You’ve worked hard on your business plan, researched the make and model of cars you want to target, and found somewhere to store your vehicles, now it’s time to get your business up a running. But how will you buy and sell cars for a profit?
At Tradex, we specialise in helping businesses with the necessary car dealer insurance. For information on what car dealer insurance you may need, please see our blog How to Become a Car Trader.
Here’s our easy guide to buying and selling your vehicles, getting the best deal and keeping your business on the right side of the law
Tips on Buying a Vehicle
1. Where to look for vehicles
There are plentiful resources where you can find second-hand vehicles to sell. Try local freesheets, classified ads in local newspapers and online listings on auction sites such as eBay, Gumtree or Copart UK. You may also find plenty of choice with websites such as Auto Trader, Exchange & Mart and Auto Village.
Car auctions are another option to find cheaper deals. However, they are fast, and you need to be familiar with how they work if you are going to get the best deals. Visit as many as you can before you start to bid and go with someone who is seasoned in buying at auction to avoid mistakes.
2. Getting a good deal
Check the condition of the car thoroughly and take it for a test drive. If you aren’t experienced in the mechanics of a car, take someone with you who has knowledge in this area. You can then get a feel for how much any repairs may cost and give you some bargaining power with the seller.
A useful tip is to run the car on a cold engine - cars that are already running may unintentionally hide any glitches in the engine.
Before you come purchase the vehicle, check out the car’s history online using the free government site www.gov.uk/check-mot-history. Look out for any outstanding hire purchase or conditional sale agreements as you will be unable to sell these cars.
3. Check for a V5C
When purchasing a car, make sure the V5C registration certificate is available. This tells you about the car, such as the date it was first registered, who is the registered keeper, its manufacturer, and engine size. If the owner doesn’t have one, they should be able to buy a replacement from the DVLA. Failure to produce one may mean the car is stolen and will also make it extremely difficult for you to sell on.
Tips on Selling a Vehicle
4. Preparing Your Car for Sale
Once you have found some cars that are ready for market, it’s time to start selling. Make sure the vehicles have passed their MOT so that consumers can be confident of a good deal. Giving the vehicles a deep clean or a valet is often worthwhile, and getting rid of any scratches, chips or dinks will make the car more appealing to the buyer.
5. Marketing and Advertising
Having researched the best market to advertise, take some high-quality pictures of both the exterior and interior of the car to help to attract buyers more quickly. Include as much description as you can – check out other ads of similar makes and models of vehicles to see what they include in their listings.
6. Know Your Price – and Stick To It
It can be difficult to stick to your asking price when under pressure to sell. When deciding the asking price, leave room for a certain amount of negotiation, so you both feel you are getting a good deal. Looking at adverts and seeing how much vehicles are selling for is a better way to evaluate how much you can expect to get for a particular vehicle. Have a bottom price in mind and stick to it.
7. The Consumer Rights Act
As a car trader, you will need to become familiar with the Consumer Rights Act. It stipulates that any vehicle you are selling is of satisfactory quality, fit for purpose and as described.
If you sell a car without being completely honest about any faults, you will be liable. You only get one opportunity to fix the vehicle to the customer’s satisfaction before you have to legally issue a refund.
When you sell a vehicle, both you and the buyer will need to fill out the relevant parts of the V5C and you will need to send it to the DVLA, who will send it to the new owner once the details have been updated. You may offer a warranty and also make sure you issue the buyer with a receipt setting out any conditions of the sale.
7. Offering Credit Card Payments
When selling a car, make the purchase options as seamless as possible. Taking a credit card payment is a quick and easy way to make a sale. If you need to prepare the car before handing over the keys, you may also want to take a credit card deposit to secure the agreement.
To be able to operate a card machine, you will need a merchant account, which is a type of bank account that enables you to accept debit or credit card payments. It will authorise the payment for a small fee and then deposit the amount in your bank account.
It’s also recommended that you open a business account for these payments, to keep your business payments separate from everyday spending. Merchant accounts can also help to protect your business against fraud.