Should you donate or sell your old car?

Most people sell their old car when they're planning to get a new one, but you also have the option of donating the car to charity. Depending on certain factors, you may deduct the vehicle donation from your taxes. On the other hand, donating your car means you won't get any money directly from your old vehicle. Ultimately, the choice should come down to your needs and whether you can find the right charity for you.

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Pros and cons of donating a car

Donating a car can be a satisfying way to get your old vehicle off your hands — but it depends on what you're expecting. The implications of either donating or selling a car are different.

Pros of donating a car

The most significant benefit of donating a car — and the most compelling reason to do so — is the sense of satisfaction you get from helping others and supporting a good cause. If you want to do a good deed when it's time to replace your car, donating could be the way to go.

There are other benefits, too. For one, most charities are happy to accept nearly any car, so you don't have to go through the hassle of finding a buyer and meeting people for test drives. Similarly, if your car is in poor shape, it may be hard to sell. If that's the case, donating can be a simpler, faster option than selling.

Another potential benefit to donating is help with paperwork. Even if your car is in good shape, larger charities that regularly accept cars — and services that act as brokers for people donating cars — may have staff who can help you with the paperwork. Getting help with the paperwork will make the process easier than selling a car to a private party . Finally, you may be able to deduct your donation from your taxable income, but the process to do so is complicated, and not everyone will benefit from this approach.

Cons of donating a car

The biggest drawback to donating a car is that you won't get money for it. That can increase the actual cost of buying a new car since you won't have a trade-in or as much cash for a down payment. That can result in a bigger loan and more money paid to interest in the long term. Another potential drawback of donating a car involves more complicated paperwork and record-keeping than a private party sale. Many charities will help you with this aspect, but if they don't, it can be a hassle to handle on your own.

Some people see tax benefits for their donation, but whether your donation will impact your taxes in a meaningful way depends on your income, how you file, and many other factors. The process for claiming a tax benefit is complicated, so you should talk with a tax professional first to see if your situation merits the time and effort involved in getting the tax deduction.

One final, unfortunate drawback to donating a car is that it may not benefit the charity as much as you'd like. In some cases, a charity may use the car for transportation or give the vehicle to people in their community who need reliable transportation. The charity may sell the car at auction to raise money. In these cases, they may not get the vehicle's fair market value and have to go to the expense and trouble of selling the car. If you want to make the biggest donation possible, you might consider selling the car yourself and donating the money to the charity.

Pro tip:

If you want to know if you'd qualify for a tax deduction by donating your car, consult a tax professional before starting the process.

Can I donate a car that doesn't run?

Usually, yes. Of course, the car's value won't be much, so donating a car that doesn't run isn't likely to qualify for a tax deduction. Still, many charities will accept old cars that no longer work, which they then sell to junkyards or auction off to people looking for parts or scrap.

Should I sell my car or donate it?

In the end, that's up to you. Think about why you're considering donating the car: If it's because you want to help a charity while getting rid of your old vehicle quickly, donating is a great option. If you want to help the charity as much as possible and are willing to do a bit of leg work, selling the car online or by yourself and then donating the proceeds may be a better fit. If you're looking for financial benefits, speak with a tax professional to assess your situation — many people are better off selling a car than donating it for a tax write-off.