Is It Worth Donating A Car?

If you’ve got an old vehicle sitting in your driveway, you’re probably wondering what on earth you’re going to do with it. Do you try to sell it to someone in the hope they can fix it? Do you part it out and try to get a little money for the engine and anything else that may still work?

What about car donation? You may have considered this, but is it worth donating a car? In this guide, we’ll look at the benefits of donating a car so you can more easily decide whether it’s worth the effort. 

Why Should I Donate My Car?

Donating your car is a relatively easy process, though different charities may have different procedures. There are dozens of non-profit groups that will accept your donated car, and some will even take your “junk” car. 

In addition to the feeling of doing something good for others, you can benefit from donation when Tax Day comes around next year. Your donation is tax-deductible and can lead to significant savings on your next return. 

Before you donate your car to a non-profit, you’ll need to do a little research to determine whether it’s worth it for you to donate your specific vehicle. Everyone’s situation is a little different, so let’s talk about the questions you should answer before calling your favorite charity. 

Is It Worth Donating My Car?

As you consider donating your vehicle, it’s a good idea to figure out what it’s worth. If your car won’t start or drive, you probably not going to be able to sell it for much. You could junk your car (sell it to a junkyard) but even they won’t pay you more than a couple hundred dollars. 

If your car is in reasonable condition, you may be able to sell it to a private buyer or a dealership. Even then, the amount you get will likely not be its full market value. Let’s face it: people like a deal, and the dealerships are in it to make money. 

So, is it worth donating a car? Well, because of the American Jobs Creation Act of 2004, it’s no longer always possible to deduct the fair market value of your vehicle. Instead, you’ll be permitted to deduct only the dollar amount the charity gains from scrapping, selling, or auctioning it. 

However, if a charity is able to use your car (donate it to a family in need or use it for their own purposes) you may deduct the full market value of the vehicle. That can make quite a difference on your tax return!

To best determine whether donating your car is best, ask the charity what they intend to do with the vehicle. If they’ll scrap it, you might be better off doing so yourself and pocketing the cash. If they’ll use it, consider donating it and taking the tax deduction. 

Alternatives to Donating a Car

If you don’t feel that donating your car is worth it, or don’t have a worthy charity in mind, you can still make a little money from your unwanted vehicle. There are three options many car owners consider.

First, you can sell your vehicle to a private buyer or a dealership. You will need to have the vehicle title on hand and be willing to provide information about the title history. Check with Kelley Blue Book or Edmunds to discover what your car is worth, both for private and dealer sales. Price your vehicle accordingly. 

Another alternative to donating your vehicle is to sell it for parts. If your car won’t run, but still has working components, you can list those components for sale individually. For instance, someone in your community may be looking for a motor for a Ford F-150, which you happen to have! 

Finally, you can scrap your vehicle yourself. Junkyards will pay a few hundred dollars for your unwanted vehicle, even if you don’t have a clean title. Most will pick up the car within a few days of your call, and many will pay you at the time of pickup. 

Car Donation Process, Fair Market Value, and Tax Deductions

Because of American tax laws, it’s no longer always possible to deduct the fair market value of your vehicle. For this reason, you’ll need to ask yourself if it’s worth donating a car based on the condition of your vehicle and your specific circumstances. 

Regardless of its condition, though, you can usually claim up to $500 as a tax deduction. If you itemize your deductions, this may be well worth it for you. 

Research the car donation program, make sure it actually offers more benefits than simply scrapping/selling and donating the cash, and be aware of car donation scams.