Putting a Price On your Car

Take the highest wholesale price your car will bring-as determined by the used-car appraisers-and decide how much above the wholesale price is the lowest amount you'll accept. Remember, your ultimate goal is to make more money on your current car than you'd get from a dealer. You be the judge of how much above the trade-in price makes this exercise worth your while.

You now have an asking price and you know the price below which you will not go. Keep something else in mind: When you trade a car in on a new car, you pay sales tax only on the difference. Let's say your car is worth $8,000 at wholesale and you trade it in on a $20,000 car. If your sales tax rate is 6 percent, with the trade you'd pay $720 in sales tax. However, if you took the cash from the sale and added it to a loan, you'd have to pay sales tax on the full purchase price. In this case that would amount to $1,200. Obviously, you don't want the sales tax on a new car to eat up your profit.