In the United States it's possible to donate a vehicle (usually a car, but it can be a boat or any other form of transportation) to certain charities, and in return be able to claim a tax deduction on your personal income tax return. A car donation may be accepted on the condition that the vehicle doesn't have to run but should be in towing condition. A charitable car donation may be worth more than a trade-in.
The new rules allow the donor to deduct only the amount the charity receives for the vehicle. Charities usually provide you with a release of liability when they take your vehicle, and after the car sells, they send you a tax-deduction form that explains how much they received for your car. There have been car donors who needed a new vehicle and they ended up buying donated and repaired vehicles.
You may have an old vehicle sitting on your property or on the street that you don't use very often. Make sure you have the title in hand if you call in your donation.
You can usually donate a sad-looking car that's not running, depending on the charity. The donor benefits from the donation by receiving a tax receipt for the highest possible value of the vehicle. It's good to know that when you donate a car, you'll get it off your property within just a couple of days, freeing up space in the garage, in the driveway or even your yard.
Your vehicle has to have all four of the tires inflated in order to be accepted. By donating a car it can eliminate spending money on repairs, advertising fees and the problems or liabilities associated with selling a vehicle. In some cases charitable car donors can still claim fair market value for their used vehicle.
If your automobile, truck, boat, motorcycle, RV or aircraft is no longer of use to you, it can still go a long way toward supporting the charity of your choice. Make sure to fill out the forms the charity representative gives you and have them ready for the driver when he comes to pick up the car. No need to pay for advertising, no loss of privacy and possible security risk, and no need to pay for vehicle registration, insurance, and repairs to keep your car in running condition while you wait for a buyer.
Also, if your car is running, consider dropping it off with the charity yourself to save the organization from paying for towing costs. For states that require smog certificates or safety inspection certificates, you can donate your vehicle without these documents. And some cars may not qualify for the tax exemption because of the condition they're in.
There are a few exceptions in the new tax law regarding the fair market value section, for example, you may base your deduction on the vehicle's fair market value if the charity sells it to a needy individual at a discounted price or if the charity uses the car as part of its mission instead of selling it. Some charities have the capability to repair or perform maintenance and get a donated vehicle ready for sale. A vehicle donation is allowed if you itemize your income tax return.
Whether it's the law in your state or not it's a good idea to protect yourself by having proper insurance coverage on your vehicle until it's donated. One of the exceptions to the new IRS regulations allows donors to still deduct the fair market value of their vehicle, provided the charity materially improves the vehicle.
Saturday, October 13, 2007
Thursday, October 11, 2007
Your Car's Trade-in Value -- The Real Truth!
Car dealers have a bad habit of telling you they're giving you more for your trade-in than they actually are. They do this by artificially inflating the price of the car you're buying, and then artificially inflating the trade-in allowance an equal amount.
In reality, all they are going to give you is wholesale value for your vehicle. Why should they buy your trade-in for more money then they can buy a similar vehicle from a car dealer auction that sells at wholesale value? A car dealer is no different than any other merchant in that they have to buy inventory to resell. Just like the grocery store or the furniture store owner, they have to buy at wholesale and sell at retail in order to make a profit and stay in business.
The problem is that I've never met a customer who was satisfied with wholesale value for their trade-in. They always think their vehicle is worth retail value. It doesn't help when Blue Book and other reputable automotive resource web sites list unrealistic trade-in values for most vehicles.
The only way to get more than wholesale value for your car is to sell it privately.
Car dealers even have terminology to differentiate between the true amount they are putting in a vehicle, "ACV" or "Actual Cash Value," and the artificially inflated number that they list on your car sales contract, "Over Allowance."
They use these two terms so that when they are discussing the deal between management and salesman, and when they are calculating their profit after a deal is complete they can differentiate between the true number for the trade-in and the false, inflated number.
The car dealer wants the car deal to follow the path of least resistance, so they tell you what you want to hear. It's all "Smoke and Mirrors!"
So how can you know for sure what the car dealer is actually giving you for your trade-in?
Always negotiate the selling price of the car you're buying without the trade-in. Bring the trade-in into the deal after you have agreed on a purchase price. By doing this you take away their ability to artificially inflate the price of the vehicle you're buying and therefore, they can't artificially inflate the trade-in allowance either. They'll have no choice but to tell you the true ACV (Actual Cash Value) of your trade-in.
The car sales person won't like you dealing in this manner, but so what. No one says you have to do a car deal their way. Their way will usually cost you more money anyway!
Remember, If you tell the car dealer up front that you have a trade-in they will always hold back some money in the selling price so they can show you -- on paper -- an inflated trade-in allowance. The "price difference" (the difference between the vehicle you're buying and the trade-in allowance) will be the same in both scenarios, but the inflated scenario always looks better on paper to the customer even though it's all BS!
In all fairness, doing a car deal in this convoluted fashion is not all the car dealer's fault. As I mentioned earlier, most customers have an exaggerated opinion of what their trade-in is worth, so in order to not anger the customer and risk losing them, the car dealer will show them on paper what they want to see . . . a high trade-in allowance, even though there is absolutely no way the car dealer could, or would ever pay that amount for the trade-in.
In reality, all they are going to give you is wholesale value for your vehicle. Why should they buy your trade-in for more money then they can buy a similar vehicle from a car dealer auction that sells at wholesale value? A car dealer is no different than any other merchant in that they have to buy inventory to resell. Just like the grocery store or the furniture store owner, they have to buy at wholesale and sell at retail in order to make a profit and stay in business.
The problem is that I've never met a customer who was satisfied with wholesale value for their trade-in. They always think their vehicle is worth retail value. It doesn't help when Blue Book and other reputable automotive resource web sites list unrealistic trade-in values for most vehicles.
The only way to get more than wholesale value for your car is to sell it privately.
Car dealers even have terminology to differentiate between the true amount they are putting in a vehicle, "ACV" or "Actual Cash Value," and the artificially inflated number that they list on your car sales contract, "Over Allowance."
They use these two terms so that when they are discussing the deal between management and salesman, and when they are calculating their profit after a deal is complete they can differentiate between the true number for the trade-in and the false, inflated number.
The car dealer wants the car deal to follow the path of least resistance, so they tell you what you want to hear. It's all "Smoke and Mirrors!"
So how can you know for sure what the car dealer is actually giving you for your trade-in?
Always negotiate the selling price of the car you're buying without the trade-in. Bring the trade-in into the deal after you have agreed on a purchase price. By doing this you take away their ability to artificially inflate the price of the vehicle you're buying and therefore, they can't artificially inflate the trade-in allowance either. They'll have no choice but to tell you the true ACV (Actual Cash Value) of your trade-in.
The car sales person won't like you dealing in this manner, but so what. No one says you have to do a car deal their way. Their way will usually cost you more money anyway!
Remember, If you tell the car dealer up front that you have a trade-in they will always hold back some money in the selling price so they can show you -- on paper -- an inflated trade-in allowance. The "price difference" (the difference between the vehicle you're buying and the trade-in allowance) will be the same in both scenarios, but the inflated scenario always looks better on paper to the customer even though it's all BS!
In all fairness, doing a car deal in this convoluted fashion is not all the car dealer's fault. As I mentioned earlier, most customers have an exaggerated opinion of what their trade-in is worth, so in order to not anger the customer and risk losing them, the car dealer will show them on paper what they want to see . . . a high trade-in allowance, even though there is absolutely no way the car dealer could, or would ever pay that amount for the trade-in.
Wednesday, October 10, 2007
Buying a Car - How To Lower Your Costs
When buying a car, new or used, focus on the overall price, not on the monthly payment. Here’s why. A dealership or lender can lower your payments by extending the loan. But the longer term will cost you hundreds, maybe thousands, more in interest over the life of the loan.
Spreading out the payments when buying a car could also put you “upside down” on the loan, meaning you owe more than the car is worth. If you total the car, if it is stolen, or if you want to trade it in on another vehicle, you will have to make up the difference between what you owe and what the car is worth out of your pocket.
Ongoing Costs
What you pay for a car and for your financing are only two of the expenses of driving a vehicle. There are also ownership costs and operating costs.
Ownership costs are the same regardless of how many miles you drive. They include taxes, depreciation, finance charges (if you have a car loan), registration, insurance, and license fees.
Operating costs include gas, oil, tires, and maintenance. These go up the more you drive. You can lower your operating costs by driving smart. AAA offers the following tips on saving fuel:
* Slow down. If your average commute includes 20 miles of highway time, and you drive it at 60 mph instead of 70 mph, you will save approximately 1.3 gallons in a 5-day week.
* Combine errands. Instead of spreading these tasks out over a few trips, do them all at once. Park in a central spot and walk from place to place.
* Shop online. Save the trips to the store, and consider other errands online, such as banking, buying stamps, and paying bills.
* Drive the small car. Do you own a SUV and a fuel-efficient sedan? Take the smaller car on any long trips you can this week.
Spreading out the payments when buying a car could also put you “upside down” on the loan, meaning you owe more than the car is worth. If you total the car, if it is stolen, or if you want to trade it in on another vehicle, you will have to make up the difference between what you owe and what the car is worth out of your pocket.
Ongoing Costs
What you pay for a car and for your financing are only two of the expenses of driving a vehicle. There are also ownership costs and operating costs.
Ownership costs are the same regardless of how many miles you drive. They include taxes, depreciation, finance charges (if you have a car loan), registration, insurance, and license fees.
Operating costs include gas, oil, tires, and maintenance. These go up the more you drive. You can lower your operating costs by driving smart. AAA offers the following tips on saving fuel:
* Slow down. If your average commute includes 20 miles of highway time, and you drive it at 60 mph instead of 70 mph, you will save approximately 1.3 gallons in a 5-day week.
* Combine errands. Instead of spreading these tasks out over a few trips, do them all at once. Park in a central spot and walk from place to place.
* Shop online. Save the trips to the store, and consider other errands online, such as banking, buying stamps, and paying bills.
* Drive the small car. Do you own a SUV and a fuel-efficient sedan? Take the smaller car on any long trips you can this week.
Tuesday, October 9, 2007
Certified Pre-Owned Vehicles
Certified pre-owned vehicles are commonly presented as being a better buy, or more likely to be reliable, than your average used car. Of course, this additional reliability comes at a premium, which some consumers are willing to pay. However, once you see what ‘certified pre-owned’ actually means, it may not seem like such a great deal.
The only thing that separates a certified pre-owned vehicle from any other vehicle is that it has very low miles (probably has some original warranty left on it) and has been thoroughly inspected by the dealership’s mechanic (this is done to every used vehicle regardless) and deemed fit for a warranty package, which is added to the price of the car.
Essentially, the warranty comes with the vehicle, whether you want it or not. Although the vehicle inspection may be somewhat more rigorous when it comes to a certified vehicle, it is still done by the dealership’s mechanics, which some may say constitutes a conflict of interest.
Despite the newness of certified pre-owned vehicles, it is still a good idea to have them looked at by an independent mechanic to ensure there are no signs of abuse or neglect.
Remember, pre-owned is a euphemism for used, the same way collateral damage is a euphemism for deaths. Pre-owned vehicles, no matter who certifies them, are still used vehicles, and should be treated accordingly.
It is also good to consider where most certified pre-owned vehicles come from. They are usually not trade-ins from customers who drive a vehicle for ten thousand miles and trade them in. Most of them are ‘program cars,’ which means they were leased to rental car companies like Enterprise or Avis. Although program cars have low miles, there is no telling how they have been driven or how frequently the oil was changed.
Many people buy certified pre-owned vehicles because “it has a warranty,” but you can get a warranty for any used vehicle. However, some used vehicle warranties may be much better than others, including those that are part of a certified pre-owned package. For this reason, it is important to read the paperwork and find out what is covered, and how things will work if you do need repairs. Some warranties provide a loaner vehicle, while others require you to pay for necessary repairs and submit the bill for reimbursement.
No matter which path you choose, do not overlook the power of negotiation and the possibility of getting the dealer to throw in some extra perks in order to make the sale.
It is also a good idea to compare the price of a certified pre-owned vehicle to a similar unit without the added warranty to see how much that warranty actually costs.
Many car buyers spend more than they intended because of the allure of the warranty and the certified pre-owned designation. However, looking at vehicles that are slightly older, with a few more miles, and adding a warranty, can oftentimes be a much cheaper alternative and be just as reliable as a certified pre-owned vehicle.
The only thing that separates a certified pre-owned vehicle from any other vehicle is that it has very low miles (probably has some original warranty left on it) and has been thoroughly inspected by the dealership’s mechanic (this is done to every used vehicle regardless) and deemed fit for a warranty package, which is added to the price of the car.
Essentially, the warranty comes with the vehicle, whether you want it or not. Although the vehicle inspection may be somewhat more rigorous when it comes to a certified vehicle, it is still done by the dealership’s mechanics, which some may say constitutes a conflict of interest.
Despite the newness of certified pre-owned vehicles, it is still a good idea to have them looked at by an independent mechanic to ensure there are no signs of abuse or neglect.
Remember, pre-owned is a euphemism for used, the same way collateral damage is a euphemism for deaths. Pre-owned vehicles, no matter who certifies them, are still used vehicles, and should be treated accordingly.
It is also good to consider where most certified pre-owned vehicles come from. They are usually not trade-ins from customers who drive a vehicle for ten thousand miles and trade them in. Most of them are ‘program cars,’ which means they were leased to rental car companies like Enterprise or Avis. Although program cars have low miles, there is no telling how they have been driven or how frequently the oil was changed.
Many people buy certified pre-owned vehicles because “it has a warranty,” but you can get a warranty for any used vehicle. However, some used vehicle warranties may be much better than others, including those that are part of a certified pre-owned package. For this reason, it is important to read the paperwork and find out what is covered, and how things will work if you do need repairs. Some warranties provide a loaner vehicle, while others require you to pay for necessary repairs and submit the bill for reimbursement.
No matter which path you choose, do not overlook the power of negotiation and the possibility of getting the dealer to throw in some extra perks in order to make the sale.
It is also a good idea to compare the price of a certified pre-owned vehicle to a similar unit without the added warranty to see how much that warranty actually costs.
Many car buyers spend more than they intended because of the allure of the warranty and the certified pre-owned designation. However, looking at vehicles that are slightly older, with a few more miles, and adding a warranty, can oftentimes be a much cheaper alternative and be just as reliable as a certified pre-owned vehicle.
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