How to Sell Cars and Make Money - A Guide by Roger Bryan
So the question How to Sell Cars seems to be a pretty prominent question among aspiring entrepreneurs. This question gets asked often enough that I figured I would create a resource page where we can all discuss ideas on how to buy and sell cars for profit.
Let's start with my credentials so you'll feel comfortable with the information that share.
2001-2005: General Manager - Greater Cleveland Auto Auction; Cleveland, OH
*While working at the Greater Cleveland Auto Auction I started out as an Inventory Manager, then I moved into Dealer Sales, Bank Sales, Sales Director, Assitant General Manager and then General Manager for the last two years I was with the company.
2005-2006: National Sales Director - Capital Auto Auction; Northeast Regional Company
*Helped to establish sales and logistics systems to handle large national accounts to include charity cars as well as bank repo's.
2006- Current: Owner (various vehicle brokerage companies to include National Charity Services, 1-866 Vehicle, and other direct buy purchasing ventures)
*Last year I sold over 6,000 vehicles independently from various suppliers. Hopefully this shows I have a little knowledge to share on How to Sell Cars.
So that we are on the same page I have 10+ years of experience in How to Sell Cars.
Here are some of the most common questions I get asked
1- How do I get a dealers license?
This is different in each state but there are some basics. The first thing you need to know is that it is not easy to get a dealers license these days. To many people rush out to try to get a dealers license when they are learning how to sell cars.
Here are some of the basic requirements (This is an exact list for the state of Ohio)
- - $10,000 in the bank
- - A lot w/ paved parking for 10 cars + indoor repair facilites for two vehicles
- - A desk, a filing cabinet, an active phone, a wall clock, and posted hours of operations (no I'm not joking)
- - A $25,000 insurance bond
- - A Clean Background Check (felons need not apply)
So as you can see you need to have a little money to even consider getting a dealers license to help learn how to sell cars.
2- Do the companies that sell 'wholesale licenses' actually work?
For the most part the answer is NO. The reason for me saying NO is that most of these 'wholesale license brokers' only give you the chance to buy at auction. So if you are looking for a car for yourself this isn't a bad idea. The problem is that if you are trying to learn how to sell cars then you'll be stuck because you are not allowed to sell to the public with this license. You can only sell to other car dealers. There is money to be made in the wholesale industry but you need to know what you are doing.
3- How do I buy at auction?
The first thing you want to do is to look to see if there is a public auction in your area. Many people are surprised when they learn how many public auto auctions are out there. Many states actually require that Repossessed cars be sold directly to the public. If you are in an area where there are no public sales then you still have a few options. You can take the route of getting a 'wholesale license' either from a broker or directly from the state (not available in all states).
Or you can take an easier path. Everyone knows someone who knows a car dealer. Well at least in my world they do. Ask around and typically you can pay someone $200 to buy a car for you at auction. The other route is to post a listing to Craigslist asking for someone to take you to an auction. Please be very careful here! I've heard to many stories about people getting scammed out of money and even their car because they don't do this right. Be sure you understand title transfers, money transfers, and legal documentation before you try this. To keep myself out of trouble I will say consult an attorney before trying this.
4- How much money will I make selling cars?
If you ask me this question I'll have to be honest with you - Please don't ask me this question! There is no answer here. If you are really good at what you do you'll make a lot. If you make a mistake and buy a car with a bad engine you could loose a lot. There is no answer here. On average as a wholesaler I would like to make $300 per car on a 10 car deal. That doesn't mean $300 per car it means an average. Usually I loose money on 2 and I'll make a killing on 2 it's the other 6 that make or break your profit margins.
On a side note to this part - Always make sure your cash accounts are flush. You never know when you'll get a lemon and have to spend a bunch to get it fixed. If you are pinching pennies to begin with your probably already in trouble.
5- What is the difference between a 'used car license' and a 'wholsale license'?
A 'used car license' gives you the ability to buy at auction and then sell to the public. The ability to sell to the public is the corner stone of being a dealer. A 'wholesale license' typically only allows you to buy at auction and sell to dealers (or back at auction). I know a lot of people who make a lot of money doing this.
Let me summarize How to Sell Cars
- - You need to be well capitalized for this to work
- - You need to understand the difference between a 'used car dealers license' and a 'wholesale license'
- - You also need to test the waters before you even worry about a license. In most states you can buy 5 cars and sell 5 cars a year before you have to register as a dealer. Of course as a private individual you'll have to pay tax when you buy which makes it hard to make money. With all that being said I would still try doing it privately before you move into thinking you need a license.
If you have questions on How to Sell Cars
So I hope this helps. For all of you that have sent me a message on Facebook or on YE I'm going to ask that you submit your questions via the comment section on my blog. It's only fair that if I'm going to provide free advice that it gets shared with everyone. Let me know if you have any questions on how to sell cars!