Unless your car is an intricate part of your adventure, such a road trip, then the answer is most likely, yes, you should sell your car.
We can all get attached to our cars. I certainly have loved two trucks in my life. However, even if you’re car is your baby or you had your baby in the front seat, the best financial decision is likely to sell it.
Here are the reasons why you should sell your car.
Car payment – If you have a car payment, then you don’t want to take that debt on the road. Sell the car, and pay off the difference if needed. In fact, you should look to get rid of all of your consumer debt before you travel.
Cars cost money to store – If you are traveling without your car, you’ll need to store it somewhere. Perhaps you can stash it for free in a friend’s or your parents’ driveway, but if not you’ll need to pay to store it somewhere. Storing a car could cost you $5o per month at a cheap mini-storage.
Cars depreciate in value – Even if you don’t have a car payment and can store your car for free, you’re car is worth more today than it will be in a year or two. With the exception of some classics, cars depreciate in value over time. If you hold onto the car, you are losing money. Instead, sell the car and invest that money into an investment that earns money, even a low yield savings account is better than keeping your money in a losing asset.
Cars cost money to own – Though you may not be putting gas in the tank, you may be obligated to pay annual fees for registration tags, plates, and insurance. Maybe you can avoid these annual registration fees by turning in the plates, but you’d have to purchase new plates when you’re ready to drive again. Depending on your local tax code, you will pay property tax whether you drive the car or not.
Cars deteriorate when not driven – Even though you aren’t putting miles on your car, a dormant car and engine can lead to major mechanical issues. Sensitive moving parts within the engine can seize. Oil can turn to corrosive sludge. Tires can rot. Leaving your car to sit for a year or two is not the same as preserving it. It is highly likely that you will have problems when you return to start your car again.
You can buy a better car when you return – If you keep your car, it will be older, worth less, and potentially more prone to problems when you return. If you sell now and put the money into a savings account or perhaps into an investment that grows your money while you travel, then when you can return you can likely purchase a new, better car with a sharp eye for a deal.
Bonus tip: Your lifestyle could change – You don’t necessarily know that you will need your car when you return. If you travel for a year or more, it is likely that your perspective and habits involving consumption will change. When you return, you might find that you relocate to an area where you don’t need your car. You might increase reliance on public transportation. Or perhaps start cycling. Don’t bet on being the same person with the same habits when you return.
No compelling financial reason to keep your car while traveling
If you want to keep it because of sentimental value or you’re fine with losing money, then I suppose you could keep the car.
Aside from some rare exception in which you own a classic car that is appreciating in value, I don’t see a compelling financial reason to keep your car.
Getting cash for the car now is the best financial option.
If you’ve got a great reason why keeping the car is a good idea or more reasons why it’s a bad idea, let our readers know in the comments.