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Car trading is one of the oldest business ideas. It still maintains it's appeal. But, although many people aspire to such a business, few actually start. It's not really a tabletop type business, but it is something that you can start with not too much difficulty if you sketch out a basic plan.

Needless to say, there's plenty of demand for car trading. Millions of potential customers every year! The big franchised dealers have got all the big opportunities cornered, but the thing to do is to look out for riches where the small trader can begin. Often, it's not necessary to be involved in any mechanical work at all.


Unfortunately, car trading is not a business where you can start with a few pounds capital. You're going to need some investment. That said, it can be less than you might think in the right circumstances. £500 would be sufficient, but more would obviously be helpful.

A few car dealers have started by reselling their own car for a profit. And, depending on how attached you are to it, it can be a possibility.

You can certainly work from home, but a telephone will be essential.

When working from home you should be very careful not to make it obvious that you are dealing in cars. It's not strictly allowed under planning regulations. You won't generally cause any problems if you only handle one vehicle at a time, which is quite enough.

Consider the legal implications of car trading. You'll need appropriate insurance to drive all cars - a special trader's insurance is available. Also, any cars you drive on the road, or even keep there, will need insurance, tax and MOT, whether you are using them or not (but not if they are on your own property).

Also remember that it's illegal to knowingly sell a car in an unroadworthy condition. Having an MOT certificate is some evidence of legal mechanical conditions, but not necessarily roadworthiness.

Take some time to research the various ins and outs, because motor vehicles are some of the most regulated possessions ever.


Once properly set up, you can start to think about buying a car to trade in. A single one will do to start.

Now, there's no need to think about getting some old banger and 'doing it up' as some dealers do. In fact, unless you have mechanical knowledge, or will pay someone to work on cars, it's not a good idea unless you're absolutely sure of safety.

On the contrary, it is possible to make money without doing anything to them. Perhaps just cleaning them up will be enough. Many established garages buy in cars and resell at an immediate profit. It's all down to careful buying.

Basically, there are two ways of buying cars in for resale that involve minimum problems:


The 'easy' source of cars for resale. They are held all round the country. Check your local papers to see what's available.

What you buy will depend on your finances. There are some auctions that sell only late model cars (up to four years old) where the vehicles are ready for instant resale. This might be a possibility.

On the other hand, there are auctions which sell old cars for £20 and £30 that are almost guaranteed to be worth £100 in a resale. Ideal for a bargain basement business. But remember the safety problem.

It's best if you can take a mechanic to an auction, because most don't offer much, if any, warranty. If you don't have a vehicle mechanically checked, then you are buying very much on a risk basis. With careful buying, auction cars will virtually assure you of a profit. The amounts vary, but it's usually 10% minimum (that's £400 on a £4,000 car) and can be up to 30% sometimes. Start with one car to see how it goes.


The second method of getting in cars is to buy privately. This is good if you have a sum of cash available to outlay now.

Consider that all over the country there are people who want to sell their cars quickly for cash. Maybe they need the money or have brought a new car. If you can come up with the money quickly, then you can get a big discount.

Place advertisements for cars wanted in local newspapers. Respond to enquiries. Remember that you're expecting a big discount to give immediate cash.

Value the car by reference to advertisements in papers - the going rate. Or try the 'Black Book' which is a trade guide to prices available which you can get once established.

Then think in terms of offering the seller about 30% off the retail price and negotiate around that. I will work for people who need fast money and don't want to wait.

Do what you can to ensure the vehicle is the property of the seller. The registration document is not proof, but if their address is on it, and they can prove that they live there, it's a good pointer. But, of course, it is a risk.

As I said, you might get 30% off. So you can, with aggressive negotiation, get a £3,000 car for £2,100!


The best thing when operating as a small trader is not to become involved with doing cars up. As I said, there's a safety risk. If you have to pay someone else to do the work this will probably make it uneconomic. Until you are established and can afford to pay someone skilled, then the most work you should do is to give your purchases a thorough clean inside and out. Strip off every bit of grime. It's amazing what value a good clean up will add. You're probably talking in the region of £100 to £200 for even a small car, and that's in addition to the profits of buying cheap.


Sell on your stock as soon as possible, because it's depreciating all the time!

The best ways of selling trade cars are undoubtedly classified advertisements in newspapers. Or, even better, those regional car selling magazines. You can advertise quite cheaply and they are usually circulated to thousands of interested buyers in your area every week.

Don't rely on advertising in window cards, or Sunday car sales and the like. It's almost certainly not worth it.

In selling, pitch your price quite high. Compare to similar cars and pitch higher for the age and mileage. Prospective buyers are almost certainly going to make you an offer and it's nice to be able to accept this with only a small cut in your profit margin!

Never part with your car against a cheque or a bank draft that hasn't been cleared first. The only acceptable payment for a client to take a car immediately is cash in hand.

One snag is that traders usually offer finance facilities and perhaps a warranty. It's possible to arrange both of these in conjunction with finance companies and specialist car warranty companies. In both cases, these companies will provide you with finance for your customer (and pay you a commission), or a warranty. Make enquiries. You might have to be established for a while before they'll take you on. If you can't offer a warranty facility make it clear that your vehicles are sold 'as seen'. This will mean that your prices are a little lower than garage type traders. However, you still have a legal responsibility to the customer that the car is road worthy and as you described it in any advertisement.

Because so many cars are on the market, selling is not always easy. But the low prices you can buy cars for at auctions, or for cash, mean that a profit, even if only modest, is virtually assured in most cases, and that's enough for a home business.


Probably, most prospective car dealers and car millionaires never get their ideas off the ground, because they think too big. For example, they expect a posh showroom and to be involved in mechanical repairs, resprays, etc., is always necessary. The fact is, however, you needn't be concerned with all this. It's much better to start in a small way with just one car, and steer clear of mechanical work and all the usual trappings of the car trade. Obviously the rewards are less for a smaller business, but they are still quite attractive for the effort.

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