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1)
CarAlternative.com versus a vehicle donation
The CarAlternative.com solution is even easier than donating. We offer the same level of convenience: easy paperwork, towing for non-running vehicles, and no registration or smog requirements. However, because we send you cash you don't have to consult a tax expert or worry about how to claim a proper tax deduction. Nor do you have to wait until tax time to get value for your vehicle.
In almost all cases donated vehicles are taken to auction and sold. The donor then receives a tax deduction based on the gross auction sale price. What many people do not understand is that the gross auction sale price is not the actual amount of tax savings. The amount of the tax savings is your tax rate (usually between 30-35%) multiplied by the gross auction sale price.* Since our service also involves an auction sale, you will get more of the auction sale price back in cash from CarAlternative.com than you would get in tax savings from donating to a charity.
Example:
| Sale Price: | $1,500 | |
| Tow Fee: | $80 | ($0 if delivered by customer) |
| Auction Fee: | $85 | |
| Admin/Processing Fee: | $75 | |
| Net Proceeds from Auction Sale: | $1,260 | |
| CarAlternative.com Commission (20%): | $252 | (20% of net) (capped at $400) |
| Customer Check Amount: | $1,008 | |
| Vs. Donation Tax Savings: * | $525 |
*
Tax Deduction: the amount your can deduct from your taxable income.
Tax Savings: the amount of the deduction multiplied by your tax rate.
Therefore, when a vehicle sells for $1,500 it is true that you would earn that much as a deduction by donating the vehicle, however, you will only reduce your taxes owed by $1,500 multiplied by your tax rate.
Tax rates vary for individuals and in our example we've assumed a 35% tax rate which yields an actual tax savings of $525. By using CarAlternative.com you could get $1,008 cash back immediately, rather than waiting to get the $525 tax break. Please use our payment wizard to experiment with various sale price scenarios.
2)
CarAlternative.com versus a dealer trade-in
| CarAlternative.com | Dealer | |
| Sale Price: | $2,000 | $1000 |
| Tow Fee: | $0 | $0 |
| Auction Fee: | $85 | $0 |
| Admin/Processing Fee: | $75 | $0 |
| Net Proceeds from Auction Sale: | $1915 | $1000 |
| CarAlternative.com Commission: | $368 (20% of net, capped at $400) | $0 |
| Payment to Customer: | $1,472 | $1000 |
Summary:
This example assumed a poor dealer trade-in value. It is not always the case that the dealer will give a poor trade-in value. If you think you’ve been offered a low trade-in price, CarAlternative.com may be a better alternative. Read the paragraphs below dealing with how a used car dealer handles trade-ins.
Trade-ins
When a dealer accepts a trade-in vehicle that won't be sold on their own lot, the dealer either sells it to a local used car dealer, sells it at auction, or sells it to a vehicle dismantler. The dealer is therefore getting a “wholesale” price when he sells a trade-in car in this manner.
Because the new car dealer wants to make a profit on the trade-in, he will usually offer the new car buyer a trade-in value significantly lower than what he himself expects to sell the vehicle for. What this means is that you may be offered a “below wholesale” price for your old car. In these cases CarAlternative.com may be able to get a better price for your car at auction. See our Estimating Sale Price page.
A dealer has a profit margin built into the new car purchase that he sometimes uses to “inflate” the trade-in value. Whenever you are considering buying a new car and trading-in your old car, always negotiate the sale price for the new car down to the lowest possible amount, and then mention you want to trade-in your older vehicle to reduce the price even further. That way the dealer has to play fair on your trade-in price.
3)
CarAlternative.com versus selling your car privately
| CarAlternative.com | Private Sale | |
| Sale Price: | $1,000 | $2,000 |
| Tow Fee: | $0 | $0 |
| Auction Fee: | $85 | $0 |
| Admin/Processing Fee: | $75 | $0 |
| Net Proceeds from auction sale: | $840 | $2,000 |
| CarAlternative.com Commission: | $168 (20% of net, capped at $400)* | $0 |
| Repairs/Service: | $0 | $1,500 |
| Advertising: | $0 | $40 |
| Payment to Customer: | $672 | $460 |
Summary:
This example assumes major repairs (like clutch replacement and a brake job), or handful of minor repairs, is needed before your car can be sold easily and safely to a private individual. If you’re in this situation, you may wind up with a repair bill just slightly below, or even above the price you could sell the car for. Because auction buyers have access to cheap parts and labor, and also buy cars strictly for parts value, CarAlternative.com can get a decent price at auction for cars needing major/minor repairs.
Using CarAlternative.com also eliminates the hassle and anxiety of trying to sell your used car to a private individual. Selling privately also takes time. You may have to spend three or more evenings giving test drives and negotiating price before successfully selling the car.
* CarAlternative.com has a maximum commission of $400. This means that as the net proceeds from the auction sale exceed $2,000 the commission charged by CarAlternative.com stays at $400 and does not get any higher.