Should you donate or sell your car?

Pros of donating a car

A significant and compelling benefit of donating a car is the sense of satisfaction you get from helping others and supporting a good cause. There are other benefits, too:

• Most charities are happy to accept any car: You won't have to go through the hassle of finding a buyer and meeting people for test drives.
• Car condition: If your car is in poor condition and has little market value, donating might be the best option.
• Faster option than selling: If your car is in poor shape, needs significant repairs, or is old, it may be hard to sell. Donating can be a simpler, faster option than selling.
• Help with paperwork: Larger charities that regularly accept cars — and services that act as brokers for people donating cars — may have staff who can help with the paperwork, which will make the process easier than selling a car to a private party.
• Tax deduction: You may be able to deduct your vehicle donation from your taxable income, but the process can be 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 car to trade-in or as much cash for a down payment, resulting in a bigger loan and more money paid to interest in the long term. Other drawbacks may include:

• Complicated paperwork: While many charities help you with necessary paperwork, it can be a hassle to handle on your own.
• Less money: Selling your car usually nets you more money than donating it, whether you sell privately or trade it in.
• No tax deduction: Not all vehicle donations may qualify as tax deductible; consult a tax professional for advice.

Can you donate a car that doesn't run?

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

How do you update your auto insurance policy when donating a car?

Whether you sell or donate your car, contact your auto insurance company once the car has been sold or donated. Your agent or insurer can remove the vehicle from your policy, so you don't continue to pay for a car you no longer own or drive. Updating your insurance when donating your car is similar to updating your insurance when selling a car.