substantially different number than FMV.

  3. andy says:

    About 3 years ago I needed to unload a car really quick. It was a ’93 Plymouth Acclaim with almost 130K on it. It wasn’t worth much more than $1000, so the tax deduction wasn’t a big deal for me, and selling was going to be far too much trouble.

    I called the National Kidney Foundation, and they refused me! Something about the car not being worth their time/effort.

    I called the Salvation Army, and I couldn’t turn it over fast enough! He wanted to send someone over to pick it up that afternoon, and I had to push him off to the following day. Got my receipt in the mail a few days later.

    I don’t know if they fixed up the car or sold it for scrap, but it solved a problem for me and apparently it was useful in some way for the SA as well.

  4. Neer Patel says:

    When I was looking for a new car, I was trying to figure out my option on what to do with my old car. Here is some math I did. It may be a bit confusing, so send me a msg if you need me to clear anything up.
    (all income taxes below are based on the 25% bracket & sales tax at 8.25%)

    My Honda Ridgeline cost me $34,000 plus $2,805 in taxes (drive out at $36,805)

    If I traded in my car, I would have gotten $4,000 from the dealer for the car & paid $330 less in sales tax. Making my drive out $32,475($30,000 + $2,475).
    (The amount of your trade in lowers the sale price of the car before taxes)

    If I donated the car, and took the tax deduction. I would have gotten $8,000 in deduction.(They valued my cars high then the dealer did)
    So that would have been $2,000 in deduction.

    I live in Texas, so I can deduct my sales tax(if you itemize).

    if I traded in I would have paid $31,857 ($34,000 – $4,000 + $2,475 – 618)
    If I donated I would have paid $34,104 ($34,000 + $2,805 – $2,000 – 701)

    The difference was $2,247. So I donated it. It was well worth, because I learned more about taxes (it was the first time I had itemized). Plus it helped the organization.

  5. saladdin says:

    Just add me to the list of ones refused by a charity.


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