While there are many benefits to donating a car, There are some downsides :
The documents & paperwork
With a car donation you’ll certainly get rid of that unwanted vehicle. But if you think it’s as easy as just dropping off the car and its keys, think again. When you donate a car, there is a vast amount of paperwork involved. And after signing so man documents, it can be tiresome, daunting and irritating. As the car owner, you are required to take responsibility for the transfer of the title. Additionally, you have to provide all of the precise as well as accurate information about the car.
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Looking to donate your car and you lost the title? Well, it will be your responsibility to get a new title before you can donate that old vehicle. As the vehicle owner, it is your responsibility to complete all tax forms too. You will need information such as the fair market value of the vehicle. For lots of people, the number of documents that one needs to fill out for a car donation is too much of a hassle.
No cash payout
When you donate a car, you will take what is referred to as a “tax write off”. When you sell your car, you will gain money in the end. But with a donation, there is no money to pocket. Although you may benefit from the tax deduction; but that differs from getting cash in your hand. So, if you’re looking for quick cash, then your best bet is to sell your old, unwanted vehicle. You may want to call and discuss your options with a trusted tax professional or accountant to find out what works best for your situation.
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Just as in selling a car, when you donate a vehicle, you have to watch out for the scams. When donating a car, you have to be careful. Lots of companies will call themselves “charities” Unfortunately, lots of criminals run these organized charity schemes and businesses that are nothing but organized crime hubs. They will work overtime to obtain free cars and then sell them as junk to scrap yards. The criminals running these “charities” will also take your car and then have it fixed up and then sell it as a used car. Other scam companies will only offer a small amount of the value of the car to charity. But somehow or some way they will ultimately make money, while leaving you holding the tax bundle.
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And then when you attempt to deduct the fair market value or your donated car on your tax return, you will lose the tax deduction, and you may also face being audited. So, be careful when you choose to donate your car. Because, not all charitable organizations you’re considering are real and true charitable organizations.