Starting a Small Used Car Business
For every person looking to buy a new car, there is a person looking to get a deal on a used car. If you start your own small used-car business, you are getting involved in a part of the auto market that is unlikely to decrease in demand and profits. Starting your business can be an enjoyable venture, but you must be prepared to finance and promote your business. Managing a small used-car business may be one investment where you can recoup your money quickly.
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Instructions
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Secure a location for your business. Find a small, commercially zoned lot where you can house your cars. Keep copies of all your documents of purchase after closing, so you can acquire a dealership license.
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Apply for a dealer's license from your local Department of Motor Vehicles before opening your business. Most states require you to complete an application, pass a written test and pay an application fee before getting your license. You may be asked to show your deed to your dealership lot, as some states limit licenses to only official dealers.
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Obtain a surety bond to show you're a legitimate used car dealership. Surety bonds protect customers from shady vehicle deals, such as used cars with mechanical problems, and lemons. For administrative purposes, your state may require that you renew your surety bond after a period of time.
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Attend car auctions to start building your inventory. Wholesaler auctions allow you to purchase used cars, SUVs and trucks from various automakers giving you a better selection of vehicles on your lot. Attend estate sales, private auctions and police auctions in your community for deals on used cars for your business.
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Decide if your used car business will buy and trade from residents in the community. Keep an inventory with buybacks and trades. Look over each car to ensure it meets your standards before making a purchase. Ideally, you want to be able to sell the car for a portion of the listed price new. Refer to Kelley Blue Book for a price guide.
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Establish a relationship with a local bank to become your primary auto lender for your consumers. To speed up the transaction for your customers, work with the same bank representative each time. Keep your bank information and loan applications on hand for costumers.
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Hire a part-time salesperson and mechanic for your used-car business. Have your mechanic inspect each used car brought to your lot. Have him conduct regular maintenance on cars sitting in your dealership for sale.
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Advertise your business. Focus your ads on your target audience. Use colorful sidewalk signs or streamers with an interesting logo to catch the attention of drivers passing by your lot. Keep your marketing costs low by advertising in small community fliers and newspapers.
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Tips & Warnings
Work with an accountant to ensure all expenses, sale figures and tax information is reported on time.
Business requirements vary from state to state and can be complicated. Hire an attorney to help you set up your business.
