First, I want to say that this won’t work for everyone, but I hope thousands of you will be able to take the ideas in this article and sell a car or truck now, while the used car market is white hot in the US. Some of these ideas will also work outside the US, some will not.
I covered this topic 10 months ago in the article entitled “Save $39,000 To $114,000 Driving The Tesla Model Y, The World’s Best Crossover.” This time I want to leave Tesla out of the article and just focus on living with one less car. It could either be reducing your vehicle count by one if you own multiple vehicles, or if your family only owns just one, it would be how to sell that vehicle and live car-free (which is much harder to do).
The article is broken into 3 parts. First, it will show you that you can save a boatload of cash if you sell your car or truck now. Many of you have thought of that, but then decided, but I can’t because of X. The second part of the article will address every reason I can think of that you need to keep your car and how to work around it. The third is how to keep access to a car without owning one.
You may not like the things I’m going to suggest, but I think you will find at least one idea you have never considered before and maybe it is the one that will work to let you sell your car. I’ve personally used these techniques 4 times in my life to sell a car. The first time was when I went to college. The second was helping my retired parents decide to go from two cars to one. The third was when my 92 year old mom fell and I helped here decide it was best she didn’t drive anymore. The fourth was a couple years ago when my son “needed” a car for a job, so I used these techniques to reduce the cars my wife and I use from two to one.
You may ask “if I knew all these things, why did my son “need” a car? He tried these techniques. For where he was living and the specific job he had and the skills he had at the time, the techniques didn’t work for him. That’s one reason I said right off the bat that they won’t work for everyone, but they will work for many people, including my mom and myself.
Show Me The Money
While many auto companies are blaming the 20% drop in US auto sales since April on chip shortages, the Mannheim used car price suggests that sales have peaked and that prices will round trip, one of many reasons we believe inflation will surprise on the low side of expectations! https://t.co/BQQKIAI9fp
— Cathie Wood (@CathieDWood) August 12, 2021
Used car prices are ridiculously high, and if Cathie Wood and I are right, consumers are starting to realize that awesome electric cars coming out over the next year aren’t 5% better (as previous new models typically are) but are 4 times as efficient, cost half as much to maintain, and are faster, quieter, smoother, and safer than anything they’ve owned before. And because of that, the smart money is delaying new car purchases until these great cars are available in their segment. Zach also covered the peak in the ICE vehicle market recently.
A couple of days ago, we highlighted that the average cost of ownership for a new car is almost $10,000 a year. Now, you may not have as high a cost if you have a lower cost car or bought it used, but many people only focus on their payment and fuel costs and forget about maintenance, depreciation, finance, insurance, and other costs. If you have two cars and one costs you $10,000 a year and one costs you $8,000 a year and you sell the $8,000 one, you won’t save $8,000 — your costs will go up somewhat on the car you keep, since you will use it more.
OK, I’m Convinced I’d Save A Pretty Penny, But I Can’t Because …
- “I need it for my job.” Well this one has been made much easier by the Covid crisis. Many jobs that could be done remotely before but the company just didn’t trust the employees unless they came in every day now let people work from home. Some of the smarter companies are starting to see that they can save big bucks on real estate if they reorganize their office. It also allows them to recruit worldwide for talent, which is especially valuable if they are located in a high-cost area or even a low-cost area that doesn’t have the sort of amenities that are expected by the talent they want to hire.
- If you really like your job and it doesn’t let you work from home, now is a great time to ask your boss to reconsider. You could also move closer to your job so that you can use other forms of transportation to get there. I realize jobs like airline pilots and surgeons can’t work from home yet, but that time is coming. For now, those with high-level jobs will likely have to keep access to a car. But they can use the suggestions in the next section to reduce cost of access to a car.
- If you don’t like your job, the job market is excellent, so consider leaving it for a job that either lets you work from home or is closer to home.
- If you have a low-end, entry-level job like work in a retail store, those are very easy to get. You can either switch to an entry-level online job or switch to a retail job that is closer to where you live, or move to be closer to your job (usually not worth it for a low-end job).
- “I live in an extreme environment, like Alaska or the Tropics.” I live in the lightning capital of the world (Tampa), so I can’t easily give up my car. I’d be killed in a year or less if I walked or biked to work, to run errands, or to go to entertainment events. That doesn’t mean I can’t walk or use a bicycle. It does mean I have to watch the lightning app on my phone and have a backup plan if a storm comes up (which happens frequently in the summer). I could move to a more walkable community, but I choose to share a Tesla Model Y with my wife and we just plan who uses the car.
- “I need a truck to haul stuff.”
- “I need to take my kids to school.” I have 3 kids, so I know this situation well. Most of these options I have used, but some of them I only considered.
- You could homeschool.
- Your kids could do virtual school.
- You could move your kids to a school that is more convenient for you. I realize this goes against the mantra that we will do anything to make it better for our kids. Making things better for our kids includes them realizing at a young age that it isn’t all about them — there are competing priorities and you don’t always get to go to the school you want. You can still be whatever you want to be. There are plenty of chances in life — you just have to take advantage of them.
- You could pay another parent to take your kids to school.
- You could hire a transportation service to take your kids to school.
- Your kids could take the school bus. Yes, I know — they would have to get up an hour earlier and many buses don’t have air conditioning or adequate heating. This builds character in your kids.
- Your kids could take the city bus to school (if there isn’t a school bus to your school, they could take the city bus).
- You could carpool with other parents. I was once in 3 carpools at once. One for each of my 3 kids, who each went to different schools that didn’t offer transportation.
- If your kids are in after-school activities, you can carpool with other parents for that after-school activity.
- Your kids could walk or bike to school, either alone, with you, or with a School Pool.
- “I need a car to visit my friends.” You can see them online and use some of the methods below to meet in person occasionally.
None Of Those Work For Me, I Still Need Access To A Car
Just because you need access to a car doesn’t mean you have to own it. First, here are other ways to get places without a car:
- Bike, or use an electric bike to go farther than your level of fitness can take you (or is comfortable for you).
- Buses, trains, and trams.
- Carpools are excellent choices. You still need a car to be part of a carpool, but if you are in a carpool with 5 other people, you only need a car once a week. You maybe able to share, borrow, or rent a car for that one day a week for far less than owning a car. For example: 50 days a year times $50 a day is $2,500, far less than owning a car.
- Rent a car, and don’t forget Turo. You can also use Turo to rent out your car if you find you need to keep it but don’t use it everyday.
- Uber or Lyft.
- Pay a friend to drive you. This is a tricky area, since most friends don’t want to be paid. To ensure this isn’t a one-way relationship, you can insist on “paying for gas” and be generous. You may find other ways to compensate them, with meals or other gifts for example.
- Formally buy a car with your neighbors. I have a friend in California who shares a car with 3 other people. I don’t know how the insurance works, but it is a great idea for people who need a car but don’t need it very often.
If I haven’t convinced you to sell your car, maybe you want to sell a $30,000 vehicle and buy a $3,000 older car. This will dramatically cut your depreciation, financing, and insurance costs and may even cut your fuel bills if you are carful what you buy. You will likely have higher maintenance and repair costs on an older car, so if you make this choice, do your research. I know some people who buy a $2,000 car, run it for 30,000 miles or so, doing little maintenance or repairs, then when something breaks, they sell the old one for parts for $1,000 and buy another running car for $2,000. There are no financing costs since they pay cash, and the $1,000 depreciation over 30,000 miles is only about 3 cents a mile, so they dramatically cut their costs. These “beaters” don’t look pretty and may be less reliable, but it does save a lot of Benjamins.
If you decide to share a car with your spouse or friend, I recommend you use a shared calendar (like Google Calendar) to keep track of who is using the car each day. Then decide what to do about conflicts. What I do if my wife and I want to go different places at the same time is one either drops the other off or, if that doesn’t work, one of us takes an Uber or Lyft. Recently, Uber and Lyft have become more expensive and less reliable due to a driver shortage, though. Hopefully that is a short-term problem.
So if you sell a car that was costing you $6,000 a year and you spend $2,000 a year more taking Ubers, renting cars, paying people for rides, or accumulating extra costs on any other vehicles you own and start using more, that would be a net savings of $4,000 a year for 10 years, or $40,000, as promised in the headline!
I hope I have given you and your family encouragement and ideas on how you could sell one of your cars if you are looking to save a whole lot of money over the next few years.