Is It Worth Donating an Older Car
It can make sense if the car is hard to sell, but a trade-in or private sale usually puts more money in your pocket.
Donating makes sense when the car is more trouble than it's worth to sell
If the car doesn't run, needs repairs that cost more than it's worth, or has sat unused for a long time, donating it can be the easiest way to be rid of it. A charity will typically tow it away at no cost to you, and you avoid the work of listing it, meeting strangers, and negotiating a price.
The tax deduction is the other reason people donate, but it only helps if you itemize your deductions, and the amount you can claim depends on what the charity actually does with the car. If they sell it, your deduction is usually limited to what they sold it for, not what you think it's worth. Ask the charity how they handle this before you hand over the keys.
What the car is actually worth to someone else
Before you decide to donate, find out what the car would fetch if you sold it or traded it in. Dealers will often take an older car as a trade-in even if it needs work, because it still has some value to them. A private buyer might pay more than a charity would ever credit you for, since the charity usually sells at auction for whatever it can get.
If the car runs and drives, a trade-in or sale will almost always leave you with more than a donation does, once you account for the deduction. Donation starts to make more sense once the car is the kind that a dealer won't take and a private buyer won't want.
Check a trade-in value or a private sale price first. If the numbers are close to what a charity would credit you through a tax deduction, selling is usually simpler and the money is certain rather than dependent on your tax situation.
What happens to your insurance once the car is gone
Once you donate the car, call your insurer and tell them. You don't want to keep paying for coverage on a car you no longer own, and you don't want a gap where you've stopped paying but the policy still technically covers it.
If this was your only car, ask your insurer what happens to your coverage history. Some insurers let you keep a policy open at a reduced level just to preserve your record, which matters if you plan to get another car later. Letting coverage lapse entirely can make it harder to get a good rate when you do.
If you're replacing the donated car with another one, your agent can usually move your existing discounts and driving history to the new policy. Ask about this before you donate, not after, so there's no point where you're uninsured.
Questions people ask about this
Do I need the title to donate a car?
Yes, almost every charity will require the title before they take the car. If you've lost it, you can request a duplicate from your state's motor vehicle agency, and it's worth doing this before you contact a charity rather than after.
Will the charity tow away a car that doesn't run?
Most charities that accept car donations will tow a non-running car at no charge, since towing and selling non-running vehicles is part of how they operate. Ask them directly when you call, since policies vary by organization.
How do I know if a car donation charity is legitimate?
Check whether the charity is a registered nonprofit before you donate, since only donations to qualifying organizations are tax deductible. Your state's attorney general or charity regulator office usually has a way to look this up.
What paperwork do I get after donating a car?
You should receive a receipt at the time of pickup and a separate tax document later if the car sells for more than a minimal amount. Keep both, since you'll need them if you claim a deduction.
Can I donate a car that still has a loan on it?
Usually not until the loan is paid off, since the lender holds the title until then. Contact your lender to ask what's required to clear the loan before you can transfer ownership to a charity.
See what your car is actually worth before you decide what to do with it.
Get a trade-in estimate and a private sale estimate for the car this week, so you know what you'd be giving up by donating it. Call the charity you're considering and ask exactly how they'll value the car for your tax deduction. If you decide to donate, tell your insurer the same week so your coverage doesn't lapse or keep charging you for a car you no longer have. If you're replacing the car, ask your agent how to carry your discounts and driving history over to the new policy.
