Anyone trying to sell a used car will try to eke as much money as possible out of the deal, but few will manage to sell the old jalopy for more than six times its market value. That's because we don't all have the business savvy of Warren Buffett.
Buffett sold his 2001 Lincoln Town Car through an online charity auction last fall for $73,200 -- not too shabby for a vehicle that has a Kelley Blue Book value of just $11,200, according to an Associated Press report about the transaction. It will soon be picked up by New York City businessman Bill Zanker, who runs real estate and wealth seminars through his company, The Learning Annex. Zanker said he had no regrets paying so much for the vehicle, because he got 45 minutes of Buffett's time.
You and I probably can't cash in on the big money by advertising our vehicles as "Once Owned by the World-Famous Accountant Joe Smith," but we can think like Buffett for a moment and consider the most profitable avenue for getting rid of a used car.
Many Fools would say that your best option is to hang onto that clattering, ancient bag of metal until the very last screw holding the engine parts together finally gives way. Cars, and especially new cars, can be very expensive.
Vehicles lose resale value over their lifetimes, beginning the moment that a shiny new convertible leaves the dealer's lot. Some vehicles lose their value faster than others. If you're buying a car with a loan, especially if you're buying a new car with a loan, you're paying interest to own something that's declining in worth.
That means it's often cheaper to just keep your old beater running than to buy a new (or new-to-you) vehicle. Besides, once your old clunker finally does fall apart, you can turn it into a fine piece of lawn sculpture that your neighbors would certainly appreciate.
But keeping an old car until its dying chug isn't possible for everyone. Sometimes the repairs just cost more than you're willing to pay, or the car just doesn't fit your family's needs any more. In that case, you have a couple options.
Like Buffett, you could donate the old vehicle to charity and let a good cause profit from your generosity. This route can get you a nice tax deduction, but the rules have gotten a lot more complicated. You'll be permitted to deduct the amount of money the charity gets from the sale of your car, but not necessarily the car's market value. (Find out more about the ins and outs of charitable giving, as well as some very Foolish charities, at our Foolanthropy center.)
As a result, you might want to seek out a charity that rebuilds old cars and uses them for their work, instead of selling them. Steer clear of charities that sell many cars in mass auctions. Often you and the charity will get very little money if the organization goes that route.
If you have a specific charitable cause in mind, you can also sell the vehicle yourself and donate the proceeds to charity. Or you can keep the money and put the cash toward your new car.
To get the most from your used car sale, you'll want to avoid using a dealer and sell the vehicle yourself. This will require more work on your part, but you'll probably be better compensated in the end. Make sure to know what you car's worth, and check out other sales in your area. You'll have to adjust for any unique "character traits" your car has picked up over the years or for any improvements you've made.
You probably can't expect to match Buffett's record and get six times its market value, but you can hope to get a fair price.
Fool contributor Mary Dalrymple does not own stock in any company mentioned in this article. She welcomes your feedback.