Cover Image: ”Rimar Auto Salvage, Grimsby” by David Wright is licensed under CC BY-SA 2.0
Ever thought about donating a vehicle to charity? Whether you want to support a particular charitable organization, or you want the ease of having someone come and pick up your old car or truck, a charitable donation might work for you (and your tax return). I recently made a vehicle donation for the second time and learned things I wish I had known the first time! The process also made me think of things to be careful of the next time I buy a used vehicle.
Whether you’re donating to a large organization or your local radio station, the steps I followed should help you understand the process.
The World of Vehicle Donation
“Used car sales in NJ” by Shankar S is licensed under CC BY 2.0
If you donate a late-model vehicle to a charity, the vehicle may get resold and end up in a dealer’s lot. The charity gets the proceeds from the sale. You may get a tax break.
Even if a dealer won’t give you much as a trade-in, your old car, truck, or motorcycle has value to a charitable organization. My family had just purchased a used car in a person-to-person transaction, so we didn’t need the trade-in value of our older vehicle. Many charitable organizations will take a vehicle donation to support their work. CARS, the third-party company that facilitated our most recent donation, has returned more than $450 million to nonprofit organizations from the Purple Heart Foundation to the Make a Wish Foundation. To be clear, this article was not sponsored by CARS; this is just the facilitating company used by the recipient of my donation.
(Sidenote: We wanted a cheap and reliable way to get important information about the history on our new used car before we bought it, so we ran a Dirt Legal VIN Check. Don’t buy a vehicle without using this service!)
Key Steps At Donation Time
Like most folks, we had an exact organization in mind that we wanted to support, and we contacted their vehicle donation department directly. The process moved quickly from there - this has been my experience for both vehicles I’ve donated. I left a callback number, and soon I was on the phone with someone from CARS, providing basic info and scheduling the donation. CARS would also be sending a tow truck to collect my car free of charge.
I couldn’t take time off from work to meet the tow truck, so I had to make a tricky decision if I wanted the car to get picked up in my absence. I decided to:
Take a Chance Without License Plates
I took the license plates off the car before the donation and parked the vehicle on a public street where the tow truck could access it. I told the exact location to the tow truck driver when he called to confirm the pickup. (In the era of GPS, it’s easy to give the exact location of the vehicle.) There’s a downside to this! If they see a vehicle without a license plate parked on a public street, most local police departments will either tow it or issue a ticket / summons to the owner of the vehicle. One time in the past, I had an untagged car in the driveway of a house where I was living, and a police officer had to come up on the property to leave a ticket on the car. When the police officer came onto the property, he noticed that we had let our grass grow quite long, in violation of a local law, and he issued two violations, one for the car without plates and one for the grass!
As I was working out the final details of my recent donation with CARS, the representative on the phone told me that I had the option of leaving the license plate on the car. This car was headed to a salvage yard to be sold for parts, and the phone representative said that the salvage yard would then mail me back my plate in about a month. No way! There are too many ways that a bad actor can use your license plate to do unsavory things in your name.
Long story short: if you want to stay off the radar of local law enforcement, keep a license plate on your car, truck, or motorcycle! In this instance, I figured that I probably wouldn’t get a ticket during the few hours’ window when the car had no license plate. I also had a conversation with my neighbor, in front of whose house the car was parked. It’s never a bad idea to get the neighbors on your side!
Form 4868, 2010, with pen glasses phone by Jonathan Schilling is licensed under CC By 2.0
Keeping track of the details of your vehicle donation can save you money at tax time!
Get Important Info For Your Taxes
When you donate a vehicle, the amount of money that you get to deduct from your taxes depends on what the charity does with your vehicle afterwards. If a tax deduction is part of your plans, get written documentation about what’s going to happen to your car, truck, or motorcycle once you donate it. The charitable organization will probably be best able to provide this information to you after you have submitted information about your vehicle’s make, model, mileage and condition.
If a charitable organization sells a vehicle that you donate, then your tax deduction is based on the vehicle’s sale price, with a minimum deduction of $500 for most cars, trucks, or motorcycles in running condition. If a charitable organization uses the vehicle itself, sells it at a discount, or gives it to someone in need, then your tax deduction is connected to the vehicle’s fair market value. The charitable organization is required to notify you in a timely fashion about what it does with your vehicle, but I don’t remember getting this information the first time I donated a vehicle. It’s never a bad idea to ask proactively for this kind of info. With this recent vehicle donation, the tax info arrived via email about a month after the donation was finalized.
Key Steps After Donation Time
Newark Third Precinct Police Station by Paul Sableman is licensed under (CC By 2.0)
When donating a vehicle to charity, make sure you take the appropriate steps to be in good standing with local law enforcement!
In Pennsylvania where I live (and in most states), the seller of a vehicle is responsible for returning license plates to the DMV after the vehicle title is transferred to the new owner. This process also serves the purpose of officially notifying the state that the license plates are no longer valid or connected to your name. Lots of people don’t take this step, and they really should! If you haven’t notified the state that plates are no longer valid, then they can still be traced back to your name. If a bad actor gets their hands on plates connected to your name, then they can put them on their vehicle, and anything that their vehicle does could lead back to you. At the risk of putting too fine a point on it, do you think that bank robbers use their own license plates on the getaway car? They use plates that would lead back to someone else!
I didn’t love the idea of putting my license plates in the mail. When I had my pre-collection call with CARS, their representative told me that I could also take license plates to my local police department. I called my local precinct and had a pretty funny back and forth with the police officer on the phone. He basically said that yes, it was technically possible for my local Philadelphia Police to accept plates that were no longer valid, but mostly the police step in when a crime has occurred. He made it sound like it would take a really long time for the precinct to move the plates along to the state DMV. Local law enforcement works pretty hard in my part of the world, and I decided not to take a chance on starting out at the bottom of their to-do list. There’s no harm in calling your local police precinct and seeing if they can save you a trip to the post office and accept your plates.
I put the plates in the mail, and the process moved along promptly with the state DMV. If you can spare the extra money, consider sending your license plates to the state DMV via registered mail. Keep track of those plates!
Storm Farmers Insurance Group Agency Northville Michigan by Dwight Burdette is licensed under CC By 3.0
Communicate promptly with your insurance company to save money and stress when you donate a vehicle .
Notify your insurance company
If the vehicle you are donating has valid insurance, then you should notify your insurance company as soon as the vehicle donation has occurred. I waited a few days, and it turned out fine. The insurance company even let me backdate the notification and save a little money. Check your bill next month just to be sure: sometimes local car insurance companies contract their services out to big national chains, and details can get missed. It’s a good idea to confirm that you stopped paying to insure the donated vehicle on the date that you reported its donation.
Advice to Buyers of Used Vehicles
Ever bought an older car, truck, or motorcycle? Donating cars to charity has helped me understand that lots of reasonably-priced used vehicles start out as donations that get sold to dealers. If you are thinking of buying a used car, truck, or motorcycle, keep in mind that not everyone who donates a vehicle to charity takes all the steps that I took to fully transfer ownership of the vehicle. If a state motor vehicle agency does not have record that a previous owner no longer owns a vehicle, then you could get into a bureaucratic mess when you try to title, register, or insure that vehicle after buying it. Check your facts before you buy! Ask to see the title and be on the lookout for anything that looks fishy. (See here for previous coverage on this blog of the dangers of a shaky title.) Use Dirt Legal’s VIN Check Service to find out key information about a vehicle’s history, and consider Dirt Legal’s Title and Registration services if you find yourself in a tough situation.
Summing Up
By now hopefully you’ve learned about:
The overall industry of vehicle donations to charity
How the donation industry both supports charitable organizations and feeds the used car, truck, and motorcycle market
How to use a car, truck, or motorcycle donation to lower your taxes
What to do with your title, keys, license, and insurance when you donate a vehicle
How a Dirt Legal VIN Check can save you from surprises when purchasing a used vehicle
We wish you luck supporting a charitable organization that you care about!
Mismatched VINs on cars can put a hard stop on your titling efforts. Avoid at all costs! That is, unless you are in the practice of buying project cars. In that case, eat your heart out.