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How to sell your car

How to sell your car

Whether upgrading or changing to a new set of wheels, how should you prepare for the sale of a car, and should you sell your car to a dealer? 

You may wonder about how to sell your car if you’re moving to another town, need to raise money, or want to replace it with a new and better car, potentially alongside a new car loan. Selling a car can take some effort, and you'll want to get the best price that you can. 

Trading or selling your car to a dealer with a car buying business, usually a division of a car retailer, may be the quickest and most convenient option. However, selling to a dealer may end up getting you the least amount of money for your car if you trade it in. Dealers generally buy your car for a lower price and then resell it at a higher one, often after a thorough mechanical and visual inspection, and with a statutory warranty. 

While often convenient, it might not be the best option if you're looking to maximise the value of your car. Alternatively, you could try selling your car on your own. 

How to prepare to sell your car?

Before you get into the sale, you need to prepare to sell your car. The first step is to get all your documents ready. You also need to prepare your vehicle to maximise its appeal before you put it on the market. Consider hiring an expert to help you with the process. The looks are the first way to attract customers to your car, so do present a clean and shining vehicle to prospective buyers. 

You could get your car cleaned professionally. If you choose to clean it yourself, make sure you clean all of the hard-to-reach spots, such as the door and boot openings, as well as the engine bay. Never leave anything strewn about the interior or boot of your automobile that would make it appear untidy to a potential buyer. Loose things can rattle and bang about during a test drive, leaving a bad impression.

How to charge for your car?

Setting the price right is important to find buyers and also recover a fair amount of money from the sale. If you advertise your car for sale but mention a price expectation that’s too high, you'll waste precious time waiting for the phone to ring. On the other hand, if you set an unrealistically low price, your car may go quickly, but you will have less money than you could. Avoid these traps by checking current listings for cars similar to yours in your location. 

Do your research and highlight the best features of your car in the images and description when you list it. If your vehicle appears to be in a similar condition to other listings, you may want to set your price a little lower to make it show up in searches. 

How to find buyers?

There are different ways to find buyers. You may consider placing an ad in a newspaper or online. This way, you get to set your price and choose the buyer. However, you have to deal with no-shows, manage test drives for different prospects etc. Many buyers may negotiate the price as well. 

Another efficient method could be to participate in an auction. You will have to pay an entry fee and also reimburse a fee if your sale is successful. This may work out as a way to sell your call quickly and without negotiations but may not fetch you the best price for your car. If you trade-in your car at a dealership, you may not get the best price, but you don’t have to spend a lot of time on the selling process. You may have to pay the dealer a service charge for this facility. 

What happens when you sell a car?

Once the deal has been finalised and you receive a deposit, give the buyer a receipt. Make sure you and the buyer both fill out your information and sign the registration transfer and notice of disposal on the back of the registration certificate. You maintain the notice of disposition slip and offer the purchaser the transfer of registration. If the car is still covered by a manufacturer or dealer warranty, provide copies of the paperwork. Don't forget to hand over any spare keys, accessories, the owner's handbook, and the logbook or service booklet to the new owner. 

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Fact Checked -

This article was reviewed by Head of Content Leigh Stark before it was published as part of RateCity's Fact Check process.

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Learn more about car loans

How much is your car worth?

If you already own a car, you could potentially bring down the cost by selling your car in the process. Before that happens, though, you’ll need to find out how much your car is worth.

One of the first places to find this value is to research the value of your current car, giving you an idea of roughly how much it’s worth in its peak condition.

There are plenty of websites that offer a free online valuation, allowing you to enter your car’s make, model, year, badge and description, with results listing a price guide based on both selling your car privately and through a dealership.

Of course, dealerships will try to profit on your trade-in by buying it for less than they can sell it, making it highly unlikely that you’ll get the same price selling a car to a dealer as you would selling a car privately.

However, private car sales can be costly and can take months to sell, making car trading more convenient with a guaranteed return, even if you may not be able to realise the total value of your car’s worth.

Remember that everything is negotiable. If the dealership is offering you less for your trade than you wanted, try to negotiate elsewhere to gain that money back. Start by negotiating on the price of the trade and then ask them if they can give you a further discount on your new car.

How much is my car worth?

If you own a car, it may be something that can help you bring down the cost of your next vehicle purchase through its sale. However, before you can do that you’ll want to find out how much your car is worth.

Your car’s worth can depend upon various aspects, including:

  • Age
  • Condition
  • Model and make

A great starting place for aspects of this includes websites that offer online valuations, allowing you to enter your car’s make, model, year, badge and description, with the listed results displaying a price guide based on both selling your car privately and through a dealership.

Both have pros and cons, as cars can be very profitable, something that will no doubt impact any chance you have to make the most of your car’s value upon sale. Dealerships will try to profit on your trade-in by buying it for less than they can sell it for, so you shouldn’t expect the same price selling a car to a dealer that you would necessarily get selling a car privately.

What is resale value?

The resale value is the price you could realistically charge if you were to sell your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is depreciation?

Depreciation is the reduction in the value of your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is residual value?

The residual value of a car is how much it will be worth at the end of a lease period. Finance companies need to calculate a car’s residual value before they can know how much to charge during the lease period. For example, if a financier calculates that a $30,000 car will have a residual value of $16,000 at the end of a five-year lease, the financier will know that it must charge $14,000 to break even on the lease – and more to make a profit.

Can I buy a car as a student?

Buying a car is a huge financial decision, and shy of marriage and purchasing a house (or perhaps around the world travels), it may be the biggest financial decision you make. But if you’re looking at your empty pockets, don’t despair! Your dream of owning your own car could become a reality, if you look for and compare the right car loans for your circumstances.

How do you get a car loan?

There are four different ways you can get a car loan. You can go straight to a lender. You can get a finance broker to organise a car loan for you. You can get ‘dealer finance’ – which is when the car dealer organises a car loan for you. Or you can organise your own car loan through a comparison website, like RateCity.

Whichever method you choose, you will need to provide proof of identification, proof of income and proof of savings. So you may be asked for any combination of passport, driver’s licence, bank statements, payslips, tax returns and utility bills. You might also be asked to provide proof of insurance.

What is trade-in value?

The trade-in value is the price you could realistically charge if you were to sell your car to a dealer while buying a replacement vehicle. Generally, a car’s trade-in value is less than its market value. That’s because the dealer has no interest in buying your car unless it can make a profit – which can only be done if the dealer has room to increase the price.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

Can you get a chattel mortgage with bad credit?

Getting approval for a chattel mortgage with bad credit may be possible, given ‘chattel’ (usually a piece of equipment or car) is put up as security for the loan. That means if you fail to repay the loan, the creditor can recover the loaned amount by repossessing and selling the car or piece of equipment. This differs from unsecured car loans, where the asset is not tied to the loan and cannot be taken if you don’t meet the repayments. 

How to get a chattel mortgage?

Both businesses and individuals may use a chattel mortgage, provided that the car is being used predominantly for business purposes. 

To apply for a chattel mortgage, you need to first consider your options and choose a suitable lender that meets your requirements. Once you have selected a lender, you can apply for the loan online by filling out a form. If the lender doesn’t offer an online application process, you can either call them or visit their nearest branch. 

After you’ve applied, the lender will ask you to supply documents that confirm your identification, income, job profile, etc. If everything is in order, most lenders will arrange the loan’s settlement, so all you need to do is pick up your car!

Should I service my own car?

There are also costs associated with vehicle ownership, such as paying for petrol and the obligatory ongoing maintenance. But should you cut down on costs by servicing your own vehicle?

If you’re considering getting out the tool box, spanner, and grease-laden towel, you need to carefully weigh up the risks and benefits. A trained mechanic will need to complete certain tasks, while you may be perfectly capable to handle other aspects yourself.

If you’re short on time, it may be worth paying for the convenience of a full vehicle service. However if you’re trying to slash your expenses, there are some basic maintenance tasks that you can complete yourself.

You should call a mechanic if you’re unsure about a vehicle maintenance task you’re about to take on. However there are a number of maintenance tasks that you may be able to complete with your own two hands including:

  • Replacing your car battery
  • Changing the oil
  • Replacing worn windscreen wipers
  • Replacing blown fuses

Remember to keep your car’s body in good condition, by washing and applying a protective wax on a regular basis, too.

Always check your car warranty agreement as some new car purchases come with an extended car warranty provided your services are conducted at the vehicle service centre where you purchased the car. In these circumstances, you may find the service fee is capped, alleviating some of the maintenance woes.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

Can you put a deposit on a car to hold it?

It’s up to individual car dealers to decide whether to promise to hold on to cars in exchange for deposits.

Some car dealers will request a deposit and promise, in return, to hold on to the car for a certain period of time. Others will request a deposit but make no guarantees, other than to return the deposit if they end up selling the car to someone else.

Some car dealers ask for deposits; others don’t. If you get asked for a deposit and you decide to pay it, make sure the dealer gives you signed paperwork before you make the payment and a receipt after you’ve made the payment.