If you're ready to part with your car, you could sell or trade it to a dealership with little to no hassle. However, you'll likely give up a significant amount of your sale price, as dealerships need to add in their markup when reselling your vehicle.
According to a 2012 ABC News report, a couple from New Jersey tried to sell their 2006 Hyundai Tiburon coupe valued at $10,000 based on Kelley Blue Book data and a dealer only offered $4,000.
Instead of taking an auto dealer's offer, you can often get a far greater profit by organizing a private sale using online marketplaces such as Craigslist, AutoTrader or CarDaddy. While Craigslist is a general marketplace where you can sell many items including cars, car-focused marketplaces such as AutoTrader and CarDaddy provide premium services to help you screen potential buyers, prepare the bill of sale and more.
Selling your car by yourself is increasingly common: According to AAA, 30 percent of used vehicles were sold directly by the car owners rather than through dealerships in 2011, the most recent year for which data is available.
Remember: When you take this route, you'll be responsible for all marketing and legal needs related to the transaction, but you're likely to see a better payoff. Here are seven tips for a successful online private sale.
1. Create a detailed description with high-quality photos.
Most online marketplaces allow multiple photos. Craigslist now allows up to 24, so take advantage of the opportunity to showcase your vehicle.
"If you have 24 relevant pictures of your car, post them all," says Michael Milstein, business intelligence manager at the online classified site MojoMotors.com. "This gives the consumer more of a chance to fall in love with your vehicle."
Thoroughly clean and detail your car before taking photographs to ensure it looks its best. In the listing, include the year, make, model, trim and mileage. If you've recently purchased new tires or other special features, mention those details as well.
2. Point out any potential flaws in the vehicle.
If your car has any dents or other problems, point them out now -- a potential buyer will discover the issue as soon as he looks at the car.
A description that points out negative issues "will make you seem more credible to a potential buyer," says Tom Catuosco, co-founder of the free classified website TheRoadCode.com. "That is important with a big-ticket item like a car. Nobody wants to buy a car from a snake oil salesman."
3. Price your car based on your local market.
When it comes to pricing your vehicle, look at the Kelley Blue Book estimate for your car at KBB.com. Then evaluate other local listings for cars of the same age, make and model as yours for similar mileage. Depending on how competitive your market is, you may see cars priced below their KBB values.
You should price in line with local listing prices if you'd like to sell your vehicle quickly; for the fastest sale, you may want to undercut your competitors by several hundred dollars. However, don’t let on to potential buyers that you are eager to sell, or they may take advantage of that knowledge in price negotiations.
4. Respond to potential buyers immediately.
When listing your vehicle for sale, be sure to include an email address that you check frequently or a phone number, Catuosco says. If you don't feel comfortable putting your personal phone number online, you can use a free call forwarding service such as Google Voice.
Respond to each inquiry within a few hours at most. "The used-car market is competitive," Catuosco says. "Waiting too long replying to a buyer can lose a possible sale."
5. Make sure you have the legal forms you need.
For any sale, you’ll need to prepare a bill of sale document for both parties to sign, which states the car's vehicle identification number (VIN), mileage, both parties' names and addresses and the car's sale price. This document can generally be downloaded from your state's Department of Motor Vehicles website. The buyer will need to take the bill of sale to his or her town office to register the vehicle, and you’ll need to contact your own DMV to let it know you're no longer the owner.
In some states, including California, Texas, and Florida, you must complete a Notice of Transfer and Release of Liability form; look at your state’s DMV requirements for selling a vehicle or call your local office to make sure that you’re following the rules.
You'll also need to remove your license plates from the vehicle so that you won't be held liable for any traffic violations or crimes the new owner could potentially commit. It’s the new owner’s responsibility to obtain new plates for the vehicle from the local DMV once the sale is complete.
6. Get paid in a secure format.
Accepting cash or a bank cashier's check is a safer bet than a personal check, because personal checks can take several days to clear -- providing the buyer with the opportunity to cancel payment or bounce the check after taking ownership of the vehicle.
"It's also a good idea to get a photocopy of the buyer's ID, such as a driver's license," Catuosco says.
7. Cancel your insurance, and make sure the buyer has purchased insurance coverage for the vehicle before driving away.
As soon as you and a buyer have committed to a price for the vehicle, remind the buyer to purchase insurance coverage for the car before he or she drives it away. He or she will be required to provide insurance information when registering the vehicle. Once the bill of sale has been signed, you’re free to cancel your coverage for the vehicle, and you may be entitled to a prorated refund for the remainder of the paid coverage period.