I have a confession – I am not a car person. Neither is my wife. That means we don’t fancy driving the latest vehicle with the most updated technology. Although we enjoy driving nice cars, we never feel right buying an overpriced one if it is not out of necessity.
Over the past two decades, we upgraded our automobiles several times. We drove 9 different cars before we settled down in Taipei. Now we don’t have a car and won’t be buying one anytime soon. We might get an SUV mainly for weekend use. However, we are not in a hurry since the pandemic lockdown.
In the previous article, I shared our experience of buying cars in Malaysia vs in the USA. Now, I would like to share some of our findings of selling our vehicles.
How I Sold Our Previous Five Motorcars
In 2011, we sold our Honda directly to a buyer. Since the 8th generation Civic was very popular, it was pretty easy to get an interested buyer who paid a good price for it. I barely remembered the whole process. But it involved going to the bank and JPJ several times. I still recalled that James, a top-performing Public Bank loan officer in Penang, gave me guidance on the whole process. I could have spent even more time without his assistance. The most unpleasant step was to send the car to Puspakom for inspection. I had to tear off the windscreen tint film on the spot to pass the test.
As a result, I got a higher selling price for doing all that by myself, easily a few thousand ringgit compared to selling it to a dealer.
The next car we sold was the Hyundai in 2017. We sold it to a car dealership to save time from going through all the hassle. The dealer’s purchaser came to our place to check the Starex’s condition. Once they agreed to buy it, I went to the bank to pay off the loan and collected the title. Then we met with the dealer again to process the ownership transfer. That time, I didn’t need to go to the JPA or Puspakom.
Right before we moved to Portland, I sold my Toyota Harrier. That’s when Carsome became more popular. I saw their advertisement and was attracted by their promise to get everything done in a day. So I made an appointment to get my car inspected. Right on the spot, they gave me an offer. Since I don’t want to waste time going to several other dealers, I took it. But the problem is that I was not sure if the offer I received was a fair one.
In November 2020, I sold my Mustang after the summer (check out the post on how I get to use the Mustang literally for free). I figured that we would only need one car when everybody stayed at home. So instead of having a big machine sitting in the garage, taking up space, depreciating in value, and costing motor insurance premium regularly, we made a decisive decision to liquidate it. That time, I used Kelley Blue Book, a California-based vehicle valuation and automotive research company. I entered the Mustang’s details and uploaded some pictures for valuation. Within minutes, they provided an offer and simultaneously sent my details to two dealers in my area.
I went to the first dealer. He inspected my car and offered a slightly lower price, pointing out some dents that were not noticed in the pictures. Right after that, I drove to another car dealership. They gave the same offer as what I printed from KKB’s website. So I took it up. The experience was quite similar to what I had with Carsome in Malaysia. Although I still owe a bank loan for the Mustang, they paid it off directly with the bank and dealt with the DMV (USA’s JPJ-equivalent). Then the balance was sent to me via a cheque about three weeks later.
By the time we were preparing to move to Taipei, I had figured that I could use the Volvo until the very last day. In fact, we kept the XC90 hybrid till less than 24 hours before our flight. By the way, we still owed the bank for the car. Since I experienced the process before, I first checked the possible offer through Kelley Blue Book. An interesting thing I found during that time was there were many advertisements for another service called Driveway. They up the game by having their purchaser come to me instead of sending the car to them. After entering the details, I got an even higher offer than what I could get on KBB.
A week before our flight, I called up Driveway to communicate about the whole process. Driveway said they intend to purchase whenever the representatives go out to inspect vehicles. So I made the appointment for the day right before the flight to Taipei.
As promised, they showed up, checked the engine under the hood, and agreed to pay the offer I got through their website. What’s interesting is that they didn’t even test drive the Volvo. We signed the bill of sale, and they gave us a cheque right there for the difference I would get after deducting the loan, which they would pay off later to the bank.
I was very impressed by how easy that was. Imagine the customer’s experience that I went through. What I did was just enter some information on their website. They sent me an SMS right away. We confirmed the appointment. Then they just showed up with a cheque and all the documents. That’s it! I almost couldn’t believe it.
The next thing I did was check out the listed company’s financial details that own and operate Driveway. The company is Lithia Motors Inc (NYSE: LAD). Did I buy the stocks? That’s a story for another day.
After going through the entire process of selling our cars several times, here are some key lessons I would love to share with you.
Key Lesson #1: Cars Could be the Biggest Cash Burner
We seldom change cars because it is an expensive machine that depreciates over time. If you don’t drive it, it depreciates slower, but you don’t get to enjoy its benefit. But when you use it often, it costs even more – petrol, parking, maintenance, etc.
We try to refrain from getting a new car because it depreciates the most in the first few years. The higher the price you pay for the vehicle, the more you are going to lose.
We had the first car, a used Datsun 120Y, in 2000. Over 21 years, we used 9 different vehicles. For the two of us as drivers, we used each car for an average of 4.7 years.
How do you refrain from spending too much on cars?
Keep your vehicle as long as you can.
The longer you keep, the less you will lose.
By the time you don’t need one, liquidate it immediately.
Key Lesson #2: How you pay for the car has nothing to do with the car depreciation
In Malaysia, the hire purchase loan is based on a flat interest rate. So when you want to settle the loan, it is based on the Rule of 78. However, unlike Malaysia, the auto loans are similar to a housing loan for our two cars in the USA. In fact, my Mustang’s loan interest rate is lower than my mortgage. The reason is that an auto loan is much shorter than a mortgage tenure. So I was never in a hurry to pay off a car loan due to the low financing cost.
You might have heard of advice that you should buy a car with cash. Although this advice is appropriate for people who cannot afford a car, paying cash when the financing cost is minuscule is not the most brilliant money move.
The key lesson here is that after selling eight cars, we lose money on each one of them. But the loss is due to the depreciation, not how we finance the purchase. In contrast, we have made money from the financing part – by keeping the capital with us for a better investment opportunity.
For instance, by taking the car loan of US$50,000 to purchase the Volvo, we have an extra $50,000 in the bank, which we used to buy shares during the start of the Covid pandemic in Mar 2020.
In short, how you pay for the car has nothing to do with the car depreciation. The loss is locked when you drive a car out of the dealership. How you pay for it is irrelevant.
Key Lesson #3: Disrupting technology
Entrepreneurs solve problems. The more significant issues you solve, the more success you accomplish. Carsome wants to provide a hassle-free experience to car sellers. And see how far they have come and grown for the past few years.
From the experiences I shared above, I found that the procedure of selling a car has been simplified over the years. It just keeps getting better and more seamless. Even when you think that it couldn’t be any better, somebody somewhere will come up with something even more fantastic, e.g. like Driveway did for me. Eventually, even the best company faces upcoming disruptors. Businesses are constantly battling to up the game to stay on top.
How do you participate and get a piece of the profits in these great businesses?
The answer is business ownership through stock purchase.
How about you? Do you have any experience selling a vehicle? Share with us in the comment. I would like to hear your story.