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This discussion examines the pros and cons of selling a vehicle on your own. You should also review the pros and cons of other vehicle disposal methods. If you are unsure of whether or not you should get rid of your vehicle right now, our discussion on deciding to keep or dispose of a vehicle can help.
The advantages of selling a vehicle on your own include:
- Better price — selling a vehicle on your own will probably enable you to get a higher price for it than with any other disposal method. The reason? You get some of the extra profit that a dealer would make from selling your vehicle if you had traded it in instead. This does not necessarily mean that you can get exactly the same price for your vehicle that the dealer would get. Dealers typically offer warranties and financing options to their customers that you are probably not in a position to offer.
- No additional purchase required — when you sell your vehicle you get cash that you can use for any purpose. If you find that you no longer need a vehicle in your business and want to put money to work elsewhere, this is probably your best option. It is probably also your best option if you are getting out of your business. On the other hand, if you do need a replacement vehicle, you won't be limited to choosing one from the dealer where you traded in your old vehicle.
- Specialty vehicles — your local car dealership may be reluctant to accept a septic pumping truck, a delivery truck with the driver's seat on the "wrong" side of the vehicle, or other specialty vehicles. If a dealer won't take your vehicle in trade, or offers to pay only a scrap value price for it, you may have to sell the vehicle on your own.
- Experience and contacts — if your business involves selling, you may be comfortable with selling a vehicle on your own. Moreover, you may gain a few new customers or contacts from people who come to look at your vehicle and, in the process, find out about your business.
Here are some disadvantages of selling your own vehicle:
- Ill will — if you sell an unreliable vehicle to someone, you could create much ill will for your business in the process. Even if you are an excellent desktop publisher, you could be known around town as an unscrupulous and unreliable business person because of a lemon you sold. If, therefore, a vehicle is truly unreliable, consider trading or wholesaling it rather than selling it yourself. If you must sell such a vehicle yourself, at least try to be honest about its condition. You may also want to "distance" the vehicle from your business as much as possible. Say "I'm ________ and I'll be happy to show you this vehicle," rather than "I'm __________ from xyz corporation. This is one of our company vehicles, and we'd like to sell it."
- Delays — you cannot collect any money until you sell your vehicle. This may take considerable time. Trading your old vehicle in is a much faster option if you cannot wait to get a replacement vehicle.
- Legal obligations — depending on the laws of your state, you may impose legal obligations on yourself by selling a vehicle. For example, you may be responsible for guaranteeing that the vehicle passes certain emissions and safety tests. In some states, you must warranty the engine and power train for a certain period of time. Finally, some states allow you to sell a vehicle "as is." This means you are not liable for any repairs on the vehicle once you have sold it. Check with your state motor vehicle licensing office about warranty requirements on vehicle sales. You should consider establishing a contingency fund to cover the costs of any repairs for which you could be held responsible. A good rule of thumb is to reserve about 25 percent of the estimated cost of these repairs out of sale proceeds. If you don't hear from the buyer of your vehicle within the time period specified by the laws in your state, you can put the money back into your business. But if there's a problem, you won't have to suddenly come up with the entire amount for repairs.
- Transaction costs — selling a vehicle takes time and some money. You will probably have to show your vehicle to several potential buyers before you find a real buyer. And you may need to purchase some classified advertisements to get the word out on your vehicle.
- Strange people, deadbeats, and con artists — a number of people may call on you to take your vehicle for a "test drive." In reality, some of them will probably be looking for nothing more than a "joyride." Others (the "deadbeats") may have honest intentions about buying your car and fully paying for it, but these intentions may not be supported by their checking account balances. Worse still, if you're not careful, you may fall victim to con artists, who are known to sometimes use such scams as paying for vehicles from private parties by way of stolen or counterfeit cashiers or certified checks. (If you take one of these worthless pieces of paper, don't count on being able to recover your vehicle; most likely it will have been dissected for parts in a "chop shop" before you discover the fraud.)
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Work Smart
So how do you avoid losing out to the deadbeats and con artists who may show up at your door? First and foremost, unless you know your buyer well, never accept an uncertified personal check in payment. Rather, you should only accept cash, or — with the appropriate cautions noted below — cashiers or certified checks. If you don't feel comfortable with receiving a large amount of cash and having to transport it to your bank, arrange to meet the buyer at the buyer's bank and receive the cash there. Then make arrangements with the bank to transfer the money into your account, or do it yourself if there is an on-site automatic teller machine. Don't just meet the buyer at your bank and deposit the check in your account. The fact that your bank deposits or cashes the check doesn't relieve you of liability to make good on the check if it proves worthless. If you decide to accept payment by way of a cashiers or certified check, check with the bank upon which it is drawn to ask if it is good. |
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Pros and Cons of Selling a Vehicle
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