How To Start a Car Lot
The fast devaluation rate of new vehicles and the longevity of used cars on the road are two of the top reasons why many people choose to purchase used cars. While this may be troublesome for new car dealerships and manufacturers, used car lots can reap a profit. If you're interested in selling used cars to the public now may be the perfect time for you to learn how to start a car lot.
Other People Are Reading
Instructions
-
-
1
Secure start-up funds. To start a car lot you will need money to buy a few used cars as well as purchase or lease a facility. In addition, if you plan to hire staff such as salesmen or a receptionist, you will need money to cover their salaries as well.
-
2
Apply for a dealer license. Most states require that you have an auto dealer license to sell and trade vehicles. The requirements for this vary from state to state, with some requiring only an application and license fee and others requiring a background check, training program and written test. You can determine what you need to do by contacting your state's department of motor vehicles.
-
-
3
Find a facility. Running your car lot will need to be done in a place in your community that is zoned for commercial uses. You will also need a facility that has enough space to park and display your cars. It may be beneficial to check with local realtors to determine if they have any properties for sale or lease that formerly housed a car lot, as these often have the space and set-up of your facility already adapted to what you need.
-
4
Register your business. You will need to register your car lot with the federal, state and local government. You can obtain an employer identification number (EIN) from the IRS that will serve as your business identification number. You also need to register with your state and local government to collect sales tax on the vehicles you sell.
-
5
Purchase vehicles. There are a number of different places that you can go to purchase vehicles, which you can then turn around and sell at your car lot. Auctions, individual sellers and banks that have repossessed vehicles are just a few of the places where you can find them. Ideally you should find ones that are under-priced and will provide you with more of a profit when you mark them up. Once you have individuals coming to your car lot to buy vehicles you can then begin selling trade-ins rather than having to scour around for used cars to sell.
-
6
Obtain security for your facility. It is important that you have adequate security for your car lot to ensure that your vehicles don't get stolen or vandalized. You can choose to install security cameras or hire security guards to patrol the lot during the evening and overnight hours.
-
7
Get insurance to cover your car lot. Even with just a few cars sitting on your lot, you have thousands of dollars invested that could easily be lost or destroyed. In addition you need insurance that covers vehicles and persons in the vehicle in the event someone crashes when test driving a car.
-
8
Arrange the legal and financial aspects of your business. Before you open your car lot to the public for business you'll need to have the legal and financial aspects of your business in order. This includes having a method for tracking and reporting your finances, collecting sales tax, changing over titles and more. You may find it beneficial to initially use the services of a lawyer and an accountant to get your business up and running.
-
1
Tips & Warnings
It is a good idea to learn the trade-in values of cars since some customers will be at your car lot wanting to trade their current car for one that you have. You can learn this by studying the Kelley Blue Book for car values or comparing what amount similar cars are being traded in and resold.
