Living with debt can be stressful. Not only do you find yourself working just to pay off your bills, but it also hard to have a normal life. To get out of the debt trap, an increasing number of people are looking to sell their cars. After all, why make a car payment every month, when most cars are only used 5% of the time? With that in mind, here is a guide on how to get out of debt by selling your car. If your car is old and the cost of necessary repairs is adding up, it might be a good idea to junk your car.
Cars Are Expensive
Your car payment may only be $200 per month, but have you factored in costs for gas, maintenance, insurance, and, in some cases, property tax? The next thing you know you are spending close to $500 per month just for the privilege to sit in traffic.
As such, selling your car not only eliminates the cost of your car loan, but it frees up cash which could be used to other things. Just imagine what you could do if you had an extra $6,000 per year. Paying off much of your debt, be it student loans or credit cards, could finally transition from a dream into reality.
Cars are expensive and if you are thinking “I should sell my car,” then you have probably had enough.
Eliminating Your Car Loan
Even if you did nothing else, eliminating your car loan would free up hundreds of dollars every month. Granted, some of this savings would be used for Uber, public transportation or a bicycle. There is no doubting that you would save a significant sum.
Another plus of eliminating your car loan is that will help to improve your credit score in two ways. First, you will lower your total debt-to-income ratio, and second, having the account marked as paid in full would be considered a positive.
Even if you are underwater on your car loan. That is the total amount owed is more than the vehicle’s value. You might want to consider a sale as it will free up cash.
What if You Don’t Have a Loan?
Even if you don’t have a car loan, you still might want to consider selling your car. First, the sale will net you thousands of dollars which can be used to pay down your debt. Second, not having to pay for the operating costs of a vehicle will save you hundreds each month.
As such, selling a car who wholly own is a win-win. Just remember that you will need to have a clear idea of how you will get around. Maybe it is by carpooling or you can use a bicycle. Either way, you should look at advantages of selling a car (more money) against the costs of using another mode of transportation.
What are Your Sale Options?
It is probably self-evident but bears repeating; if you are considering selling your car to help get out of debt, then you want to get the most you can for your car. As such, the best sale options are either direct sale or consignment.
The advantage of direct sale is that you will get the most money. However, you will also need to take the time to list your car and to follow up every inquiry from potential buyers. While selling your car on consignment means that you are ceding responsibility for doing so to someone else. This also means that you will need to pay a portion of the sale to the person who is handling the sale.
Either way, you want to make sure you can get as much money for your car as possible. Before deciding whether a direct sale or consignment are the best option, you will want to look at what your car is worth and how long you think it will take to sell your car.
Let’s face it, owning a car is often more of a nuisance than anything else. This is especially true if you live in or near a city as you can choose from a variety of mobility options. Don’t forget the economic benefits, as selling your car can put thousands of dollars in your pocket and this money can be used to get out of debt.
So, if you are struggling with debt then consider the option of selling of your car.