How to wholesale cars (how to sell cars wholesale)

Let me show you how to wholesale cars (how to sell cars wholesale) in your neighborhood.  The basic standards are generally the same as getting a regular used car dealer license, but with somewhat less financial requirements (physical location, insurance) in some states. This is why people jump for a wholesale license first…then find out later the restrictions and limitations.

learn the proper way  to use your wholesale license…

Here is how to sell cars wholesale and make money, but first know this. You cannot operate outside of your home or non-commercial location; wholesale dealers need a physical location in which to operate. The biggest limitation obviously is that you can only sell cars wholesale to other dealers.  Many people get this license hoping that it is a shortcut to getting a used (retail) car dealer license and think that they will find some creative way to sell retail. Nope, you cannot do this this. You can either sell to other used car dealers or sell your cars from the auctions. There are basically two ways to legally use your wholesale license.

Wholesaling selling cars to other dealers

Dealers acquire their used inventory to sell in two basic ways.  The first way to get inventory  is thru  customer vehicle trade-ins. This is when a person brings their used car to dealer and trades it in to get a newer model. The customer’s car was most likely purchased or leased new…and now they want a new model. The dealer will offer that person a dealer-trade in value (which is usually at or below wholesale value).  Dealers get all types of trade-ins. Many dealers will wholesale their older vehicles,  or high-mile vehicles if they sit on their lot too long.

The second way dealers get inventory is they buy from other dealers. Why would a dealer do this? Well for one, they may not have the time or staff to go to auctions and look for cars. Some dealers actually employ a dealer s agent to go to auctions looking for deals. Many used car dealers will buy from other dealers that they have a business relationship with.  But these are wholesale deals, not retail. This means that the profit per vehicle is lower than selling it for full retail. But rest assured, there are many dealers who specialize in these types of transactions  (dealer to dealer).

 Wholesaling selling cars to (thru) the dealer auctions

You have other dealers (and dealer reps) who like to sell their vehicles almost exclusively in the auction environment. This is when a dealer will acquire a car at or below whole from another dealer or private owner and list that car at their local dealer only auto auction. Some dealers will even buy a car at the auction and re-sell right at the auction without even moving it! Or they will buy a car from one auction and list it at another auction. In order to sell (list) a vehicle at a Dealer auction, you have to pay a listing fee to the auction house (typically $125-$175 for a passenger vehicle) and send in the necessary pics, vehicles description , etc.  To list your cars directly at the auction , you will have to have a dealer license or auction access. If you need auction access, ask me about it. 

So if you want to know how to sell cars wholesale with your state license, here are the basic steps (same as used car dealer license, just less fees, less insurance needed most times).  

1. Lease a location for your wholesale car dealer business, the Department of Motor Vehicles in most states will not issue a wholesale dealer license if you do not operate from a physical location. The location must be commercial real estate located in an area zoned for vehicle sales.
2. Next step is to set up your legal entity of your company and apply for your Fictitious Name or Doing Business As (DBA) certificate from your state. This certificate is necessary if you plan to use a name for your business that is different from your legal name.
3. Get your business License to operate in your city or town. business with the state’s government and informs customers that you are a legitimate entity. Business licenses typically require your DBA name, personal contact information, social security number and a registration fee.
4. Obtain a surety bond for your wholesale car dealer business. States require surety bonds to insure your customers against bad vehicle purchases that are accidental or negligent. Look online for surety bond providers, or contact your state for further details.
5. Some states will require your fingerprints or background check to be included with your application.
6. Apply for a vehicle wholesale license from your state. The department that issues licenses varies between states, but try the Department of Motor Vehicles, The Department of Transportation or the Department of State.

So if you are thinking about getting your wholesale license, ask yourself how do you plan to use it. Are you looking for a short cut into the retail market; or do you actually plan to just wholesale vehicles because you have a reliable source of sub-wholesale valued cars?

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