BusinessHABA Car Stands Business: You don’t have to be a mechanic to make a little money on used cars.
In fact, most people can buy and flip cars for a few hundred dollars each,
as they know how to find a good deal, which is easier than you might imagine.
The biggest tip to remember is that you make your money when you buy the car, not when you sell it.
So finding a good deal is your top priority.
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With a little elbow grease and smart negotiating,
you can almost always flip the car quickly and profitably.
Car trading couldn’t sound more straightforward: buy cars cheap and sell for profit.
The trick to make money when you buy and sell cars is often to sell quickly –
with car traders typically fetching anything from £400 depending on the car.
You do not have to be a car expert to be successful selling cars.
What is more you can buy and sell cars on a part-time or full-time basis –
perfect for an entrepreneur looking for a simple business idea.
Follow this checklist to find out more…
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Read also; 5 Tips to Start Buying and Selling Business in Nigeria
1. A Car Stands Business: Research the market
Find out what types of cars are selling, and for how much,
before you buy your first car.
When thinking about the best cars to buy and sell,
think also about who your audience is,
then decide how you might best cater to that audience
(do you want to specialise in selling a particular car make or model you know a lot about, for example).
Where do they buy cars from? How long does it take to sell a car?
Don’t forget there are different ways to price your vehicle;
you could look at existing car adverts or car price evaluation sites to gauge how much you should charge.
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2. A Car Stands Business: Write a business plan
Work out your costs compared to how much you might sell the car for.
Once you have done some market research,
and have an idea of what kind of cars you want to sell you should then create a business plan.
This might not seem necessary, at least for your first car,
but it is important to assess the viability of buying and selling cars as a business and not simply a hobby.
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Keep in mind that you will have to repair any issues the car may have,
so you will want to have a budget for that,
as well as for any aesthetic improvements you might want to make.
There will also be a few legal regulations,
and marketing considerations you will want to be aware of,
(see below) which are useful to add in to your plan from the outset.
You may want to look at a simplified version of our business plan template to help you.
Once you know your costs,
you will know how much you can afford to purchase a car for,
and can assess if you need to raise any finance.
3. A Car Stands Business: Notify your local council
Selling cars from home is a great way to save money when you’re starting out as a car trader.
If this is the route you decide to go down,
you’ll need to notify your local council in order to ascertain how many cars you can have parked on the road at one time.
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4. A Car Stands Business: Get Motor Trade Insurance
Once you have the go ahead from the council you need to get yourself some Motor Trade Insurance,
which covers you when driving cars without having to insure them individually.
Motor Trade Insurance is a great option as unlike private insurance,
it allows you to add and remove as many cars as like without having to pay additional costs.
There are three types which cover you for different things and vary in price.
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5. A Car Stands Business: Apply For Trade Plates
Next you need to apply for trade plates which are essentially mobile tax discs that save you having to tax,
and register every car that is temporarily in your possession.
6. A Car Stands Business: Buy A Car To Sell
There are a few different avenues you can go down when purchasing a used car.
The most convenient is online on auction and listing websites such as eBay,
Copart UK and Gumtree and car selling sites such as Auto Trader UK, carwow and Carspring.
Alternatively, you can find cars at auction houses,
which tends to be a very cheap option;
if you’re not an auction aficionado go a few times before actually purchasing.
See also; 8 Step to Start Buying/Selling Used Motorcycles Business in Nigeria
7. A Car Stands Business: Start selling!
After you’ve purchased your first car you need to make sure it is ready for resale.
Firstly, making sure the car has passed its MOT will save a lot of hassle when selling on,
and of course make sure it’s clean; you could also give it a spray job to make it more appealing.
If you are selling from home, you are not allowed to have any signage on your house,
price boards on the cars or to make any alterations to the premises.
There are a plethora of car listing websites that allow you to create an advertisement quickly and easily,
or you could advertise in your local newspaper or car dealer magazines.
The best way to get your car noticed is using some good quality images.
That give a clear indication of what you are selling,
and ensuring you have listed all information in your advert.
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8. A Car Stands Business: Register As A Sole Trader
Once you’ve sold your first car, you should register as a sole trader
(read more in our guide on how to register as a sole trader).
It is important that you inform HMRC once you start trading,
so that you are registered for self assessment tax.
You could be fined if you don’t do this!
As you start buying and selling cars more,
you may decide to form a company rather than operate as a sole trader
(read more in our guide on sole trader vs limited company differences).
Even if you don’t set up a company,
you may want to set up a separate bank account for your car trading activities to be able to track them more clearly.
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A Car Stands Business:
Some Tips On Buying Cars
Be sure to check the condition of the car you are buying.
Check the car’s history online using the free government site.
And make sure there are no outstanding hire purchase .
Or conditional sale agreements as you cannot sell cars that have either of these.
Once you go and see the car you should take it for a test drive to get a feel for how it drives,
and any repairs you may have to make should you decide to purchase.
Finally, make sure the car has a V5C registration document,
this can be used as proof of ownership and as a way to keep track of registered keepers.
If the person you are buying from does not have this it could mean that the vehicle is stolen.
You should check the vehicles history to be sure.
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A Car Stands Business:
Some Tips On Selling Cars
You must observe the Consumer Rights Act that stipulates that the car must be in a satisfactory condition before sale.
The consumer has more rights than you,
so it is very important that you tell prospective buyers everything you know about the car,
as if there is anything wrong once purchased you as the seller will be liable.
Once you have a prospective buyer and they want to come and see the car,
remember that you don’t know who you are selling to, so it might be an idea to have a friend or family member present to ensure that you feel safe when meeting the customer.
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Take the buyer for a test drive and make sure you let them know everything about the car,
have all the documents, such as MOT certificates and service records and V5C to hand.
Both you and the buyer will have to fill out the relevant parts of the V5C,
and then send it to the DVLA who will then send to the new owner with updated details.
Do not let buyers make copies or take photographs of vehicle documents,
but make sure you hand them over once you’ve reached an agreement.
You can set your own warranty or not have one if you wish,
and remember to provide the buyer with a receipt.
Once you’ve sold your first car you can go out and do it all over again, and call yourself a car trader.
A Car Stands Business:
Search Car Auctions, Classifieds, eBay, And Craigslist For Cars Sold By Their Owner.
You will rarely be able to buy a car from a dealer and flip it for a profit,
as these cars are generally sold at their highest price.
Random people, however, don’t have to pay employees or rent on a lot,
and can afford to let go of their used car for much less than a dealer can.
Confine your search to these sellers for the best results.
- Don’t be immediately turned off by “salvage titles,” which are often some of the best deals on the market. Be sure, however, to ask what happened to earn the title. A broken window is a lot different than a cracked axle, but both could cause the car to be considered salvage.
- Carfax and other title check sites are good ways to get a cheap vehicle history for bigger buys.
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A Car Stands Business:
Use Online Appraisal Sites To Get A Good Idea Of The Base Price.
Places like Edmunds and Kelly Blue Book let you input the car’s make, model, year,
and condition and see the general price.
This is often a good baseline for negotiation,
and can be used to effectively bargain if someone is grossly overestimating the price.
These sites usually have ratings too,
letting you see if the car has common issues to look for or has a record of reliability.
Some tips to make the most of these sites include:
- Note the “dealer’s price.” You can usually bargain down to the price they expect from a dealership, because there will be much less paperwork for both of you.
- Check several sites at once, and always assume the car will be in worse shape than it is — most people will try and sell at the highest price they can find online, and will err towards a better condition on their advertisement.
-
Always start the car from a cold engine. Be wary of any cars you come across that are already on and running. It takes the most energy and momentum to get a cold car started, and you can often hear or feel any issues with a bad motor as it lugs to a start. Be on the lookout for:
- Cars that don’t start easily or smoothly.
- Loud noises or grinding sounds in the engine.
- Ticking, whining, or shaking as the car starts.
A Car Stands Business:
Check The Oil Levels And Oil Colour.
As you do, ask about the car’s history, starting with its last oil change.
The lighter the oil, the better, and it shouldn’t ever be dark brown or sludge-like,
especially if it has been changed in the past six months.
If you see any water or solid bits (like metal) in the oil, walk away — repairs won’t be cheap.
- Have the seller rev the engine 5-6 times and watch the exhaust. If produces black or thick smoke you should walk away, especially if the oil levels are also low.
A Car Stands Business:
Search Under The Car For Leaks Once It’s Been Running A While.
A little water is to be expected.
But oil or radiator fluid is a big no-no, and the car likely shouldn’t be bought.
Another good way to check this is to have someone rev the engine with the radiator cap off.
If you see air bubbles in the radiator when the car revs, walk off — the head gasket is likely blown.
- Is the engine temperature high? If so, and there is hot water leaking from the car (not fluid or oil!), then you might be in for a bargain. This could just be a leaky house causing the overheating, meaning you can cheaply fix an expensive-seeming problem.
A Car Stands Business:
Pop The Hood To Listen And Look At The Engine.
There shouldn’t be loud ticking noises or gurgling,
and it’s pretty obvious when something doesn’t sound quite right.
Have someone rev the engine in neutral and watch to make sure it still sounds good,
as you watch for any issues. Turn the car off and check the belts and hoses,
looking for corrosion, rust, or heavy wear.
While 1-2 belts and hoses are easy to fix,
a complete overhaul could cut away any profits you hoped to make.
A Car Stands Business:
Drive The Car Before Buying Whenever Possible.
If you’re a true bargain hunter with some mechanical skills,
you might buy a non-working car cheaply if you believe you can get it running.
But in all other cases, you want to take the car for a spin.
Test a variety of speeds and variations,
ideally testing it in both a neighborhood and on a highway,
Or road where you can get the speed up safely.
As you do, pay careful attention to:
- Steering: is it smooth and responsive?
- Braking: Does it stop the car quickly, especially in quick-stop situations? Most importantly, does the car stop in a straight line?
- Transmission: Does it shift smoothly? On automatic cars, you should be able to get into drive and reverse in less than a second and a half. Any longer delay could be a bad sign.
- Electronics and Features: Do the lights, windows, and AC work? Is the odometer still running or is it stuck (and do they know how long ago it stopped running, if so?).
A Car Stands Business:
Use Any And All Perceived Defects To Drive The Price Down.
This is especially crucial if they didn’t mention these deficits in the ad posting.
Most people are honest and upfront about issues the car might have,
but you should be constantly searching for other issues to use as a negotiating tool.
If there are minor to serious issues that they didn’t tell you,
but you’re confident can be fixed cheaply, you can often get serious discounts.
- As you’re examining the car, show them issues as you find them. Most people trust a calm, thorough buyer if you walk them through your tests and issues, making them more likely to take your word on price.
- Gauge their own car knowledge as well. If they seem lost around an engine, you can use this to your advantage to play up any perceived issues.
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A Car Stands Business:
Be Sure To Get The Title And Copy Of The Car’s Registration.
If they don’t have a title on hand, you should be very wary about buying the car.
The title is required to get the car registered,
and to subsequently get insurance for the vehicle.
If they can’t hand over the title, you better be sure the car is worth the hassle of getting it re-titled.
For more expensive cars, use a site like CarFax to get the title history and avoid any unpleasant surprises.
A Car Stands Business:
Determine Your Lowest Possible Price And Your Target Price Before Putting The Car On The Market.
Use the same appraisal sites you used when buying the car to set a reasonable price,
using Craigslist and local ads to find nearby buyers.
If you don’t care how quickly the car sells, start the price on the high end.
If you want it gone quickly, keep it on the lower end and note that you’re firm on the price.
- Even if you say you’re firm on the price, people will still be looking to negotiate.
- The phrase OBO (“or best offer”) is used to indicate that you’re willing to negotiate on the price, which is a good way to convince people to call you.
- If the car is high value or a rare find, you might be able to make more money at an auction than a direct sale. Know, of course, that all auctions are a bit of a gamble: you might get way more than you hoped, but you could also get far less.
A Car Stands Business:
Get The Car Checked Out By A Mechanic And Fix Any Issues, As Long As They Are Cheap Enough To Still Resell At A Profit.
This is why you must set your price point early on.
If the cost of the repairs makes the care more expensive than you can sell it for,
the repairs are obviously not worth it.
However, if you can get a cheap car with relatively cheap fixes,
you’ll be able to charge more than it cost for the repairs.
While buying a car that needs repairs can be a roll of the dice,
smart buyers can turn big profits on small issues that the original seller was too lazy to fix.
- Be sure to check online if the car has any common issues or problems. Can you do anything to convince potential buyers the problem has been handled?
- What repairs can you do yourself? Older cars tend to have pages of advice on home repairs online, and more of them are in the range of a home mechanic than you might imagine.
A Car Stands Business:
Get The Car As Clean As You Possibly Can.
A clean car is much easier to sell, especially for a higher price.
Furthermore, vacuuming and cleaning the windows costs you nothing,
despite potentially making the difference between cash in hand and a missed sale. Be sure to:
- Wipe down all surfaces with a clean cloth.
- Vacuum all surfaces, including under and around the mats.
- Rinse and wash off the exterior, including hubcaps. For higher-priced cars, consider a coat of wax to give it a clean sheen.
A Car Stands Business:
Show Any Obvious Defects To The Buyer, And Include Them In Your Ad.
If they know the problems beforehand and still show up,
they can’t use them to drive the price down.
If they find issues you didn’t mention, however,
they suddenly have a few bargaining chips.
Being honest upfront may seem like it is admitting to a bad sale,
but it only brings in buyers who will be serious about the purchase.
While you may be able to skate some smaller issues past a buyer without them noticing,
people will generally pay more to a seller they find honest and trustworthy.
- Be sure to provide plenty of pictures, especially of problem areas you noted (like a ripped seat). This inspires confidence and can help people stop worrying about potential defects
A Car Stands Business:
Change The Oil, Radiator Fluid, And Wiper Fluid If Necessary To Instantly Raise The Price.
Unless these were done recently by the seller,
this is a cheap way to clean the car up and raise the price.
Be sure to note these services in your ad,
as buyers will be happy to hear that they don’t have to worry about these little hassles,
and are generally willing to pay a bit more.
- Be sure to note the registration status as well. If it is almost up, people will have to pay $100 or more in order to re-register it, and they may factor that into their bargaining.
- Be aware of state-specific requirements, like California’s smog tests. If you can get this done ahead of time you can usually charge more than the test’s cost, as you’ll have eliminated the hassle of making them pay for a smog test.
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A Car Stands Business:
Keep Tabs On What Other Cars Sell For, Even If You’re Not Interested In Buying Them Right Now.
For example, imagine you see a clean 1987 BMW e30 sell for $2,500 at an auction.
While this is far too high to buy and sell for a profit,
you’ll know that a similar car on sale for $1,500 might be a good investment later on.
And, when you sell it, you can comfortably keep the price at $2,000 or higher,
knowing someone will pay that much.
- Watch or check out car auctions and car sale shows to get a good idea of prices on a variety of cars.
- Check into car appraisal sites regularly and watch the newspapers for car sales even when you’re not in the market. The more cars and prices you see, the sharper your sales mind will become.
A Car Stands Business:
Look For Buyers And Sellers Who Want to Move Quickly With Little Hassle.
If you’re working with other people trying to make a profit you’re going to both be fighting for every penny.
But people who just want a car off of their hands,
or buyers who want a car to get them around without hassle,
are going to be much easier to negotiate with.
- When buying cars, looks for phrases like “getting rid of,” “need to make some quick cash,” or other indicators that someone wants the car gone, no matter what the price.
- When selling cars, pay attention to those that move quickly or seem excited before they’ve even seen the car. Be sure to ask why or what they want the car for, as this can clue you into their financial situation. Desperation signals good deals
A Car Stands Business:
Bargain Like A Shark.
Buying and selling cars isn’t for the faint of heart.
If you want to make any money in this game,
you’re going to have to learn to negotiate.
While everyone has different strategies,
the best overarching principle is to be honest with yourself beforehand.
Ask yourself two questions — what do you want to pay for the car,
ideally, and what is the maximum you’re willing to pay.
Start a little lower than the first number,
and work your way slowly to the second.
- Be honest with the seller, “I can only buy/sell this car for $1,200 — can you meet me there?” If they can’t, you can walk away.
- Always have the cash on hand, and ask potential buyers to do the same. If you can pay right on the spot, you can often get them to lower their price to save everyone the hassle of meeting again.
- Don’t get emotional about this — you’re only buying the car for the money. If they don’t meet your pre-planned price, get out.
A Car Stands Business:
Bring A Friend Along, Especially If They Are Knowledgeable About Cars.
Two heads are better than one,
and if you’ve got a friend who is handy with a wrench it pays dividends to bring them around.
Not everyone knows everything about cars,
but that doesn’t mean you can’t still make a profit.
Your friend can rev the engine for you,
watch the car as you take test drives or inspect the motor,
and point out little defects you may miss.
- In general, it is a good idea to have a friend along for online deals to stay safe.
- Always meet people in a public place.
See through; Top 20 tips about Car Rental Business in Nigeria
A Car Stands Business:
Feel Free To Leave Cars And Come Back Later For A Better Price.
Unless you are totally confident that a car is a bargain,
leave your phone number and have them call you about the sale.
Remember that these cars are just there to make money,
so don’t get too emotionally attached if they sell to someone else while you’re playing hardball.
If you really want to get good prices,
waiting 2-3 days will help your gauge the seriousness of the seller,
as well as the overall condition of the car.
If it still hasn’t sold in a few days,
you can almost always ask to cut 10-25% off the price.
A Car Stands Business:
Trust Your Instincts When Dealing With Buyers And Sellers.
If a car doesn’t feel right or a deal feels shady,
there is no shame in walking away.
Hundreds of used cars are on the market at any one time,
and your goal here is to turn a profit, not take undue risks.
If you’re wary that someone is taking advantage of you or neglecting the entire story,
trust your gut and walk away.
There will always be more deals on the road.
- Look the seller in the eye and ask them if you’re making the right choice buying the car. They should be able to look right back at you and shake your hand.
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