All of the prognostications are in that used car values are dropping but now may not be the right time to trade in. You have to ask yourself certain questions to determine if now is the right time to trade in your used car.

Say, for example, you own a Toyota Prius that right now is worth $20,000. You fear this time next month it might only be worth $19,000 because as gas prices are falling so are compact used car prices.

[By the way, this is just a hypothetical example. I can't forecast right now how much a $20,000 Prius will be worth in a month. If I could, I would be selling used cars and not writing about them.]

So, one month from now, the used car sitting in your driveway is going to be worth less. You want to sell now. Your heart tells you to sell now. After all, nobody likes to lose money on a major investment.

Take a little time, though, and answer these questions to see if now is the right time to sell. After all, neither the sale nor the purchase of a used car should reasonably be an impulse purchase.

Q. Do you need to replace your car?

It doesn't make sense to take on the burdens of higher insurance, property taxes, sales taxes, registration fees and other costs to purchase a different vehicle just to "save" $1000. You might quickly burn through your alleged savings, especially if you don't value the used car you are buying correctly.

Do you own your used car?

By this, I mean really own it. You have the title in hand.

The lender doesn't. It makes no sense to sell off a used car that you are behind on the note. Frankly, this is probably not going to happen with most compacts right now because values have increased instead of decreasing but it's something worth considering.

What are you going to purchase?

Sure, you can sell your compact used car right now but what is your new transportation going to be? Are you going to buy something less fuel efficient? You will have higher fuel spending in that case. Plus, you have to determine how much you can afford on your next used car.

Is your used car ready to sell?

Is it showroom ready? If not, you're not going to get as much as you think you can for it. Don't consider your car in excellent condition if it needs any mechanical repairs or even minor body work.

Can you wait to replace your used car?

OK, this requires some nerve on your part. Let's say you're selling a 2010 Toyota Prius worth $20,000. In two months it might be only $19,000. You might want to consider holding off purchasing a used car replacement because - strange as it seems - you might be able to buy your own car or something similar to it back for less money. How cool would that be? Again, this only works if you have another car in the driveway or access to reliable public transportation. Of course, that means you have to factor in the cost of public transportation.

Can you sell your own used car?

This is something to consider but understand that there is a lot of competition in the used car market among private sellers. The private seller segment is growing the fastest. However, you are going to get more money for your used car than if you trade it in. However, you have to take into consideration the cost of marketing it, prepping it, and other transportation while you wait to sell it. You might be fortunate to have a free ride but not all folks are.

Do you really want to sell?

Seller regret (also known as buyer regret) is a real phenomenon. We develop emotional attachments to our cars, just like our homes. Are you ready to part with a used car that is serving your well?

How important is depreciation to you?

It's not to most people. They don't factor in depreciation when buying a used car. (I never have because I keep my cars until they die typically.) For most, a used car purchase is a matter of practical concerns and not passion. Yet, the practical concern relates more to getting from Point A to Point B than the financial implications of the purchase. Don't sell if your used car was bought for getting from Point A to Point B. Depreciation is just not a factor to you.

Just some questions to consider before trading in a compact used car to take advantage of current market conditions. My sense is you are going to better off holding on to what you have unless you were already planning to trade in anyway.