The price of used vehicles is on an upswing, which might make you start looking at the car in your driveway in a new light.
Kelley Blue Book, a leading automotive resource, reports that the average price for a used car in America was $28,219 in July 2022 — rising 11% from July 2021 prices. Compared to two years ago, amid the start of the pandemic, the average price for a used car has increased by nearly 40%.
While vehicles are often seen as a depreciating asset, the inflated prices of today’s market means you could potentially break even on a car you bought a few years ago or even score a profit.
You may be asking yourself, “Should I sell my car now?” The Catch-22 is that new car prices are also on the rise. You may fetch a profit selling your used car, but you’ll face sticker shock if you’re looking for a new vehicle to replace your former set of wheels.
The average new car in July 2022 cost more than $48,000 — nearly 12% more than the year prior and $1,000 more since just the beginning of the year.
And if you sell your car without buying a replacement vehicle and wind up spending in excess on ride shares or rental cars, that’s just a big frugality fail.
However, there are a few scenarios where it makes sense to sell your used car and bank your profits.
5 Situations When It Makes Sense to Sell Your Used Car
Here’s when it’ll really benefit you to take advantage of this hot seller’s market.
1. You Are Now Working Remotely
Millions of workers transitioned to remote work during the pandemic. While the shift was temporary for some, many companies have committed to making the switch permanent.
If you’re secure in the fact that you won’t need a vehicle to commute to work, this may be the right time for you to sell your used car.
Don’t forget, however, to factor in your other needs for a vehicle besides work. Take inventory of how frequently you use your car. Grocery delivery, rideshare options, two-day shipping, telehealth appointments, online banking and other modern conveniences have made it easier to not have to rely on a car.
2. You Moved to a Place Where You Don’t Need a Vehicle
If you were among the hundreds of thousands of Americans who moved during the pandemic, your need for a set of wheels in your previous city may be very different from your current location.
If you now live in a city where you can walk, bike or take public transportation to get around, it may be a good idea to part ways with your vehicle — especially if you’re also paying a premium for parking. On the occasion where you do need a car, consider renting one by the hour from a service like Zipcar.
You may not even need a car of your own if you moved in with relatives or friends who have a vehicle you could borrow. Use some of the funds from your car sale to reimburse them for gas and other related expenses — and make sure that you’re properly insured in case you have an accident while driving their vehicle.
3. You Recently Retired
The Great Resignation saw millions of Americans quitting their jobs. Instead of finding a new position or starting a business, some simply retired early.
Similar to those transitioning to permanent remote work, if you’ve recently retired you may find that you no longer need a car to get around on a daily basis. This may be the perfect opportunity to sell your car and add the money to your retirement savings.
4. You Have Another Vehicle at Home
This one may be fairly obvious, but if you already have another vehicle at home, consider transitioning from a two-car household to a one-car household.
This may require some adjustments to your typical schedule. If you now have to carpool with your spouse or partner, one of you may need to get dropped off earlier and picked up later. You may have to be selective about which extracurricular activities your kids can join so you’re able to manage pickups and dropoffs.
It won’t always be feasible to go from a two-car household to a one-car household, but if you’re able to make it work, you could get a significant cash influx from selling one of your vehicles.
5. You’re OK With Downsizing (or Downgrading) Your Ride
Selling your used car only to buy another vehicle usually means you aren’t going to net any money — unless, of course, the next vehicle you purchase is less expensive than the one you’re giving up.
Trucks, SUVs and minivans are typically more expensive than sedans. If you’re selling your Ford Explorer, for example, and looking to purchase a Toyota Camry, you may be able to make some money off the deal, assuming both vehicles are of similar condition.
You may also find yourself with surplus funds if you sell a newer model and opt for something older with more miles, or if you sell a luxury vehicle and purchase a car with only the most basic features.
Nicole Dow is a former senior writer at The Penny Hoarder.