Can you really win your dream car for just a few dollars? You’ve seen the car giveaways plastered over Instagram and Facebook. They give you a chance to win your “dream car.” All you have to do is spend a couple bucks on merch or stickers. Are these car giveaways just a scam? I’ve spent over a thousand dollars on all kinds of car giveaways and will give you the full run down.
The short answer: Yes, they are real.
However, your chances are extremely slim. Statistically, you are likely to spend more than the value of the car before winning any giveaway. Here’s the full story on how these giveaways operate.
How Do Car Giveaways Work?
After entering 50+ giveaways myself I have found there to be two unique types of giveaways you will run across:
1. Sweepstakes
These are the ones you see all over social media with ads begging you to purchase merchandise. YouTubers run these with their own merchandise as well. You will typically see a business model like: every $1 spent = $1 entry to these.
Sweepstakes like these will be run by an official company that uses a registered and legitimate third party company to do a truly random drawing. There will be an option to enter for free to maintain the legality of this being sweepstakes.
Some examples you’ve probably heard of this are:
The giveaway will run for the period specified by the company and all entries will be submitted to the 3rd party to conduct the drawing and decide the winner.
2. Grey Market Raffles
You won’t see ads for these, they pop up in facebook groups, instagram stories and spread with the word of mouth. These tend to be run by a single person and not a company. It’s usually run in a format like: 300 spots for $40. You submit the money through Paypal, Cashapp, Venmo or even a website run by that person.
The cars here tend to be of lower value since the total money collected is much lower. I have seen countless civics, integras, MR2’s, even a few S2000’s and Evo’s here.
Once all spots are filled, each entry will be assigned a number (sometimes you can choose your number before you pay). The list will be published, then the person will go live on social media to do the drawing. They will use a website like random.org to choose the winner or a physical drawing of a piece of paper from a basket or something like that.
That winner will then receive the car as the prize. Many giveaways offer free shipping across the 48 continental US states. I call these “grey market” because they are not run by a company and the drawing is not done by an audited third party. From what I’ve seen, they do what they can to make it random but there.
The Secret to Getting Free Entries
These giveaways are sweepstakes (not a lottery), so these companies are obligated to offer a way to enter without a purchase. You can read more about the details of a lottery vs sweepstakes here.
To enter without spending a dime: Find the official rules for the sweepstakes on the company’s website (this is typically found in the footer).
If you scroll through the pages you should find a section called Mail-in, How to Enter, Ways to Enter or something similar. Here there will be instructions on how you can enter the giveaway without purchase. Typically you need to write your name, address and other contact information on a 3” x 5” index card along with a short explanation or phrase that involves the prize. Every company’s instructions are different, it’s important to follow the directions exactly as instructed or your entries can be discounted.
Then mail this to the address instructed by the deadline listed in that document and you are now entered to win. I’ve actually heard of people winning the grand prize by just sending in a postcard, I urge you to give this a shot.
How Good are Your Chances to Win a Car?
Let’s be clear: the chances of winning are very low. There are a number of factors that determine your chances and many times you will have no idea what those chances are.
For the sweepstakes, it’s nearly impossible to have a real idea of your chances. Entries can be in the tens or even hundreds of thousands. So if you back that into a percentage, your chances are extremely low. You need to factor in that these companies have to pay for the product and shipping of the merchandise plus advertising costs. Throw in the initial cost of the car and there are a lot of entries they need to receive in order to be profitable.
No for the raffles, oftentimes you have an exact idea of your chances of winning the grand prize (as well as how much the person running it will make).
Let’s use my example above: 300 spots at $40 each.
If you buy 1 Spot you have a 1 out of 300 chance of winning ~ 0.33% of you taking home that car.
Now let’s see how much the organizer might make: $300X40=$12,000 total collected. You have to do some estimation on the value of the car but for this example let’s say it’s about $8,000. Now the organizer will likely agree to pay for shipping so that could really be a wide range depending on how close the winner lives but let’s put aside $2,000 for that. This person could make $2,000 or more on this giveaway.
Important: By entering the giveaway with that many spots for that price, the chances you have have value the car at $12,000. So statistically speaking you will spend more than the value of the car before you win it.
Why Do They Come With Cash?
To cover the taxes you will be required to pay. On average you will have to pay 33% of the car’s value in taxes. This won’t be due instantly but when you file your taxes next year, you can be sure a good chunk of change will be due.
Here’s how to find the estimated retail value of the prize and get a rough estimate of the taxes. Navigate to the official rules of the giveaway and find a section about the “Grand Prize.” You should see a section that gives you retail value of the giveaway.
For example if there is a $40,000 Car + $20,000 cash = $60,000 total prize (yes you have to pay taxes on the cash prize as well).If you have to pay ~33% in taxes that means you will owe about $20,000, just enough to cover the entire grand prize. (Plus it makes a great marketing tactic for them, who doesn’t like cash?)
If you do win one of these I recommend speaking with a professional on the best way to handle the taxes.
1 Critical Thing You Need to Understand
You will have to pay to maintain this car and the insurance. If there is leftover cash to use after putting it away for taxes, it can be used for this. It is very important that you understand this as winning an exotic car can come with some hefty running costs.
Why are there so many car giveaways?
Many YouTubers and aftermarket companies are jumping at this gold rush of car giveaways. Entire companies are even being spawned from the merchandise they sell to giveaway cars.
They seem to have started with decent cars like a scion FRS and over time have evolved to having exotic cars like Lamborghini’s.
The answer: When there’s good money to be made there will be plenty of competition.
However, many people underestimate how much work it takes to put on a giveaway of this size. You need to work with a legally sound sweepstakes company to set up the legalities which can cost thousands by itself. In addition to that you need to manage a profit after paying for advertising and the cost of the merchandise.
How Much Money I’ve Lost
For every winner, there are hundreds or thousands of losers on these giveaways. I’ve entered countless giveaways for my shot at a new car.
I’ve counted it all up and I have spent $1,451+ dollars on entering. This is both the sweepstakes and the grey market giveaways. What do I have to show for it? Absolutely Nothing.
Here’s what I’ve learned:
- You can’t expect to win.
- It gets addicting fast.
- Your chances are very low.
Will I keep entering more giveaways? Of course, but I’ve learned to only enter for cars I would actually enjoy. In the beginning I found myself entering some giveaways just to enter them, not even being a big fan of that type of car. Just hoping to win something.
It could be thousands and thousands of more dollars before I win and that’s what you need to understand. Winning is not guaranteed. With some extremely bad luck you could spend double the amount of the car you want and get nothing in return. Every dollar you put in needs to be what you can afford to lose.
So is it worth it?
If you are in a position with some disposable income you don’t care to lose, I say yes. But if you are strapped for cash, this is not the way to get into the car game. I go into every one of these expecting to lose because if you hope to win you will most likely end up disappointed for something you don’t have control over.
So what are your thoughts on car giveaways? Do you think they are real? Have you entered one? Let us know in the comments below.
