When you buy a car, you don't get a cooling off period. The car you buy may be everything you hoped for, but sometimes things don't work out the way you planned. Whether the car isn't as nice as you thought, or simply turns out to be more than you can afford, you can sell your car after you buy it. You may not be able to recoup the amount you initially spent, however.
Always double check with the lender financing your car purchase to determine whether or not you will be subjected to a prepayment penalty when selling your vehicle.
Understanding Financial Penalties
There is no law against selling your car after you buy it. You could walk out of the dealership, walk right back in and sell it if you wanted. Bear in mind that if you took out a loan, you might have a prepayment penalty. The only way to know if you have a prepayment penalty is to look at your loan agreement. If you used a bad-credit loan, paid a high interest rate or took out a long-term loan, you're at a great risk of having a prepayment penalty. You'll also have to pay off everything you owe on the loan, even if you sell the car for less than you borrowed.
Selling New Vehicles
When you sell a new vehicle, you're almost guaranteed to lose money. When you buy a new car, it turns into a used car the second you drive it off the lot. The simple act of titling the car in your name saps 20 to 30 percent of its value. On top of that, if you trade it in, you'll have to negotiate with the dealership, which wants to buy it for a low price that lets them make a profit when they sell it.
Selling Used Vehicles
When you buy a used vehicle, you're in a better position. It's already been through that initial new-to-used hit to its value, and going from two to three owners won't usually affect its price. You still have to swallow the taxes, fees and license that you paid for when you bought it. In addition, if you sell it back to the company that sold it to you, it may discount the car so that the business can make a profit when it sells.
Maximizing Your Value
When you sell a car that you just bought, the key is to get as much for it as possible. Unfortunately, unless you have a highly desirable car, your best buyer is usually a private party. Sprucing up the car if it isn't still in showroom condition may increase its perceived value. You'll also have to find a buyer, which means putting for sale signs in the car window and advertising it on appropriate websites. Another option is to use a consignment lot, which sells the car for you and takes a commission.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.