We are now well into our 4th month of the pandemic. People are starting to panic because of the uncertain future ahead. Some are sorting to sell their assets (like cars), so that they can be more liquid to face this crisis.
Is it wise to sell your car in times of Covid-19? Depending on the need, as I would elaborate in this article, selling your car could be a good idea. In this year 2020, the COVID-19 pandemic has increased the demand for used cars, as many buyers are seeking to avoid public transportation.
The demand for used cars is high, which means your car may be worth more than it was before the pandemic. But, the extra profit may not be worth it if you’re concerned about unnecessary exposure to others. So, here are the pros and cons.
Is it a good time to sell?
You may be saying to yourself, "Why should I sell my car? It's running perfectly and it has not been giving me any problems." It may sound obvious, but the best time to sell your car is not when you’re desperate, or don’t have the time or energy to devote to the process. The best time to sell is often when your car and your life are in perfect harmony.
Selling a car takes time and effort, from detailing and preparing the vehicle, to placing ads, fielding responses, and handling appointments with potential buyers. Owners often decide to sell their car when yet another problem or mechanical failure becomes the last straw. The truth is, you’re a lot better off selling when nothing is wrong.
The best time to sell is when there’s nothing wrong inside or out, maintenance is taken care of, and all systems are functioning properly. That way, you’re also likely to end up with a faster, easier, and more stress-free sale.
The best opportunity often comes along when you’re not shopping for one, but that doesn’t mean you shouldn’t be ready to take advantage of a good deal. If your newly born baby means you need more room, or you’ve found that an SUV might suit your lifestyle more than a sedan, be ready to sell when you hear of a good deal.
Doing the Marie Kondo way of dispatching things can be encouraging. Being sentimental is no reason to hang onto a car. I am guilty of it, as I did not want to part with my 15-year-old car because it brought so much good memories. The right time to sell may be when a car comes along that fits your current situation better than the one you have. Be ready to let go, and to move on. I did and it wasn't that bad.
Maintenance Costing More than Your Monthly Payment
Congratulations if you’re driving payment-free because you either paid cash for your car or have paid off your loan. Congratulations again if your car is still providing safe and reliable transportation to you and your family, and doesn’t wake-up and scare the whole neighborhood.
But if you find that your beautiful loving car is spending more time with your mechanic than with you in your garage or costing more in repairs than you’d be paying per month for something more reliable, it’s probably time to sell it.
In fact, if that’s the case you’ve probably already waited too long. To some degree, it becomes a matter of personal preferences, and how much time and patience you have. If it becomes a matter of finances and safety, sell it.
Think Before You Default on Your Auto Loan
It’s an unfortunate reality that many buyers fall behind on their car payments, and that’s especially true during job losses caused by a worldwide pandemic. If you’ve been running late on payments, it’s almost always best to sell your car before it gets repossessed, and pay off as much of the balance as you can.
Even if you owe more on your car than you can get by selling it, it’s usually best to cut your losses and let go. A missed payment or two may put a gash in your credit score, but repeated missed payments or a default could have a serious and lasting effect on your ability to get a loan the next time around.
If your car is worth more than the balance you owe, you can pay off the loan and have money left over to put toward your next car or other bills. If you owe more than the value of the car, you’ll still have to pay off the balance. Either way, the best bet is to sell it privately. That way, you’re likely to get more for it than you would by selling it to a dealer.
Watch Your Mileage
Most late model cars are capable of lasting for well beyond 100,000 kilometers with proper maintenance, but used cars still lose a substantial value after reaching that milestone. If you’ve been thinking of selling and your car is getting close, you might want to make your move before 100K.
There are other, less obvious mileages that you should consider when timing a sale. A car that still has some or all of its warranty coverage can be more appealing to buyers than one that’s fresh out of warranty. Seasoned buyers who do their homework may also be aware of when major services are due.
If your car requires a replacement timing belt at 60,000 kilometers, don’t expect to get as much for it with 63,000 as you would at 50,000 kilometers. A four-year-old car is always going to be worth more than a five-year-old one of the same make and model, even if you bought yours as a brand new last-unit-available model at the end of the model year.
To a buyer, your car is as old as its model year, regardless of when you bought it. Remember that new model introductions happen all year long, so if you drive an SUV and a redesigned version comes out in April, that’s the month your SUV grows another year older. If you’re thinking of selling, try to do it before your car ages another year.
New cars are available with advanced safety features that older ones don’t have, making crashes more avoidable and reducing the likelihood of injury if a collision does occur.
If the time comes when you and your family no longer feel safe in your current vehicle, it’s probably time to get rid of it.
Circumstances may also have an impact on how safe you feel. Moving you residence from the city to a mountainous region may mean it’s time to trade in your two-wheel-drive vehicle for something with all- or four-wheel drive.
If mileage or age is taking its toll in repeated mechanical issues or rust that could lead to structural damage, it’s definitely time to move on.
From a financial standpoint, the best time to sell a car is when you owe less on it than it’s worth. That’s positive equity. The only time it makes sense to rush into selling when you owe more than it’s worth is when you’re at risk of default or repossession.
When you sell with positive equity, that gives you money to put toward a new vehicle. If you owe more than the car’s value, also known as being upside-down in a loan or underwater, you run the risk of further financial woes by having to dip into savings to pay off the loan. Sometimes, a few more car payments can turn things around, and get you from negative to positive equity. If you can afford the payments and wait it out, it could well be worth it in the long run.
Covid or no covid, ultimately, the ideal timing boils down to a combination of personal, and economic considerations. Selling your car calls for practicality. It should also help minimize your stress, and contribute to your happiness in these extraordinary times.