Do you have a junk vehicle? Whether your old car is still running or it’s sputtered its last breath and now sits dormant in your garage, it may be time to consider freeing up space by getting rid of it. But you might be asking, “Should I junk my car, or should I donate my car?”
Use this guide to learn everything about donating a vehicle, and, ultimately, to help you decide whether you're better off junking it or not.
Let’s get started!
Junking vs. Donating a Car: Quick Comparison
Junking and donating cars are the two most popular methods for getting rid of your old vehicle. What’s the difference between the two methods? What’s the difference, if any, for your wallet?
Junking vs. Donating a Car: Similarities
These two methods accomplish the same goal at their most basic level: they do away with your unwanted vehicle, freeing your life and space for a new car.
Junking a car and donating a car are also both tried and true methods for getting rid of your junker, and the proof will be in the pudding: both junking and donating allow you to influence your finances positively.
Do you have a car that doesn’t run? Both junking a car and donating a car will allow you to do away with this glorified mass of metal. In a lot of situations, both charities and junkyards will pick up your junk car from home for free.
The fate of your old car in both junking and donating will also likely be the same: if it doesn’t run, it will be stripped for parts, and the scrap metal will be recycled and sent back into the automobile manufacturing process.
Junking vs. Donating a Car: Differences
What’s the difference between junking and donating a car? Though both boost your finances, they do so in different ways.
Donating a car allows you to take a tax deduction while junking a car gives you a cash payout.
Furthermore, donating a car is done with a not-for-profit organization (we’ll get into that more later) with a charitable cause. In contrast, junk car deals are done with profit-motivated companies. You can donate a broken car -- that is, many people go about donating a car that doesn’t run -- but you can also donate a vehicle that runs perfectly well.
More About Donating a Car
Maybe you’ve decided to donate your car. This is a great choice! Donating your car helps the less fortunate out while still allowing for a tax deduction for you. But first...
Where Can You Donate Your Car?
Who should I donate my car to? Donating a car is an excellent idea, but you need to be careful that you’re dealing with an upright player. Indeed, someone might tell you, “we’ll accept your donation,” but that doesn’t make them a charity! Not only might they end up using your junk car for pure profit, but your tax deduction also won’t be valid unless you donate and receive receipts from a certified charity.
One very easy way to make sure you’re dealing with a charity is by ensuring their 501 (C) (3) status. A 501 (C) (3) is a tax-exempt nonprofit organization, and in fact, this series of letters and numbers designate tax exemption for the IRS. For this reason, the best way to ensure a company is a charity is through the IRS tax-exempt organization search portal.
Another potentially simpler way to find out if a company is a charity is by asking them directly to prove their tax-exempt status. If they’re unable to provide this proof, be very wary.
How To Find The Best Places To Donate a Car?
Even amongst charities, we know there are some that do great work and others that don’t make much of an impact. If you’re donating, you want to be sure your donation helps out people in need.
What is the best charity to donate a car too? One of the best places to find a charity is through the Charity Navigator Website. In the search bar, type “car donation” or something similar, and all sorts of charities pop up. This will help you answer the question, “where should I donate my car?”
Be careful! Though all the Charity Navigator websites' organizations are charities, not all charities are created equal. The best idea is to do a little research to determine how much of the charity’s income goes to those in need and how much of their income goes to “overhead.”
How Can You Donate a Car?
The car donation process is more painless than you might think! Here's how to donate a car:
- Find a charity organization that directly accepts car donations. Avoid the plethora of for-profit company intermediaries accepting “car donations,” as they will certainly take a cut from the profits of your junk car, sometimes even a very large cut. Find a nonprofit charity that has a cause you like and arrange with them to take your car.
- Double-check that your charity is a 501 (C) (3). Please do this by asking the company for proof or looking them up on the IRS database.
- Properly sign over your car ownership. Your charity might ask you not to sign over the car by leaving the ownership assignment space blank on the charity donation forms. If they do, seek another charity. It’s necessary to sign over your junk car so that you don’t incur any fines associated with the hunk of metal in the future.
- Fill out your paperwork properly (IRS info). Non-cash donations are among the most common reasons for an IRS audit, especially when the deductible amount is high, as it likely will be for your junk car. Here are the car donation rules:
- If your car is worth $250 or more, you need written acknowledgment from the donation charity.
- If your car is worth $500 or more, you need to complete IRS Form 8283 section A and attach it to your taxes.
- If your car is worth $5000 or more, you must have an independent appraisal of donation and fill out IRS Form 8283 section B.
What Happens to Your Car When You Donate It?
When you donate a car, the car will almost invariably be sold by the charity as quickly as possible. Depending on whether the donated vehicle is running or not, it may have another life with someone needing a car.
However, more likely than this is that your junk car will be sold to an auto salvage yard, and your car will enter junkyard limbo, where it will be stripped of useful parts, and its metal will be recycled back into the automobile industry.
Is It Worth It To Donate a Car?
It is worth it for a lot of people to donate a car. You can’t donate junk cars for cash, but you’re able to claim the charitable contribution and deduct it from your taxes: the tax deductible will be exactly equal to the amount your charity can sell the car for at auction. They must give you a written receipt of this transaction for your records.
If the charity decides to use your junk car rather than sell it, you can use Fair Market Value (FMV).
What Are The Downsides of Donating a Car?
Donating a car is a great idea, as it gets rid of your junk car and allows you to feel like you’re helping those in need. There are some oft-mentioned downsides. However, that should be brought to the fore here.
For one, the paperwork can be complicated. Sorting through the IRS forms and the sheer anxiety of an audit possibility is just too much hassle for many people.
Secondly, the only financial benefit you get is a tax deduction. For some, junking a car for tax benefits is less appealing than junking a car with a for-profit company that will often pay upfront and with cash.
More About Junking a Car
While donating a car feels good for the soul, donating a car for money doesn’t exist. Junking a car will give you cash right away. You can junk any car, from broken to running. You can sell the whole car or sell it for parts.
Where Can You Junk Your Car?
There are also larger junk car buyers that operate nationally and buy junk cars all over the United States. Often, these companies can offer better, fairer deals because they have a national reputation to maintain.
Consider Carscrappers: we can make fast cash offers and guarantee cash payout within 1-2 days.
What Happens When You Junk Your Car?
Typically, when you junk your car, the fate is the same as when it’s donated. It will most likely be stripped for parts, and its metal sent back into the automobile industry to participate again in the great circle of . . . traffic?
Is It Worth It To Junk Your Car?
For many people, junking a car is very much worth it.
At Carscrappers, we can give a reasonable, top market cash offer on any junk car. Be warned that if the car is very old or has more than 200,000 miles, you may not be able to get much for it, as very often, when this is the case, the parts are not resellable.
Conclusion: Is It Better to Junk or Donate a Car?
Is it better to scrap a car or donate it? The answer of whether or not to junk or donate falls largely on you. You can’t donate your car for cash. If you need cash quickly, it might for all your good intentions be best to junk your car with a place like Carscrappers.
On the other hand, if you’re happy to wait for the tax write-off and prefer the feeling of having donated to a charitable cause, donating will likely be best for you.
The most important thing is how you feel and make sure you’re taking care of your financial situation first. We hope this guide helped. If you’d like to learn more about junk cars, you can check out the rest of the blog. Thanks!