Selling Cars in today’s economy – Surviving tough economic times can be well, tough; however with some initiative, common sense, and the will to survive your own particularly tough situation, you can of course start to buy and sell cars, and very profitably too. Nonetheless, before you rush out and perhaps lose money you cannot afford to lose, you need to read this guide on how to buy and sell cars without getting into even worse financial trouble. Here is how to sell cars successfully.
Get a license
While buying and selling cars per se is not illegal in any state, selling cars does become illegal when you sell more than about three to five in a period specified by each state. If you are going to be serious about supplementing your income selling cars, you need to do it right from the get-go, which means obtaining a dealer’s license. Having a dealer’s license does not only allow you to sell as many cars as you want- it also allows you to compete with dealers at dealer auctions.
Dealer auctions can be very productive hunting grounds, because dealers often use these auctions as dumps for what they see as unsalable vehicles, which means that you can often pick up once-in-a-lifetime bargains because you don’t have the high overheads dealers have. If you do all or much of the work of preparing a vehicle yourself, you can buy and sell cars from dealer auctions at much better prices than dealers can, simply because it doesn’t cost you as much to fix it as it would a dealer.
Don’t buy wrecks
There is no way you can make money selling cars if the cars you buy need a lot of work. As a minimum, the vehicle should be free of rust, accident damage, and major mechanical defects. If you are not mechanically inclined, partner up with an ASE certified mechanic to inspect all the cars on your radar. Alternatively, don’t buy a vehicle if you cannot drive it home.
As a rule of thumb, estimated repair costs should not exceed about 5% of what can you can get for the vehicle, and this amount should include the fee you pay the mechanic that inspected the vehicle. Bear in mind that you entered the business of selling cars to make money, not spend money on learning about car repairs.
Know the market
As with real estate that is all about location, selling cars is all about knowing what sells, for how much, and who is buying. This is easier said than done, so before you buy a vehicle you think might fetch you a good price, spend some time researching that particular vehicle. Many vehicles are notorious for faults, defects, and other issues such as recalls that affect their resell value, so consult the NHTSA database for information that could help you avoid making a bad business decision.
Manage your expectations
While there are many stories on the internet about how profitable selling cars can be, these stories should ideally be taken as cautionary tales. Of course, it is possible to occasionally make a huge profit on one sale, but the idea is really to make smaller profits all the time. Nobody can survive on one profitable sale for long, so what you need to do is sell cars all the time, but in such a way that you make profit on each sale.
Selling cars for profit is a tough business, and nobody gets rich from it overnight. You need to have clear goal in mind, meaning that you need to be sure by how much you need to supplement your income. Knowing how much you need to make every month helps you avoid making bad decisions; there is no point in just breaking even on a deal- if you need to make say $500 on a deal, take that amount as the minimum.
Every dollar above your minimum requirement is a bonus; know what you need and work towards it, but don’t expect to make unrealistically high profits all of the time, or even much of the time.
Consider sticking to one brand
The old adage that you should stick to what you know best applies to how you will sell cars as much as it applies to everything else in life. Thus, if you have some experience with one car brand, or even a single model, consider dealing only with that brand or model.
Doing this helps you in two ways; first, you will spend less time getting a vehicle to market, and second, it takes much, if not all of the guess work out of the equation. Selling cars is not so much a question of being good at selling as it is about being good at buying cars, which is another way of saying that you need to be sure that you can sell what you buy.
For instance, if you have experience of the mid-range models of a given brand, don’t buy a high-end model and hope to sell it. There may be faults and defects present that are beyond your abilities (and budget) to resolve, meaning that you will lose money, instead of making some.
At the risk of overstating the case, don’t buy and sell vehicles that you are not familiar with. People who do that are either experienced mechanics, or high-volume dealers who can afford to pay experienced mechanics to fix their purchases. You are likely neither.
Don’t sell cars, recycle them instead
Bear in mind that there are probably dozens of sellers of used cars in your immediate vicinity, and all of them are always looking for cheap parts, meaning that if you can’t buy and sell cars without spending rent and grocery money, you could always consider the business of recycling cars.
Chances are however that someone else has already cornered the market in that particular niche in your city, but there are ways and means of fighting back. One such way is to take weekend drives to outlying towns to see what people have parked in their backyards, covered up under tarpaulins, or stashed away in barns.
Nine times out of ten you will find what you’re looking for in any mid-sized town, and if you have a suitable trailer to move the vehicle, you are almost guaranteed to make several times your investment back by breaking it up and selling its parts. What remains can be sold as scrap metal, which could fetch you a perhaps another hundred dollars or so.
One more thing
If you want to sell cars, you must keep emotion out of the deal. Whatever you might think of a particular used vehicle, it is just that, a used vehicle, and nothing more than a tool with which to make some money. By focusing on the fact that you are in the business to sell cars, not to collect them, you can easily avoid all, or most of the pitfalls that have bankrupted many people.