The Used Car Market is Hot Now. Should You Sell Your Car?

For sale sign being placed on windshield of used car
(Adobe Stock)

You've probably heard or noticed that car prices have gone up a lot lately. It's more expensive to buy, but you can also get a lot more money for your car if you sell. The sales price of a used car is up 23.9% over this time last year.

Seeing these amazing prices for new cars can make you wonder if you should sell your car while prices are high. It's a fair question. But before you run out and sell your trusty transportation, ask yourself these questions:

What's the Goal Here?

OK, so you can get good money if you sell one of your cars. Presumably, you own that car for a reason. What is your motivation for selling? Do you have a spare car and could use that money for a worthy purpose? Are you trying to eliminate or reduce car debt? Or is this a good opportunity to upgrade to a newer/lower-mileage/better-for-you car?

Don't just sell a car because it's got a high value right now.

How Many Cars Does Your Family Unit Need?

Figuring out how many cars a family needs can be a tricky thing. For a single person, one car is almost always enough. For multiple drivers, more cars may be necessary, depending on your situation.

Our family has done the one-car thing twice, and while it wasn't impossible, it was challenging since neither time did we live within walking distance of stuff. It required a lot of communication, cooperation and flexibility to make life work with only one car.

Another thing to consider is your flexibility if you're working with a tight car situation and something happens to one of those cars. Can you get a ride to work, walk to things or borrow a car from a friend? Or are you going to be scrambling to find an expensive rental? Obviously, you can't make any decisions based on "what if" your car needs service or is in an accident, but it is a factor to consider.

Would You Need to Replace the Car You Sell?

If you need all the cars you currently have, selling a car means buying another car at these inflated prices. Would you downgrade to something less expensive? Or would you use this opportunity to buy a newer car?

If you need to buy a replacement car, how will you pay for it? Will the sale of your existing car cover the cost? Or will you need to borrow money? Will it give you a car payment when you don't have one now? If you have a car payment now, will it go up, or will the term be longer? Keep in mind that interest rates on cars are up; not a lot, but enough to make a small difference.

How Does Military Life Play Into All These Questions?

There's one constant in military life: You never know what's going to come next. One of the reasons that I usually encourage military folks to buy older cars is because you can't predict when you'll be sent somewhere that your car can't (or shouldn't) go. A huge F-250 is probably a poor choice for orders to Naples, Italy. I honestly don't know if you can't take a car to Japan or if the required modifications make it illogical, but people don't take cars to Japan. That cool convertible will be a lousy choice for Alaska or possibly even Fort Drum, New York.

If you're in a car that might not make sense for our crazy military life, maybe this is a good opportunity to get something more flexible.

It's tempting to see those car prices and think, "Oh, we should sell our car. We'll get so much for it!!" Just don't jump into that decision without thinking things through the next couple of years. We can't predict what the economy is going to do, but we can try to make smart choices to maximize your financial freedom and flexibility.

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