GET STARTED IN CAR DEALING
A VERY OLD BUSINESS
Car trading is one of the oldest business ideas. It still
maintains it's appeal. But, although many people aspire to
such a business, few actually start. It's not really a
table-top type business, but it is something that you can
start with not too much difficulty if you sketch out a basic
plan.
Needless to say, there's plenty of demand for car trading.
Millions of potential customers every year! The big
franchised dealers have got all the big opportunities
cornered, but the thing to do is to look out for riches where
the small trader can begin. Often, it's not necessary to be
involved in any mechanical work at all.
SETTING UP
Unfortunately, car trading is not a business where you can
start with a few dollars capital. You're going to need some
investment. That said, it can be less than you might think
in the right circumstances. $1000 would be sufficient, but
more would obviously be helpful.
A few car dealers have started by re-selling their own car
for a profit. And, depending on how attached you are to it,
it can be a possibility.
You can certainly work from home, but a telephone will be
essential.
When working from home you should be very careful not to make
it obvious that you are dealing in cars. It's not strictly
allowed under planning regulations. You won't generally
cause any problems if you only handle one vehicle at a time,
which is quite enough.
Consider the legal implications of car trading. You'll need
appropriate insurance to drive all cars - a special trader's
insurance is available. Also, any cars you drive on the
road, or even keep there, will need insurance, tax and title,
whether you are using them or not (but not if they are on
your own property).
Also remember that it's illegal to knowingly sell a car in an
unroadworthy condition. Having an title certificate is some
evidence of legal mechanical conditions, but not necessarily
roadworthiness.
Take some time to research the various ins and outs, because
motor vehicles are some of the most regulated possessions
ever.
BUYING STOCK
Once properly set up, you can start to think about buying a
car to trade in. A single one will do to start.
Now, there's no need to think about getting some old banger
and 'doing it up' as some dealers do. In fact, unless you
have mechanical knowledge, or will pay someone to work on
cars, it's not a good idea unless you're absolutely sure of
safety.
On the contrary, it is possible to make money without doing
anything to them. Perhaps just cleaning them up will be
enough. Many established garages buy in cars and resell at
an immediate profit. It's all down to careful buying.
Basically, there are two ways of buying cars in for resale
that involve minimum problems:
AUCTIONS
The 'easy' source of cars for resale. They are held all round
the country. Check your local papers to see what's available.
What you buy will depend on your finances. There are some
auctions that sell only late model cars (up to four years
old) where the vehicles are ready for instant resale. This
might be a possibility.
On the other hand, there are auctions which sell old cars for
$40 and $60 that are almost guaranteed to be worth $200 in a
resale. Ideal for a bargain basement business. But remember
the safety problem.
It's best if you can take a mechanic to an auction, because
most don't offer much, if any, warranty. If you don't have a
vehicle mechanically checked, then you are buying very much
on a risk basis. With careful buying, auction cars will
virtually assure you of a profit. The amounts vary, but it's
usually 10% minimum (that's $800 on a $8,000 car) and can be
up to 30% sometimes. Start with one car to see how it goes.
PRIVATE
The second method of getting in cars is to buy privately.
This is good if you have a sum of cash available to outlay
now.
Consider that all over the country there are people who want
to sell their cars quickly for cash. Maybe they need the
money or have brought a new car. If you can come up with the
money quickly, then you can get a big discount.
Place advertisements for cars wanted in local newspapers.
Respond to enquiries. Remember that you're expecting a big
discount to give immediate cash.
Value the car by reference to advertisements in papers - the
going rate. Or try the 'Black Book' which is a trade guide
to prices available which you can get once established.
Then think in terms of offering the seller about 30% off the
retail price and negotiate around that. I will work for
people who need fast money and don't want to wait.
Do what you can to ensure the vehicle is the property of the
seller. The registration document is not proof, but if their
address is on it, and they can prove that they live there,
it's a good pointer. But, of course, it is a risk.
As I said, you might get 30% off. So you can, with
aggressive negotiation, get a $6,000 car for $4,200!
DOING CARS UP
The best thing when operating as a small trader is not to
become involved with doing cars up. As I said, there's a
safety risk. If you have to pay someone else to do the work
this will probably make it uneconomic. Until you are
established and can afford to pay someone skilled, then the
most work you should do is to give your purchases a thorough
clean inside and out. Strip off every bit of grime. It's
amazing what value a good clean up will add. You're probably
talking in the region of $200 to $400 for even a small car,
and that's in addition to the profits of buying cheap.
SELLING ON
Sell on your stock as soon as possible, because it's
depreciating all the time!
The best ways of selling trade cars are undoubtedly
classified advertisements in newspapers. Or, even better,
those regional car selling magazines. You can advertise
quite cheaply and they are usually circulated to thousands of
interested buyers in your area every week.
Don't rely on advertising in window cards, or Sunday car
sales and the like. It's almost certainly not worth it.
In selling, pitch your price quite high. Compare to similar
cars and pitch higher for the age and mileage. Prospective
buyers are almost certainly going to make you an offer and
it's nice to be able to accept this with only a small cut in
your profit margin!
Never part with your car against a check or a bank draft
that hasn't been cleared first. The only acceptable payment
for a client to take a car immediately is cash in hand.
One snag is that traders usually offer finance facilities and
perhaps a warranty. It's possible to arrange both of these
in conjunction with finance companies and specialist car
warranty companies. In both cases, these companies will
provide you with finance for your customer (and pay you a
commission), or a warranty. Make enquiries. You might have
to be established for a while before they'll take you on. If
you can't offer a warranty facility make it clear that your
vehicles are sold 'as seen'. This will mean that your prices
are a little lower than garage type traders. However, you
still have a legal responsibility to the customer that the
car is roadworthy and as you described it in any
advertisement.
Because so many cars are on the market, selling is not always
easy. But the low prices you can buy cars for at auctions,
or for cash, mean that a profit, even if only modest, is
virtually assured in most cases, and that's enough for a home
business.
FINAL SUMMARY
Probably, most prospective car dealers and car millionaires
never get their ideas off the ground, because they think too
big. For example, they expect a posh showroom and to be
involved in mechanical repairs, resprays, etc, is always
necessary. The fact is, however, you needn't be concerned
with all this. It's much better to start in a small way with
just one car, and steer clear of mechanical work and all the
usual trappings of the car trade. Obviously the rewards are
less for a smaller business, but they are still quite
attractive for the effort.
