“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin
Do you need extra cash to pay off existing debt, or are you battling to make it through the month financially, so you need a small cash injection? On the other hand, you might have seen the perfect vehicle, and you have a very short time to pay for the car. It does not matter why you need to procure funds in a very short period. I believe the question that should be asked is: should you sell your car in exchange for quick cash?
Procuring cash in a short space of time
In order to determine whether it is a good idea to sell your car, I believe that you need to determine what the purpose of selling your car is. In other word, what will you gain from selling your car? Let’s start off by saying that a motor vehicle is considered an asset from an accounting or business perspective. Furthermore, according to the BusinessDictionary.com, an asset is “something valuable that an entity owns benefits from, or has use of, in generating income.”
Liability can be linked to an asset; ergo, you have had to take out a financial loan to purchase the asset, and you are repaying the loan on a monthly basis.
It is also important to note that there is no easy answer to this question. Many elements need to be taken into consideration such as:
- Do you own your motor vehicle, are you still paying for the car?
- If you are still paying for your car, can you afford the monthly repayments?
- Can you get around by utilising public transport, or do you need your car to get to work and back?
- Are you purchasing your dream car in a private sale?
By answering the above questions, you will end up in a flowchart, or if-else-type scenario. For example:
Let us start at the point where you are still paying for your car, and you can no longer afford the monthly repayments. At this point, it does not matter why. The conundrum in this scenario is that that you have to pay the vehicle loan before the new owner can transfer the vehicle into his name. It does not mean that you can’t sell. You will have to make sure that you cover the outstanding car payments. In technical terms, you are
On the other hand, if you have paid for the vehicle, and you are selling to purchase your dream car, you are exchanging one asset for another asset. This scenario is a best-case scenario. While it might be necessary, it does not make sense to sell an asset to pay short-term, recurring debt.
As a result, we can see that deciding to sell your motor vehicle for quick cash is not a simple or easy decision. There are advantages and disadvantages; consequently, it is important to weigh up all options carefully to make the best decision under your personal circumstances.