Get Started In Car Dealing

                 

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 pounds capital.  You're going to need some

investment.  That said, it can be less than you might think

in the right circumstances.  $500 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 MOT,

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 MOT 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

$20 and $30 that are almost guaranteed to be worth $100 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 $400 on a $4,000 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 $3,000 car for $2,100!

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 $100 to $200 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 cheque 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.