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Car Consignment Fees Explained - Can You Save Money?

Car consignment fees could make the difference between gaining and losing money.

It’s no surprise that you can pay someone to sell your car while you sit back and relax. It’s called consignment and it can be safer, faster, and more convenient than doing the legwork yourself. But while it’s a solid option for selling your car, it does have a catch: car consignment fees.

Like paying a bicyclist to deliver your food, consigning your car involves weighing the cost of doing it yourself versus paying someone else to do it for you. So, what are those costs? What do you get in return? Will you end up making less money than you would from selling your car by yourself or to a dealership? Will it end up about the same?

Can car consignment actually save you money?

Today we’re going to explore the true costs of selling a car on consignment and the benefits you get in return, all to help you determine whether it’s the right choice for your situation.

And I know what you’re thinking.

Credit: Aaron Curtis

Why would I pay someone else to sell my car?

The goal of car consignment is to take as much work off the seller’s plate as possible by giving you:

  • Time. The consigner markets your car, answers phone calls and messages, and swims through seas of tire kickers and time wasters, all so you don’t have to.
  • Reach. You would usually be stuck advertising your car locally because shipping a car is a complex process, one that exposes you to additional risks. Car consigners have been there and done that.
  • Security. If someone tries to scam a consignment company out of your car, or if a buyer backs out at the last second, chances are you’ll never even hear about it.

Do it right and you’ll be finished faster than having your tires kicked by a dead-end buyer in a Wal-Mart parking lot.

Consignment offers the best of both worlds

The main alternatives to selling your car on consignment are going to a dealership or a stranger in a dimly lit parking lot – the first will get you way less money and the second might get you stabbed. Consignment strikes a compromise by offering the trust and security of selling your car through a business while letting you pocket as much of the profit as you would from a private transaction.

By advertising your car in ideal locations with precisely crafted listings, consigners can find the ideal buyer in the shortest possible time. That person is often willing to pay more for your car than a local buyer. And since you retain full ownership of your car until the moment it sells, the final selling price is always up to you.

We’ve all played the game of rearranging our schedule and arranging a meetup only for the buyer to flake at the last second. That alone can be enough to make the busiest among us reconsider the notion of selling a car ourselves, and when you weigh all the ways consignment saves time across the board, one might begin to wonder what the catch is.

We answered your #1 question: Is Selling a Car on Consignment a Good Idea?

Credit: Jesse Zheng

The true cost of selling a car on consignment

There are three different types of fees during the car consignment process:

  • State and federal fees like titling, licensing, and taxes
  • Consignment fees to cover the company’s efforts in selling your car
  • Administrative fees like filing and transaction fees

Consignment fees are agreed on at the beginning of the process. While the best car consignment companies will simplify things by rolling their administrative fees into the consignment fees, some list them separately. State and federal fees are owed regardless of how you sell your car, just make sure the consigner isn’t slipping anything extra in there.

How car consignment fees are calculated

There are two common fee structures that car consigners use to cover their services:

  • Fixed Rate
  • Percentage Rate

A Fixed Rate involves paying the same fee regardless of what price your car sells for. This gives you the security of knowing exactly what you’ll owe in the end, but your profits will be diminished if you choose to accept a lower offer. Whether it’s a good deal or not is up to you – for example, paying $1,000 for consignment doesn’t make as much sense for a $5,000 Honda as it does for a $50,000 Porsche.

Car consignment fees are usually based on a Percentage Rate where the seller pays the company a portion of the car’s sale price. Some consigners charge a set rate across the board, while others tailor the rate based on any number of factors. The trade-off is that you won’t know the exact fee amount until an offer is accepted, and a percentage rate grows with your car’s selling price as illustrated below.

Typical car consignment fees are between 5% and 15% of the car’s final sale price. Some companies charge a fixed rate of $750 to $3,000 per car. The final rate depends on the car in question.

Credit: Exotic Car Trader

Can car consignment save you money?

It certainly can. The best car consignment companies use their marketing experience to craft high-quality listings and attract ideal buyers. Consigners that offer shipping and delivery services can up the ante even more by posting your car in the best markets abroad, raising the chances of someone paying more for your car than a local buyer would – not to mention all the time and effort you save.

Shop around before you commit

Going back to the example above, paying a flat fee of $1,000 to sell a $5,000 car isn’t a good idea. That works out to 20% of the car’s selling price. Yet paying even 10% on a $50,000 sale would mean owing $5,000 in fees – that isn’t great either. Shop around to find the best possible fee structure for your situation and be sure to mention any better offers you’ve received from other companies.

Ask the consigner to explain their fee structure before committing to them. For Percentage Rate consignment fees, ask them to specify whether the rate is calculated before or after other fees are applied.

You control how much your car sells for

Any reputable consignment company will give you full control over the asking price. You can set a fixed price or a range of acceptable offers, but the decision to accept an offer is always yours to make. Just remember that it may take longer to sell your car if you start too high.

So, what exactly do you get for those consignment fees?

Credit: Dmitry Zvolskiy

Everything car consignment fees pay for

When you consign a car, not only does your schedule open up for all those hours you would usually spend selling your car, but since consignment companies are experts at crafting effective listings and posting them in the right places, the resulting buyer is often willing to pay more than someone would locally. That means you stand a good chance of coming out ahead based on money alone, yet there are more factors that tilt the scales in your favor.

Any car consigner will offer you the basics:

  • High-quality listings
  • Expert marketing strategies
  • Security and peace of mind

The best consigners will bring more to the table with extra perks like:

  • Professional photography
  • Interior and exterior detailing
  • Arranged test drives and shipping

There are added security measures, too. The buyer might be asked for a down payment to dissuade them from backing out at the last minute. When they pay for your car, the funds will be held by the consigner in a secure place like an escrow account until the process is complete. Most importantly, you retain ownership of your car until the sale is finalized and payment has been confirmed.

Credit: Johannes Rapprich

How much is an hour of your time worth?

With car consignment, you might spend a couple hours choosing a company and telling them about your car, but that’s it. Everything else is handled for you.

Instead of spending hours taking good photos of your car, a professional photographer could take amazing high-resolution shots and edit them to perfection.

Instead of spending hours listing your car locally on sites like Craigslist, Facebook, and eBay, an experienced marketer could paint vivid pictures with words and post them all over the web, across the country, and even internationally.

Instead of spending hours answering calls and messages from buyers only for them to drop out anywhere between 5 minutes later and 5 minutes before you meet with them, you could let someone else deal with the tire kickers while you work or relax.

And when the ideal buyer is a thousand miles away, you could research shipping and payment options while wondering if you’re being scammed, or you could leave it to the same people who did all those other things on your behalf.

Local car consignment is great, too

Local car dealerships will often consign cars right on their lot, and some dedicated consigners have a physical property where they sell consigned cars in addition to selling online. In these cases, not only does your own personal sales staff handle the entire process for you, you also get the chance to shake hands with the people doing the work. And when the surrounding community knows and trusts them, local car consignment offers a great opportunity to sell your car quickly without going too far from home.

It’s like a car dealership without all the stress.

Credit: Exotic Car Trader

Feeling confident about selling your car on consignment?

So, what have we learned? For starters, you can pay someone else to sell your car while you sit back and relax. Doing so is safer and faster than selling your car the old-fashioned ways. You can get just as much money from selling a car on consignment, and you might even come out ahead. All in all, consigning your car is a solid option in many situations. If you have any questions, ask them in the comments section below and we’ll be glad to help.

Did you know consigned cars are vetted for quality not once, but twice? Did you know there are easy ways to spot a trustworthy consignment company from a mile away? Be sure to check out those articles plus our Complete Guide to Selling a Car on Consignment to learn everything there is to know about the process.

About Exotic Car Trader

Exotic Car Trader hosts a curated selection of vehicles on consignment and through our interactive marketplace. As a brick-and-mortar company with strong ties to South Florida car culture, we strive to set a high bar while offering some of the lowest consignment fees in the country for rare, collectible, and significant vehicles. If your car would look great among our current inventory, have a look at how our car consignment program can be tailored specifically to your needs.

Additional reading:

What Is Car Consignment, Can It Be Trusted, and Is It Worth It?

Is Selling Your Car on Consignment a Good Idea?

Car Consignment Saves Sellers Time, Hassle, and Headaches

Cover image credit: Jose Mueses

Words by Justin Dake

We are not attorneys. This article does not contain legal advice.

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