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I would like to start a used car dealership. If you have experience and want to share your success and failures, I need to know how much capital is the minimum to start and all other related expenses, government etc. Thanks in advance!

2 Comments »

1. 

   You’ll need to fund the entire amount of operating capital (3-6 months) and inventory yourself. No bank or Credit Union will finance a used dealership. The successful ones that I’ve seen were all funded by wealthy owners/investors. As far as how much capital, you’ll need to project that yourself (if you can’t, you’re not cut out to be an entrepreneur). Look at places to rent, what electric, phone, and other utilities will cost each month, and how many employees you’ll need (if any). However, if you need a loan to do all this, don’t get your hopes up because no one does them. Best of luck!

   Comment by Dean L — August 1, 2010 @ 11:26 pm

2. 

   Get a dealer’s license. Requirements and fees vary, so contact your state’s Department of Transportation or Department of Motor Vehicles (DMV). In some states, you’ll have to meet credit-score requirements and pass a background check.

   Pay a surety bond. This is an expensive but usually mandatory part of becoming a used-car dealer. This bond is intended to ensure that consumers can recoup losses if you commit fraud or employ unethical business practices that cause them to lose money.

   Secure liability insurance as well as insurance for the cars you’ll sell. This provides protection in case someone is hurt on your used-car lot or in the event of an accident in one of your cars before you are able to sell it.

   Find a lot on which to park and sell your used cars, making sure it has proper zoning for use as a used-car lot. Also, make sure you’ll be able to meet any applicable signage regulations. This can be one of the most expensive parts of starting a used-car dealership.

   Buy used cars from other dealers, through online and in-person auctions and from private sellers you find through newspaper ads and for-sale signs. After making sure they’re in acceptable condition, you may be able to sell them for a 50 percent profit or more.

   Hire salespeople to assist you. Keep in mind that they may need licenses in some states.

   Comment by Henry — August 1, 2010 @ 11:26 pm

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