If you are searching for a way to earn a little extra cash then selling used cars may interest you.

It doesn’t require that you know the ins and outs of the used car business however; It does require a little research.

If you are not very knowledgeable when it comes to automobiles then it may be a good idea to grab a friend who is mechanically inclined.

Here’s how it’s done in 10 easy steps:

1.               Come up with capital. For starters $1,000 – $2,000 will be sufficient. If you don’t have extra cash laying around then apply for a 0% credit card then take a cash advance. If credit cards are not an option then borrow money from a friend or family member.

2.               Find automobile auctions in your area. This can be a difficult task because there are so many individuals out there that want to sell you a list of auctions. You can find all the information online for free if you are willing to spend the time and search. Once you have selected a particular auction find out whether or not it is an absolute auction. By definition an absolute auction is where property is sold to the highest bidder with no required minimum amount. You only want to attend absolute auctions.

3.               Attend the auction. Most auctions allow you to inspect vehicles before you bid on them. Be sure to thoroughly inspect each vehicle and take note of damages or areas of concern and basic information such as year, make model, mileage etc. Do not consider bidding on a vehicle that you don’t feel 100% comfortable with.

4.               Purchase a current edition Kelly Blue Book prior to attending the auction. Once you have hand picked the vehicles that you are interested in then look up the book value and write it down next to the vehicle notes.

5.               I have used the following formula for years and have successfully doubled my money many times:

Book value / 2 – $300.

For example A 2002 Chevy Malibu has a private party book value of Approx $2,600 (good condition). I have found on average that you will spend $300 in taxes, battery, small repairs etc. Using the formula $2,600/ 2 – $300 = $1,000. This means that if you were to pay $1,000 for this particular vehicle and spend $300 to get it ready to sell and sold it for $2,600 then you would have doubled your investment. Your max bid should not exceed $1,000.

6.               Once you bid on a vehicle and win then its time to take the vehicle home and inspect for any necessary repairs. Repair anything small  that may immediately deter potential buyers. For example if the carpet has a lot of stains then you may want to consider purchasing new floor mats.

7.               Clean the vehicle inside and out and take pictures. Perform a detailed cleaning. A coat of wax is easy and gives a better first impression.

8.               List your vehicle on classified websites sites such as Craigslist. Craigslist of not only free but also very effective.

9.               Be prepared to answer questions that potential buyers may have such as mileage, damages, power accessories etc.

10.             Once you have some who wants to purchase your vehicle then its time to seal the deal. Create a bill of sale, sign the title over and have it notarized by a public notary.

Here are a few vehicle buying tips:

-          Never engage in a bidding war with another individual. Only bid up to your max amount as described above

-          Never purchase a vehicle that you are unsure about

-          Avoid vehicles that have been wrecked or have a salvage title

-          Always choose a vehicle with a good paint job. Nothing sells a vehicle better than a shiny paint

-          Always check all your fluids to ensure they are not mixed or contaminated. This could result in costly repairs.

-          If necessary you may want to resort to paid advertising sites such as Auto Trader

For more ideas and information on how to make money be sure to check back with Healthy Financial Habits. As always we are dedicated to helping you form wealth accumulating habits.

Author: Greg Jackson