Car Insurance

The solicitation of used vehicles has become an increasingly popular means of raising funds, especially for local or regional organizations. On the surface, it seems like a win-win situation for the donor and the charity: a convenient and easy way of disposing of an unwanted car while helping a cause. Before handing over those keys, however, there are some things that you should know.

A radio, television or newspaper promotion that welcomes car donations may mention a charity name that sounds like an organization working in your community, but that may not be the case. In fact, it may actually be located many states away. If you are not familiar with the charity, its location, and its programs take the time to check it out to avoid being disappointed later.

In addition, since so many organizations now accept donated cars, with a few calls and a little research, you can probably find a group that closely matches the needs or charitable concerns you would most like to support. Don’t confine your potential donated car recipients to the one or two charity promotions you recently heard in an advertisement.

Not long ago, only a handful of charities were known for accepting these types of donations. In recent years, these contribution requests seem to be everywhere. While this reflects the competition for the charitable dollar among a growing number of organizations, this growth is also due to the emergence of third-party brokers. These are for-profit firms that may sign up a number of different charity clients located in different parts of the country, solicit for donated cars on their behalf, sell and/or auction the cars, and then provide the charity with some portion of the dollars raised.

The donated car benefit to the charity can vary quite considerably depending on the arrangements. In some cases, the full amount of the donation goes to the organization if the charity sells the car itself or uses the vehicle to help fulfill some program services need (for example, delivering meals to homebound individuals). If a third-party broker is involved, however, the charity may receive only a percentage of the resale price of the car (such as less than 20%) or it may receive a portion of what is left after all the expenses have been paid by the broker, which can result in even smaller amounts going to the charitable cause.

In some situations, the amount the charity receives from a third-party broker has no relationship to the re-sale price of the used car. The organization may receive a flat fee (such as $100 per used vehicle) or a monthly agreed upon amount (such as $2,000 per month) that is not dependent on the total dollar value of sales incurred by the used car fund raising company. Finding out the nature of the charity’s financial relationship to the resale of the car is important, since a flat fee situation may result in making your used car donation ineligible for a tax deduction.

In order to take a tax deduction for donating a car, boat or other vehicle, there are a number of other things you should keep in mind. First verify that the recipient organization is tax exempt as a charity under section 501(c)(3) of the Internal Revenue Code. To verify that a charity is eligible to receive contributions deductible as charitable gifts, you can do one or more of the following. See if the organization is listed in IRS Publication 78, the Cumulative List of Organizations, which is likely to be available at most large public libraries. Visit the online version of IRS Publication 78 at www.irs.gov/search/eosearch.html. Or, ask the organization for a copy of its tax exempt status determination letter. (Note that churches are not required to apply for exempt status, and may not have such a letter or be included in the mentioned IRS publication. A car donation to a church, however, would still be deductible.)

If the organization is a charity, you can deduct only the fair market value of your car donation. In other words, this is the price the car would sell for today in its current condition. If the used car is not in good condition and needs significant repairs, don’t believe promotional promises that claim you will be able to get “top value” for your car donation based on one of the latest published guides that show the average regional prices for various used cars. If you are claiming that the car is worth $5,000 or more, you will need to get an official outside appraisal in order to substantiate the claimed value for the IRS.

Also, if you are claiming a car donation of $500 or above, you will need to complete and attach IRS Form 8283 to your tax return. For your records, you also will need proof that you made a charitable gift. The best evidence is to transfer the title of the car to the charity and keep a copy of this document. This title change also will help you avoid potential problems that can occur if the car is somehow parked illegally by the organization or is involved in an accident or other mishap before the charity is able to resell the vehicle.

Why all the fuss? For some households, a car donation may be the single largest charitable gift made during the year, or ever. This is all the more reason to make sure that the donation is being used for the greatest charitable benefit and that you can take full advantage of any potential tax deduction. The BBB Wise Giving Alliance welcomes readers to contact us about their experiences with car donations.

Vehicle Donation Checklist

* Verify that the recipient organization is tax exempt as a charity.
* Make sure the title of the car is transferred to the charity’s name and keep a copy of this record.
* Find out how the charity financially benefits from the resale of the car.
* For tax records, take a photo of the car and keep copies of current classified ads or guide value estimates for similar vehicles. (For more deductibility information, get a copy of IRS Publication 561, Determining the Value of Donated Property.)
* If the car is worth more than $5,000, get a written professional appraisal.
* Check out the charity with the Better Business Bureau serving your area.
* Find out if the charity is properly registered with the government agency in your state that regulates charities (usually a division of the state’s office of the attorney general).

The cost of gasoline is at an all time high, so many motorists are wondering what they can do to improve their gas mileage. What you spend at the pump is influenced in part by how you drive and what type of gasoline you use to fill your tank. Most gas stations offer three octane grades: regular (usually 87 octane), mid-grade (usually 89 octane) and premium (usually92 or 93). Octane ratings measure a gasoline’s ability to resist engine knock, a rattling or pinging sound that results from premature ignition of the compressed fuel-air mixture in one or more cylinders.

To improve your gas mileage, drivers should:

* Choose the right octane for your car. Check your owner’s manual to find out what octane your engine needs, then buy it. Resist the urge to buy higher octane gas for “premium” performance. Using a higher octane gasoline than your owner’s manual recommends offers absolutely no benefit. Premium gas also costs 15 to 20 cents per gallon more than regular gas. That can add up to $100 or more a year in extra costs. The only time you might want to switch to a higher octane level is if your car engine knocks when you use the recommended fuel.

* Keep your tires inflated to the proper levels. Properly inflated tires provide less road-resistance and can improve fuel efficiency. Check your owner’s manual for the guide to appropriate inflation levels.

* Keep your engine maintained according to manufacturer’s recommendations. Make sure that you change the oil and get tune-ups according to your owner’s manual.

* Drive within the posted speed limits.

“Spot delivery” by auto dealers can lead to some sad situations. Better Business Bureaus report an increase in complainants who were asked to return their new car because the financing they thought was assured had “fallen through.” Their only option, the dealer said, was to make an additional down payment and/or agree to a higher interest rate to obtain new financing. Their traded-in vehicle had been sold so they had no other recourse.

What went wrong? Typically, the consumer signed a financing contract with the dealer without fully understanding the terms, or the contract was incomplete or not in writing. The customer assumes that the credit deal is finalized and the car is theirs. The auto dealer delivers the vehicle “on the spot” and permits the customer to take possession of the car.

Some weeks or even months later, the dealer contacts the customer to advise them that their financing plan was not approved and that they must agree to new financing – at less favorable terms – or return the car. This practice is called “yo yo” financing. The dealer stands accused of not having properly disclosed that the credit deal he originally sold to the customer was conditional on the approval of the application.

Not all deals in which a credit application isn’t approved is a scam. Sometimes a customer does not have strong enough credit to quality for the most attractive financing offers or has provided incomplete or false information on the credit application. This does not pose a problem if the auto dealership has awaited approval of the credit application before letting the customer take possession of the car.

There are many upstanding auto dealerships that never engage in these or any other shady tactics. However, “yo yo deals” are a common enough practice that some states are enacting laws to protect vehicle purchasers from “spot delivery.” To help ensure a satisfactory car-buying experience, the BBB advises car shoppers to

* Select a reputable auto dealer. Contact the BBB for a reliability report on the dealership before making a purchasing decision.
* Shop for financing before visiting dealerships. Check with your bank, credit union and other lenders to find out how much credit you may be offered and at what terms.
* Truth-in-lending laws require the auto dealer to provide a written disclosure of the terms of the sale and credit offer. Compare that to what you have been offered by other lenders.
* Remember, it is not in the dealer’s best interest to shop for the best credit terms for you; that’s your job!
* Make sure that any warranty claims, financing terms and oral promises by the sales person are put in writing.
* Carefully review all documents and sign them only if you fully understand every provision. Make certain both parties sign the documents and obtain copies.
* Do not drive the car off the lot unless your financing is approved and secure.

When shopping for a new car, it is always a good idea to comparison shop, carefully think things through and resist being rushed into making a hasty decision. Remember, there is no three-day cooling off period!

As gasoline prices rise well above $2.00 a gallon in some areas, consumers are wondering what they can do to improve their gas mileage. Although there are practical steps you can take to increase gas mileage, the Better Business Bureau warns consumers to be wary of gas-saving claims that empty your wallet, instead of saving you fuel.

Many Web sites make unbelievable claims for various after market automotive devices (fuel-line magnets, air bleed devices and retrofit gadgets) and oil and gasoline additives that supposedly increase gas mileage for automobiles. The Federal Trade Commission found many of these claims to be either false or overly exaggerated.

Before adding any fuel savings device to your vehicle, check with your mechanic. You may end up with a voided manufacturers warranty and serious engine problems by adding after market devices to your engine.

What you spend at the pump is influenced by how you drive and what type of gasoline you use to fill your tank. With vacation time approaching and an anticipated increase in gasoline prices for summer travel, here are some tips on what you can do to save fuel consumption:

* Choose the right octane for your car. Check your owner’s manual to find out what octane your car requires. Keep in mind that the higher the octane, the higher the price.

* Keep your engine tuned. Studies have shown that a poorly tuned engine can increase fuel consumption by as much as 10 to 20 percent depending on a car’s condition. Follow the recommended maintenance schedule in your owner’s manual; you will save fuel and your car will run better and last longer.

* Don’t let your engine run at idle any longer than necessary. An engine actually warms up faster while driving. With most gasoline engines, it is more efficient to turn off the engine than to idle for any period longer than 30 seconds.

* Drive more efficiently. Stay within the posted speed limits. The faster you drive, the more fuel you use. Set your cruise control on highway trips. This can help maintain a constant speed and, in most cases, reduce your fuel consumption.

* Keep your tires properly inflated and aligned. Automobile manufacturers must place a label in the car stating the correct tire pressure. If the label lists a psi (pounds per square inch) range, use the higher number to maximize your fuel efficiency.

* Anticipate driving condition. Driving smoothly and steadily makes the best use of your fuel. If you can, avoid sudden acceleration or braking.

* Change your oil and replace air filters regularly. Clean oil reduces wear caused by friction between moving parts and removes harmful substances from the engine. Your air filter keeps impurities in the air from damaging internal engine components.

In some places you may be able to walk in and rent a car without a reservation. But to make sure you will have the type of car you want, when you want it, you should reserve it in advance. Most rent-a-car companies take reservations in advance and will guarantee them with your credit card number and arrival time. Often they will provide a reservation number which you should record.

When you call for a reservation, give the time and date you want the car and your preference of model and make. Major companies will reserve a car in the cities they serve in the U.S. and even in foreign countries.

Many established rent-a-car businesses have toll-free numbers which can be called from anywhere in the United States without charge, 24-hours-a-day.

Do: Make a reservation when possible. Recheck your reservation as close to the rental date as possible.

Don’t: Forget to cancel if your plans change; this releases the car for someone else.