Logo

Should You Sell Your Car to Save Money? 8 Questions to Ask

6 min read
Twenty20

With increased work flexibility and high gasoline prices, the movement to ditch private cars in favor of walking, biking, and taking public transportation has been gaining traction across the country. As more cities invest in public transport and bike lanes to reduce traffic and carbon emissions, at some point you might think about selling your car, too. But is this a good idea?

8 Questions to Ask Before Selling Your Car

Financially, selling your car may make sense if the savings or cash you could get would be more helpful to you than keeping the vehicle. In some situations, selling your car and replacing it with something cheaper or going without one entirely can be a great way to save money, make some quick extra cash, or pay off debt. Before making your decision, here are 8 questions to ask yourself first.

1. Why do you want to sell your car?

Clarifying the real reason(s) behind why you’re considering selling your vehicle can help you make a decision that will benefit you both personally and financially. Are you facing a temporary financial difficulty and need to raise cash quickly to make ends meet? Are high monthly auto loan payments preventing you from meeting your savings goals? Has paying off debt recently become a higher priority for you? Or maybe you’re rethinking how you’re spending money in general and want to reallocate expenses so they’re more aligned with your values and beliefs (e.g., reducing your carbon footprint).

If your future income is not dependent on having a vehicle and alternative ways of getting around are available and accessible in your community, selling your car can be a good way to raise extra cash quickly or pay down debt. For example, maybe you’re primarily working from home now and no longer require a car to commute to the office. Giving up your car in this situation could make a lot of sense, especially if you live in a two-car household.

Not owning a car can also help you save money on the cost of gas, registration, insurance and vehicle maintenance, reducing your expenses. Many people are choosing to embrace the slower pace and neighborhood connection that comes with not owning a vehicle, opting for active transportation (walking, biking, public transportation, ridesharing) instead.

If you find that growing your savings or increasing your cash flow is your true goal, selling your car for one that’s less expensive, or refinancing your existing auto loan may make more sense.

2. What’s the true cost of owning your car?

The cost of owning your vehicle is more than its purchase price. The true cost of car ownership is the total ongoing expense of owning and operating your vehicle on a monthly and annual basis. It’s important to know the true (or total) cost of car ownership because it gives you a baseline for comparison and how those expenses fit into your overall budget. When calculating the true cost of owning your car, you’ll want to take into consideration all the following:

  • Payments of principal and compounded interest (if you have an auto loan)

  • Auto insurance premiums

  • Gasoline (and the rising cost of)

  • Parking fees and tolls

  • Licensing and registration

  • Maintenance and repair costs

Once you’ve added up all the costs of owning your vehicle, you can more accurately assess how much you’ll save (going forward) if you decide to sell it and pocket the cash. You’ll also be able to compare the cost of owning your current vehicle more accurately with one that’s less expensive should you choose.

3. How much can you sell your car for?

Online tools like Kelley Blue Book® can help you research average selling prices and establish an approximate value for your car. Note that your car will likely be worth less as a dealership trade-in than if you sell it to a private individual. When it comes to depreciation, a new car’s value is most heavily impacted by depreciation in the first year, then again in the fifth year and beyond. Typically, the low-depreciation years two through four are a good time to sell and recoup as much value from your vehicle as possible.

4. Do you still owe money on a car loan?

Assuming you don’t own your car outright and have an auto loan, check your current interest rate and the payoff amount. Owing significantly more than the car’s worth is what’s known as being “under water” or “upside-down” on the loan, and it can complicate the decision to sell. In this situation, you might consider “driving through” the loan: Keep making payments until you own the car outright, or you owe less than the car is worth.

If your goal is to save money on interest or lower your monthly payments (or both), auto refinancing might be an attractive alternative to selling your car. Refinancing makes sense if you don’t have a great rate on your current loan, or if your credit score has improved since you got the loan, as you may qualify for a lower rate now.

5. What’s the maintenance and mileage outlook on your current vehicle?

Depending on the make and model of your car, looming maintenance needs can impact the price your car fetches. Generally, major maintenance hurdles are typically around 30,000, 60,000 and 100,000 miles. If your car is coming up on a big milestone, its value can drop. Maintenance costs also influence the “fix it or sell it” debate. Consider whether the repair will add value. Say your car is worth $5,000 if you don’t fix it, and worth $6,000 if you do. If the repair costs $2,000, it’s probably a bad idea—after all, you only gain $1,000 in value.

Another factor impacting the price you can sell your car at is mileage. The average miles driven per year in the U.S. is about 13,500 for most vehicles. When it comes time to sell your car, if your vehicle’s mileage is under the average for its age, it could be an attractive selling point to potential buyers.

6. Are you ready to go carless?

If you’re thinking about giving up your car altogether, slashing all car-related costs can be tempting. Nowadays, there are multiple ways to haul groceries and get yourself and your family from point A to B locally with cargo bikes, e-bikes, strollers, wagons, not to mention buses, subways, trains, and carsharing services. Be sure to think through your current lifestyle or commute and test drive the other available options before ditching your car altogether. Owning a car may not be all that important to you after all. And you may find going car-free brings you unexpected perks, adventure, and a better quality of life.

7. If you still need a car, can you downsize?

Let’s say you’re considering selling your car to pay off debt, but you still need a car to get around. Could you afford a smaller, less expensive vehicle? If you would need to borrow money to pay for it, think twice before selling your current vehicle. If you can sell your car, eliminate some of your debt with the proceeds from the sale, and can still afford to pay cash for a less expensive car, then it might be worth selling. And if you can downside into an slightly older model EV with low miles, you could also save a considerable amount of money on gas.

8. What do you need to sell your car to a private party?

Before you post an ad anywhere, get your paperwork in order and understand the documents you’ll need to close the deal. Your state will have specific requirements, but generally you’ll need the following:

  • Vehicle bill of sale documenting the terms and conditions of the sale (purchase price, VIN, model year, odometer reading, warranty, buyer/seller contact info and signatures)

  • Current vehicle title proving the vehicle belongs to you; a duplicate title can be obtained from the Department of Motor Vehicles (DMV)

  • Vehicle title transfer form transferring vehicle ownership from seller to buyer

  • Valid smog certification (if your car isn’t exempt or state does not require it)

  • Lienholder signature and release (if you have a loan)

  • Vehicle maintenance records (if requested by the prospective buyer)

The Bottom Line

Each car owner’s financial goals are unique, but reviewing these considerations should help you get to a confident answer. While one person might choose to embrace public transportation and fully eliminate car costs, another could be better served by trading in a high-maintenance car for a more affordable ride.

Are you curious if refinancing could be a better alternative to selling your car? Find out in minutes whether refinancing your existing auto loan could reduce your cost of car ownership.

Check Your Rate

You May Also Like

Related Resource Center
Soft inquiries won’t impact your credit scores, and hard inquiries can hurt your scores slightly. Here's what you need to know.
Oct 9, 2023
6 min read
woman on mobile phone image
Having a money plan in place before you turn in your resignation can make the transition smoother. Learn ways to prepare your finances before you go.
Sep 4, 2023
5 min read
Young man relaxing in an orange hammock by a misty lake holding a cup of coffee, looking at laptop on his lap.
Take control of your money and personal wellbeing with tips to recognize burnout and restore your physical, financial, and emotional health.
Aug 7, 2023
6 min read
Woman in pink blazer sitting on ground with laptop in lap next to young girl looking at documents
With six in 10 U.S. consumers living paycheck to paycheck, could budgeting, saving, debt management, or side income be the antidote?
Jul 25, 2023
5 min read
Paycheck to Paycheck
Your credit score plays a role in nearly every financial move you make. Having a great credit score can save you hundreds (or thousands) of dollars a year through lower interest rates on your credit card accounts, personal loans, moving loans, car loans, or mortgage.
Jul 9, 2023
4 min read
Man in denim button up holding a phone, sitting at table smiling
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
Blog-post
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.
Nov 29, 2023
less than a minute read
LendingClub provides a year-end statement that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been charged off.
Jun 7, 2023
less than a minute read
Applying for a lending product is fast, easy, and confidential.
Jun 7, 2023
less than a minute read
Adding creditors to your balance transfer loan is easy.
Jun 7, 2023
3 min read
To qualify for a lending product with LendingClub Bank, you must...
Jun 7, 2023
less than a minute read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,584 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,190 for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states.

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2024 and are subject to change without notice.

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2024 LendingClub Bank. All rights reserved.