In 2012 I bought myself a VW Passat. In 2015, I stopped driving it entirely, but sat on it until 2017, when I paid it off and promptly donated it to Newgate School in Minneapolis. I simply didn’t need it anymore and donating a car became a brand new experience for me.
In 2015-2017 I was working from home and hardly ever drove any cars. I purchased my dream car thinking I could “afford it” and have found myself in a bit of a money hole ever since. Well, lets be honest, I am the finance feller, so I was down in the hole well before that and kept digging, thinking the deeper I got the further I would get from my problems. I have written posts about not needing to have a nice car anymore and changing your mindset, but I haven’t talked about the process of donating my car.
This is a pretty reasonable question. And the simple answer is feelings. The car was a decent car, but it had a number of unreasonably expensive issues with it. For one, the front headlight was out. I have changed dozens of headlights before, but none of them required the entire front end of the car to be taken off to reach the bulb. This particular VW Passat had the Xenon HID bulbs, so the car was engineered thinking they would never go out. It was likely an issue with the ballast for the bulbs, but to find out what the issue was it would have cost me $1000 in labor alone. At least, that’s what the VW dealership said. FUG. THAT. FELLER.
It also had an issue with the thermostat sensor. When I purchased the car, I was told the check engine light was due to the antenna being broken, and since I was young and inexperienced in buying a car I figured it was no big deal. It wasn’t until 2014 that I found out that it was actually an issue with the thermostat sensor that went to the cooling system. Possibly another $500 to fix. To put that into perspective, my Camry thermostat is $9 and I could definitely fix it myself.
In addition to all that, it had something wrong (likely the next issue) with the battery. Something drained the battery constantly. It wasn’t any lights on anywhere or anything in my control. The issue with the battery dying constantly was that the battery was in the trunk and once the battery was dead, you couldn’t unlock the doors. The key that it had didn’t work at all (which probably indicates that was also broken) so after AAA opened my car door once, I never locked it again. Then I would have to crawl through the back seat to pop the trunk and swap out the battery. So for every snow emergency I had to move my car, you would see me walking down to the car carrying a fresh battery to start it.
The last issue it had, and this was a weird one, but the electronics on the seat didn’t really work right. It was basically haunted. What it would do is push my seat as far forward as it could go and lean it forward at the same time. It seemed to only do this on curves and in heavy traffic, so it was very clearly attempting to end me. Like I said; haunted.
All that being said, and realizing that if I sold it to a dealership I would have had to accept the fact that they likely wouldn’t fix anything and sell it as it was for a price that would indicate it had no issues. Some people would say that’s no problem, but since I am The Finance Feller, I choose instead to donate it and not have to worry about someone driving in a haunted death trap.
Why Newgate School?
Short answer: It’s not fucking 1877Kars4Kids! That is seriously, and I am not kidding, the only advertising that has made me turn off my radio for the past decade. I HATE that fucking jingle with every fiber of my being.
Seriously though, I donated to Newgate because they use donated cars to train students on how to fix cars of all types before they either sell it at auction to someone who needs it or donates it to them directly. Or junk it. I’m guessing they get some actual junkers there.
The process to go about donating a car, at least with Newgate School, is very easy. I drove it down there (carefully, since the brakes weren’t great at this point) and signed a couple of sheets of paper. They took the title, I took my 1098-C tax document, and walked away never having to deal with that car again. They would have come to tow it away for free, but since I was only a couple miles away I figured I could just as easily drive it.
Filling out the 1098-C form on my taxes was also easy. While I plan on doing a full break down on that document and process later on, I will just say here that it’s very simple. After you donate your car, you write down the fair market value estimated on Edmunds or KBB, accounting for the issues that your car has (electrical issues in my case) and save that for when you get to your taxes at the end of your year.
The Tax Fallout
When you donate a car, you get to claim a tax credit for the fair market value of the vehicle. In my case, this was about $3500. Sounds baller right? Tax credits directly reduce the amount of taxes that you owe directly, opposed to a tax rebate which essentially reduces your taxable wages for the year, but there’s a catch; you have to itemize your taxes to utilize the benefits of a tax credit. I didn’t really know that at the time I chose to donate it. I thought that tax credits like this came on top of the standard reduction (which they really should…) so I thought I was going to get them greenbacks come tax season, but alas, I did not.
I am honestly alright with it, because at the end of the day I still donated to Newgate School, students still got valuable experience working on a vehicle, I improved my local community by providing that car to Newgate for training, and no one else had to drive around in that haunted car. Did I mention that the seat would literally try to crush you? At the worst possible times?
Sure, this site is all about money, but that doesn’t mean that your entire life has to be.
Donating a car is definitely worth it if you have an older vehicle and you’re itemizing taxes beyond the standard deduction amount. It’s a little murkier if you’re only going to be close to the standard deduction, and fiscally it’s not the best choice in the world if you are going to end up claiming the standard reduction. While I know that now (and so do you, Feller!) it’s something that I clearly didn’t understand going in. If you’re planning on a big donation, you should probably do your research completely. As the example here points out, it’s not enough to know you get a tax credit, you should probably also understand how that calculates on your taxes.
While it wasn’t the most solid financial choice, I can still feel good about contributing to my community and students. Sure, I took a hit on this one. But not only is it not the end of the world, I also get to write a good article (which was even funnier for you!) and share that lesson with everyone who reads this site.