How to Become a Used Car Dealer

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Use lots of colorful banners on your used car lot to draw attention to discounts and new offerings.
Use lots of colorful banners on your used car lot to draw attention to discounts and new offerings. (Image: Barry Austin Photography/Photodisc/Getty Images)

Selling used cars gives you a way to make money while enjoying the use of different vehicles from your own lot until you sell them. Determine what types of models people tend to buy in your area before you start bringing used cars to your lot. Look at the demographics of the people most likely to buy a used car, such as the type of vehicle they need, the age and the price. Then, get ready to turn your used car lot into a thriving business.

Things You'll Need

  • Dealer's License
  • Used cars
  • Sales lot
  • Office
  • Computers
  • Invoicing software
  • Phone

Submit an application to your state’s Department of Motor Vehicles or Secretary of State to obtain a used motor vehicle dealer license. Some states, such as Illinois, require you to attend a pre-licensing seminar as well as securing your place of business and telephone number before they grant you a license.

Find a lot to lease or buy, preferably with a building to house your office. Location is key to your lot’s success, so look for one that gets plenty of traffic. If your plot of land does not yet have zoning, check with your county or city to fill out paperwork to request proper zoning to use the land and building as a commercial property. If your chosen location has no building, make sure the zoning will allow you to erect an office or transport a movable building to the site,

Raise enough money to secure your dealer license, lease the property and start constructing buildings, if necessary. You’ll need money to acquire office equipment, start utilities, buy used vehicles and obtain dealer license plates.

Develop a plan to acquire cars to sell. Look into estate and car auctions in your region. Advertise with signs and ads in local print publications about buying used cars. Talk to local new car dealers who want to offload some of their used car trade-ins. If financing is a problem, consider selling cars on consignment so no upfront money is required.

List used cars for sale by running ads that showcase the models on your lot. List your cars in classified print ads as well as on free sites such as Craigslist.org. Encourage referrals from satisfied customers to find even more people who need a used car.

Partner with a reliable mechanic to fix the used cars that need a bit of work before you put them on your lot. If space and financing allow, open up a garage as part of your dealership, giving you another way to make money.

Tips & Warnings

  • Check with your state to find out requirements for licensing since each state varies.
  • To help seal the deal, make arrangements with financial institutions or lenders to help your customers secure loans for the cars they want buy from you.
  • You must obtain your business license before selling used cars, or you may face stiff civil penalties.

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