“Good luck, man. Nobody is buying used cars right now. You should’ve sold it six months ago before COVID happened.”
This is what one of my friends said to me recently. 😔 And at the time I kind of agreed. With most people working from home and limiting their travels, I thought we’d have a really difficult time getting rid of our second car.
Luckily, it turned out easier than we thought! Just last Saturday we sold my wife’s 2013 KIA Soul. Woohoo!
We got a great price – $7,700 (well, we feel great about it) after only 4 days advertising it online. It was a win/win deal for both us and the nice couple who bought it.
My friend was right about one thing though … We should have sold it six months ago. Actually, we should have sold it two years ago, the very moment we realized we could get by fine with 1 motor vehicle.
The cost of an unused car …
I ran the numbers recently and it’s quite shocking to see what this little Kia was costing us just sitting there without any use:
- CA Vehicle registration fees: $154/y
- Car Insurance: $475/y
- Annual parking permit: $34/y
- Depreciation: $1248 this year**
Total: $1,911 for the year … or $159 per month!
Keep in mind, this is without even driving it. Driving costs for gas/maintenance would have added up to even more! Cars are the worst.
I’m a bit embarrassed to be sharing all this. I sit and type personal finance articles all day, and have been knowingly leaking $159 a month out of my wallet! There’s no excuse. I guess the reason we kept the car for so long was because it was fully paid for (a sunken cost fallacy), and also a combination of laziness and falsely perceived convenience.
What’s even worse, there’s a big missed opportunity cost. For every $1 of negative equity sitting in a depreciating car, that’s $1 of equity that’s not helping build wealth for our future!
Oh well. If the best time to sell our car was 2 years ago, the next best time is right now!
**I used this car depreciation calculator to learn what average depreciation would look like for a 2013 car, worth about $8k over a 5 year holding period.
Such a cool calculator! But also very depressing to learn how fast your car depreciates. It’s much worse for expensive cars :(
Selling a car online
I’ve only sold a few cars online in my life. Each time I learn something new and get a little bit better about the process. My first step was to do a bunch of online research to find out the best approximate car value. Since our KIA had low mileage for its year (only 43k miles – not bad for a 2013 model), I knew we had a better chance of selling than similar cars this age.
I looked at Kelley Blue Book value first, and they estimated the car’s fair market value range for private sale: $6,673 – $8,190.
Then, I cross checked these numbers with Facebook Marketplace, Autotrader, and Craigslist. 2013 Kia Souls were advertised anywhere between $3000 for a crappy junk car all the way up to $9000 for dealership prices.
All in all, my wife and I decided we would list it for $8,500 and see what happens. We could always drop the asking price later if needed.
BTW did you know Kelley Blue Book does instant CASH Offers now?
I found this pretty interesting … KBB now teams up with local dealerships to offer cash for used cars. Unlike a trade-in, you don’t need to buy another vehicle at the dealership to get this cash price.
After filling out a detailed form on the site, we were emailed an instant cash offer cash of $5,662. I could take this to a participating car dealership and get rid of it immediately.
This was actually pretty tempting. The thought of taking it into a car dealer and that afternoon walking out with cash was really exciting. But, knowing we could probably make a few thousand extra for just a tiny bit more effort, we decided to do the hard work and sell it to a private buyer.
Photos, photos, photos!
Before pulling out the camera, I went and got the car fully washed, waxed, and smelling like new. This cost me $69.95 at the local car wash – seems their prices have dropped a lot due to nobody driving much these days!
Next, I drove over to a nearby parking lot and snapped photos with my iPhone. From everything I read online about selling cars, it all comes down to the photos! If you show quality photos, you attract quality buyers. (Remember to cover your license plate in any photos!)
One other strong recommendation I heard was to take a photo of the keys, original manuals, vehicle history report, title and all repair paperwork. (check out the pic below) This might seem like a useless photo to take, but showing an interested car buyer that you keep records neat and tidy goes a long way! It also makes you stand out against the other ads out there!
Did you know Craigslist charges you $5 to post Autos for sale now? When did that start!? I guess it’s in an effort to minimize the amount of fraudulent ads and users… But, it didn’t stop me getting a lot of scammer responses. About 5 minutes after I posted online, I started getting emails from people with lowball offers or asking for the VIN number without explanation.
Then finally, after 2 days we were contacted by interested buyers who wanted to check out the car.
COVID, Cleanliness, & Craigslist
Probably the thing I was most nervous about was letting strangers touch and drive the car. My wife and I agreed to meet the potential buyer, but if we got weird feelings at any point we would just politely excuse ourselves. We brought disinfectant wipes and a bunch of hand sanitizer to the meet-up.
After greeting them and having a 5-10 minute chat (social-distanced of course), they sounded legitimately interested. They took the car for a quick test drive, and offered us $7,700 cash as soon as they returned. My wife and I were happy with this, so we accepted right away. Done deal.
As much as I wanted to rub the 77 hundred dollar bills all over my face, I refrained. We washed our hands and disinfected everything when we got home. :)
Why are people buying cars right now?
This whole process was shockingly easy. I had just assumed nobody would be buying cars right now. But there ARE people out there looking for used cars …
The couple we sold the KIA to moved to LA from New York a few years back. They’ve lived without a car for the past few years – they work close to home and have been able to Uber almost everywhere they need to go.
But now with COVID, they don’t feel comfortable using Uber or public transportation. Since they are both working from home and cramped in a small apartment, they wanted a small used car simply for weekend use. They want to drive up the Pacific Coast Highway and visit the northern remote beaches. Camping, hiking, and just being outdoors and enjoying Southern California.
The guy who bought it admitted he knows he’s going to lose money owning a car. But I guess it’s better than losing your mind stuck at your house all year?
- Wifey and I sold our spare car on craigslist for $7,700.
- Should have done this years ago, we are idiots.
- Was costing us $159 to keep in the garage – cars are a money pit!
- KBB has instant offers now (they seem low), and craigslist isn’t free anymore, they charge $5 to list a motor vehicle now :(
- If you’re selling a car online, include a nice photo of the keys/manuals/paperwork. Good photos attract good buyers!
- People ARE still buying used cars apparently, regardless of pandemic hot spots.
Next up, just gotta visit the bank and transfer this $$ to our brokerage account! VTI all the way :) Feels good to check another 2020 goal off the list and turn a depreciating asset into an appreciating one!
What about you? Are you driving less and/or Uber-ing less? Thinking about getting rid of your car?
Joel is a 35 y/o Aussie living in Los Angeles and the guy behind 5amjoel.com. He loves waking up early, finding ways to be more efficient with time and money, and sharing what he learns with others. Rise Early | Retire Early!