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How to Get the Most Cash for Your Junk Car (and better options)

Your car has reached the end of its useful life, and now it’s taking up a parking spot. One glance at it and you know that it’s worth a fraction of what you paid for it, but you can still convert it into cash. What is the best way to sell a junk or scrap car? Should you sell it privately, sell it for scrap metal, or trade it in at a dealership? And how do you know what a good price is?

Unlike the used car market’s Canadian Black Book, there’s no consistent method for evaluating a junk car, truck, van, or SUV. If you consider the car junk, however, you can safely assume it’s in the hundreds of dollars, not thousands anymore.

How Can I Sell My Car for Scrap?

You won’t be getting wealthy by selling your vehicle. However, with some intentional research, you can get a decent sum of cash for junk cars in one of a few ways.

1. Sell Privately

Is your car unique in some way? If your vehicle has something that sets it apart – a classic car, low mileage, or hard-to-find options – there could be a potential buyer who buys junk cars like yours. Private buyers pay great prices if your car is desirable. But if your car is a run-of-the-mill model with typical rust issues, a blown motor, or accident damage, selling privately probably isn’t your best bet.

2. Sell to a Local Junkyard

Most cars end up here eventually. A junkyard will pay you cash for junk cars, and they aren’t picky. Scrap car removal services fall into this category too. What you’re paid for scrap cars and trucks all centres around its weight on the junkyard’s industrial-sized scale, and the going rate for scrap steel or a flat per-car rate. There’s no haggling and no consideration at all on your car’s traits.

3. Trade It In or Sell at a Dealership

In most cases, car dealerships accept any kind of car on trade – even a junk car – if you’re buying a new or pre-owned vehicle from them. Some might also pay cash for old cars without buying another vehicle although this less common.

Trading in an old car at a dealership has benefits that aren’t commonly known. While your trade-in value is often lower than selling it privately, if you’ve already decided to buy a vehicle at a given dealership and worked out a fair price – then understanding what they’d give you for your old car makes a lot of sense. Occasionally, a push, pull, or drag sale at a dealership can pay you even more than your car is worth, but be careful that they aren’t just inflating the value of your vehicle at the expense of what could be a discount on the vehicle you’re looking at! There are also tax benefits of trading your vehicle in, although these are typically a minor consideration when the value of your vehicle is relatively low.

What is Cash for Cars?

‘Cash for cars’ is a common term for junk car removal services. These service providers pay cash for your car and resell it for parts or scrap metal to make a profit. The term ‘cash for cars’ is often confused with the federally-administered ‘cash for clunkers’ program that is no longer operating.

How Do Cash for Cars Services Work?

At its core, cash for cars services are a more convenient way to get cash for junk cars without having to bring it to the junkyard yourself. The seller contacts the junk car removal service to get a quote on their car’s worth. If you agree with the quote, they’ll come tow away your car, complete the paperwork, and pay you for it.

While it’s convenient, ‘cash for cars’ services aren’t getting you the best deal. Because they, in turn, sell your car or its parts to someone else for more, you leave money on the table for the fast, hassle-free service. Is it worth it? Well, it depends.

Should I Sell, Scrap, or Trade My Car In?

You have options to sell a junk car, but which choice is best for you? Let’s check out the possibilities.

  • If you are short on time, you should call a ‘cash for cars’ service or a junk car removal provider. You might be giving up a portion of the proceeds of the sale but you’ll be able to sell your car quickly.
  • If you’re planning on purchasing another vehicle from a dealership, you should look into trading it in at the dealer. Your trade-in value might be lower than you’d like, however, you’ll save the taxes on the value of your trade-in. Plus, you could be eligible for additional incentives from the manufacturer.
  • If your newer car is damaged or it’s a vehicle the dealership could potentially wholesale or retail, you could sell it to the dealership. Unlike a trade-in, there aren’t any added tax benefits for selling your vehicle to the dealer.
  • If you have time and patience to advertise your car, you may be able to command a higher price by selling your car privately. This isn’t a bad place to start and if you don’t get any takers you can still call a ‘cash for cars’ service to haul it away.

Are There Tax Incentives for Scrapping My Car?

Depending on the method you choose to scrap your vehicle, there may be financial tax benefits beyond the money you get.

  • When you trade in a car in Canada, GST is only charged on the difference between the sale price and the trade-in value. Provincial sales taxes, however, are administered differently. In BC, Manitoba, and Ontario, for example, provincial sales tax is charged on the difference only while in Saskatchewan, it’s assessed on the full purchase price.
  • Scrapping a car in some provinces can net you financial benefits on other purchases. Notably, British Columbia’s SCRAP-IT program allots benefits of up to $6,000 toward a new EV purchase when you scrap a car.
  • Donating a car can be just as rewarding. While you don’t have cash in hand, you’ll be issued a donation tax receipt for your vehicle’s market value that comes in handy when you file income tax.

Jun 25th, 2019