In the first part of this short series on how to make money buying and selling used cars, we looked at what personal skills someone wishing to be profitable in this business would have to have. In the second section we looked at the best sites to locate such a business; in the third we looked at acquiring our stock – our cars or trucks and in this section, we will look at valuing that stock.
Whether you obtain your cars or trucks from auctions or from private individuals, you will have to be able to work out their value accurately, so, how do you determine the value of used vehicles? The simplest way to know a vehicle’s typical market, trade-in or wholesale value is to subscribe to a car dealers’ used car guide. Most western countries have one, but in the USA the most used one is called the National Automobile Dealers’ Used Car Guide or N.A.D.A.
NADA not only publishes monthly guides to second-hand cars, it also publishes monthly guides on older or classic cars, smaller boats, larger boats, SUV’s, mobile homes, RV’s, snow mobiles and motorcycles. Look them up on the Internet and sign up to their subscription list for the kinds of vehicles that you are interested in.
These used vehicle guides normally include foreign or imported cars nd trucks as well and are a consensus of sales and auctions over the whole country, therefore a little local knowledge is indispensable as well as your area may function at slightly above or slightly below the national norm, which could present you with additional opportunities for (wholesale) sales by shipping cars into or out of your region.
Sometimes or in some regions, a permit is required to run a used car business. This is nothing more than tax by another title usually, so simply requires you to pay a fee. In other regions, it may be a means of weeding out unscrupulous traders and may require an examination of same kind, so it is worth checking your district’s requirements before you start trading.
Some regions have laxer laws than others on buying and selling used cars, permitting ‘occasional sales’. ‘Occasional sales of motor cars or trucks’ is normally intended to be no more than five sales in a twelve month period.
When you are starting out you can make use of this allowance, if your district allows it, to keep your expenses down to a minimum in the costly early days of establishing your business, but once you see yourself passing this maximum quantity you should submit an application for a license straight away to avoid incurring any penalties. These penalties can be severe ranging from a fine to disbarment from trading, so be warned.
You will also need to learn how to collect taxes from your sales and your salary to yourself and to your employees. You will also need to learn how to hand these monies over to the right authorities on time, although your accountant or book-keeper can help you there.
Owen Jones, the writer of this piece writes on various topics, but is now busy with entry door locks. If you would like to know more, please go to our website at Escort 8500.
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