If you already have a car, you must decide what you are going to do with it. Do you want to keep it for a second car, or give it to someone you know? If so, go ahead and do that and don't bother reading the rest of this book. If, however, you don't want to keep your present car, then you need to know the alternatives for its disposition.

Perhaps the simplest choice, if you have bought from a new or used car dealer, is to trade it in on your new used car purchase. This is not as wild as it may sound. Trade-ins are not just for new car buyers.

One advantage of trading your car to the dealer is that, in most localities, any applicable sales tax will be due only on the difference between the cost of your new used car purchase and the allowance for your old car. Without a trade-in, sales tax will be charged on the whole cost of your purchase.

There is a way to reduce the sales tax when you are selling your car privately, too, if you have a buyer waiting for it. It is legal, and most dealers are happy to co-operate. They will do a paper transaction, in which you sell your car to the dealer, who immediately turns around and sells the car to your buyer. Both transactions are at the price you and the buyer have already agreed upon.

Most dealers will do this at no charge, and even look after all the paper work this double transfer generates. It is not a complicated procedure, and the dealer may not even see the car. However, he will need to have documents showing serial and license numbers. It does not affect the buyer of your car in any way. He will not have to even go to the dealer, but will have to sign some papers.

There is a big disadvantage to trading your old car, though. Money. You probably won't get much for it. New car dealers usually do not like to keep cars on their used car lots when they have gone beyond a certain age. If you old car is older than the cut-off, the dealer will just turn around and wholesale it to an independent used car dealer or run it through an auto auction. Either way, the dealer won't get much for it--and you will get less than he does. If the dealer does decide to retail it, he still needs to buy it at a price that is low enough that he can fix it up and sell it at its market price and make a reasonable profit.

You can almost always get a higher price for your present car if you sell it privately, because you by-pass the middle man--the dealer--and his need to make a profit from the transaction. But, the higher price you can get by selling your car will cost you something because you will have to get the car fixed up to a saleable condition. Depending on what needs to be done, that could run from only a few dollars to as much as several thousand.

You can save some money on these repairs if you have the ability, time and equipment to do at least some of the work yourself. If you want to do this, you will likely be much better off in the long run by not attempting to trade your car into the dealer.

Then, there is the option of selling you car in "as is" condition--that is, doing no fixing up. Doing so will be most plausible if your car is in either extremely good condition or extremely bad condition. If the former is the case, you can probably sell it yourself for a good price with little or no fixing up. In the latter case, fixing your old car is probably not worth the expense.

If you decide to sell your car privately, to whom can you sell it? Maybe a friend or relative wants to buy it. Used cars are often sold to acquaintances because they know the owner and probably know the car, too. That gives them much more confidence than going to a used car lot and getting a car whose history they know absolutely nothing about.

Like borrowing money for your new car from a friend, however, relationship deterioration is a possible risk. This risk is especially high in the sale of used car because something totally unexpected might go wrong with the car at any time--right after the sale, for instance.

Of course, this is no less likely to happen if you sell your present car to a stranger. Are you prepared to face this possibility? What would you do if it were to happen? You may be the kind of person who does not want to put yourself into that kind of potential situation. Then, try trade your car and let the dealer take the responsibility for the repairs, the risks and all that. That is part of the business he is in.

On the other hand, if you can take the possible risks in stride, go ahead. Fix up your car and sell it privately. Determine a fair price by checking the used car price guides available at the reference desk at your local library. Place an inexpensive ad for your car in the local newspaper, penny saver paper or car-trader magazine. Make up an ad and put it on the bulletin board at you place of work. Put a "For Sale" sign in the window, with your phone number or address. You can either keep driving your car or park it in a good location where passersby will see it. Either way, potential buyers will spot it. If they are interested enough, they will contact you and talk business.