There is no question that consumers today are better off buying used cars instead of new ones. Aside from insurance and financing being cheaper, there is the ever looming question of the replacement of fossil fuels with renewable diesels.
Unfortunately, even buying a hybrid vehicle with a gasoline engine will not prevent the engine from becoming obsolete in a few years. Considering all of these factors, you may be able to make a good profit selling used cars.
That said, there are some things you will have to consider before starting this type of business.
As you may be aware, businesses that sell or repair automobiles are heavily regulated by the state. This includes determining the safety of each vehicle, as well as warranties and lemon law guidelines.
In most cases, you will need to be licensed by the state in order to sell cars on a regular basis. You may also be required to collect sales tax, as well as impose other fees on your customers.
Similar to any other business, you will need to buy cheap cars and then try to sell them for a higher price. While you may be able to find all kinds of cheap cars, you will also need to consider what it will cost to repair them. As may be expected, if you are not a certified mechanic, you will need to have one onhand to provide these services.
Regardless of whether you look for used cars in newspapers or foreclosure auctions, you will need to consider repair and warranty costs.
Once you know how much it will cost to acquire, repair, and market a vehicle, it is time to consider how much you will charge for it. While your first instinct may be to look at values listed in Kelly’s Blue Book, it is important to realize that they provide only an average value.
Before assigning a price to the vehicle, it is best to find out how much similar vehicles sell for in the area. If you find that the selling price of a prospective vehicle would be too low, it is best to look for other used cars to resell.
In some cases, you may find that you will make more money fixing and selling antique cars as opposed to ones for everyday use.
Even though you will be able to make several thousand dollars on each car sale, it is important to consider how much it will cost to obtain that money. Regardless of whether or not you offer credit, you may easily find that warranty and repair costs will eat into any profit that you make.
Depending on your budget, you may find it best to limit yourself to specific types of vehicles, or even see what you can do to buy or sell outside of your local area.