Should You Sell Your Car If You No Longer Commute to Work?
Have you thought about leaving your old car? This may be the easiest way to bolster your finances, saving you thousands of dollars in annual expenses. Sure, most people own cars because they need them , but is that true for you? The pandemic has killed many of us, and you may be one of them – a depreciating asset lying in the driveway.
Cars are expensive
Transportation is the second largest expense for a typical household, after housing. If you include fuel prices, repairs, insurance rates, license / registration, taxes, depreciation, and finance charges, the average annual cost people spend on their car is $ 9,282, according to AAA .
Of course, if you have an old clunker, you’ll probably spend a lot less. You also pay less insurance due to depreciation, but that simply means your car is losing value – up to 60% by the end of Year 5, according to the Black Book . Maintenance costs also rise as the vehicle ages. A Consumer Reports poll found that, on average, a 10-year-old car costs $ 375 more to repairs per year than a three-year-old.
The cost of a car varies by car, and a cost of ownership calculator can help you determine how much you are spending. As practice shows, you should pay no more than 15-18% of your income for a used car, especially if you do not use it.
You may have alternatives
Not everyone can ditch their car, but if you live in an urban area with good public transportation and ride-sharing options, you need to do the math and see if it works for you. Knowing how much you spend on your car, including gas and parking, should give you a baseline that you can compare to other options:
- Public transport
- Walking or cycling
- Taxi, car sharing and ride sharing
- Peer-to-peer car rental
- Rides from a family member or friend
If you look at the public transit pass, which costs about $ 150, it’s only $ 1,800 a year – how does that compare to what you currently spend on a car?
Just remember to be realistic about your needs – from time to time you may need to make heavy purchases, rearrange furniture or take your kids to school. You’ll want to save some money for taxis, ride-sharing, or rentals, even if you’re only going to use public transport. In addition, you can estimate your time in dollars and account for the opportunity cost of doing something other than driving, such as reading or working while commuting.
If you decide to sell your car
The good news is that used car sales are skyrocketing . NerdWallet has a detailed guide to selling your old car, but the main online players are Carvana , Shift, and Vroom . These sites give you self-esteem and will take your car if you agree to sell it.