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Home : Small Business :Drive Any VehicleCar dealer profits today are the largest in the used car market. This is because the new car prices are established by the car manufacturers and the prices are published so that everyone knows what the price of the vehicle is. Used cars values are not as well defined and dealers depend on customers trading in their old cars at values substantially (thousands of dollars) under what they resell the cars to the next customer. The average person could take advantage of this big price difference between wholesale price and the retail price to help reduce their driving costs. The intent of this program is to allow the non-sales person to buy and sell two or three vehicles a year in order to reduce their driving costs to zero. Once you have accomplished the first level, you can move on to the other two levels in this program in order to generate additional income. However, if you never move beyond the first level you will benefit tremendously. The excitement of driving an excellent vehicle that you don't mind driving with zero cost and being able to change vehicles at will is a benefit you can't even begin to measure! There are two costs associated with owning a vehicle: the depreciation costs and the recurring costs. The depreciation costs are those costs such as purchasing the vehicle and the one time cost of sales tax. The recurring costs are the vehicle registration, gasoline, insurance and repairs. Also, if money is borrowed to purchase the vehicle the interest cost is a recurring cost. There are three basic levels to this program:
The cost of operating a vehicle can be converted to an average cost per mile. This is obtained by adding up all these costs per year and dividing by the number of miles driven per year. The government uses 29 cents per mile as the amount you can deduct from your income tax if you own a small business. Other sources place the cost of owning and operating a new vehicle from 35 cents per mile to 45 cents per mile. Very expensive vehicles can be a lot more. This program is designed so that vehicles in the 30 cents per mile category can be used. To determine nominal yearly operating expenses of a vehicle, multiply the cost per mile times the miles driven in one year. If you use 30 cents per mile times a nominal 12,000 miles driven in a year you obtain $3,600 as an average cost of owning and operating a vehicle for one year. The goal was to create a system that would reduce a person's driving costs to zero for the year. Is it possible to buy and sell enough vehicles in a year in order to cover the $3,600 typical yearly operating cost? Two vehicles a year at $1,800 average profit margin would be sufficient to accomplish this goal. Even in the beginning if you cannot find vehicles that can be bought and sold for $1,800 profit margin it is certainly possible to buy and sell three vehicles per year at $1,200 per vehicle profit margin to accomplish the same goal. This program is designed to spend as little effort as possible to reduce your transportation costs to zero. You will be spending a little of your time instead of your cash. You might want to ask yourself how many hours you'd have to work at your job to receive $3,600 in income. Most of us are looking for methods to improve our personal budgets. You certainly don't need to be a used car salesperson to accomplish this cost reduction goal. You will be looking for opportunities to purchase vehicles at the right price. Purchasing a vehicle at the right price makes it easier to sell the vehicle at a good value. Selling a vehicle at a good value is not used car selling -- it's a pleasure giving someone a good deal. They are happy that they have a vehicle at a good value and you are happy that your driving costs are reduced to zero. And besides, it's great fun buying the vehicle in the first place! Once you are proficient at reducing your driving cost to zero (Level 1), you will be ready to move on to a little extra cash (Level 2) and then on to replacing your present job (Level 3). Selecting The Right VehicleSelecting the right vehicle is the single most important part of the buying and selling process. Going through this program is a lot more fun if you make sure you are driving a vehicle that you really like. After you have more experience you will be, able to select from your own special list of favorite vehicles. There are various published lists of good resale value vehicles in consumer magazines and reports. ' We will be looking for vehicles that generally have between 48,000 miles to 84,000 miles. Vehicles beyond the 84,000 miles factor are sometimes good for this program but this is only true if the vehicle is in good mechanical condition. In addition, we will be looking for vehicles in the $6,000 to $12,000 range. Vehicles that are less expensive than this can be good vehicles to turn a good profit on but you will need to know quite a bit about the mechanical condition of the vehicle before proceeding with these vehicles. This program was not intended to be used on these types of vehicles unless you have the experience to evaluate the vehicles mechanical condition, or are willing to pay an expert for his or her evaluation. Selecting Tips:
The best example of the type of vehicle that is good for this program is the compact, sport utility vehicle with four-doors. The reason for selecting this vehicle is that most people who want a car could live with a sport utility, and anyone who wants a two-door could go with a four-door. This particular vehicle caters to almost every individual and increases your chances for sale. The financial risk is a lot less with these vehicles because they hold their value longer than most cars. Most vehicles depreciate quickly in the first couple of years. We are looking for vehicles that have passed this initial high depreciation rate but have not reached the end of its mechanical useful life. The basics of the selection process is to: select from vehicles that you like and select vehicles that have wide appeal. Sources Of VehiclesWhen locating the right vehicle always remember what the objective is. We want to make money and drive an excellent vehicle that would be on our favorite vehicle list. Therefore, we will look for a motivated seller with the type of vehicle we have selected. A motivated seller is someone who wants to sell their vehicle immediately for one reason or another. A motivated seller can come from lots of different places. Even car dealers can be motivated sellers at times. I believe some of the best places to locate vehicles are in the specialty automotive magazines that are specifically just for the kind of vehicle you are looking for. But let's look at some of the places that you can find vehicles listed that would be of interest for this program: Sources of potential car sellers are:
Friends and associates are self-explanatory. Newspaper classifieds are in the same category. The specialty magazines are located in convenience and grocery stores. These magazines are still the best source. Pick up as many of these magazines as you can. They usually cost a dollar or less. Many times these magazines will have photos so you know exactly what you will be buying, which is helpful. Car dealers from time to time get the need for instant cash to pay a bill they have or to meet a sales quota that would pay them a large bonus. At these times, dealers can be very motivated sellers. Car dealers normally also have a 90 day grace period in which they do not pay interest on the vehicles on their lots. Once the 90 days have elapsed, and they start to pay interest on the vehicles that have not been sold, at this time they become very motivated sellers. One of the reasons a motivated seller would rather sell his car to you for a lower price than he could get from a dealer trade in is because they most likely cannot make the car payments and trading it in would require them to get another vehicle with payments. There are some dealers that will purchase cars without getting another one from them. If you want to know how low their offer would be compared to the N.A.D.A. listing just take your present vehicle in and have the dealer give you a quote to buy your car without buying a vehicle from them. One must be very desperate to sell a vehicle that way. Supply Items You'll NeedBefore we go to the next step there are some supplies you will need to get to help you in your selection process:
Highlighters can be purchased at your local office supply. You may want to use different colored markers if you are looking for more than one kind of vehicle.
Use your business cards to establish yourself in the vehicle buying / selling business. People will begin to call you with excellent deals because they have few alternatives to selling their vehicle except to take it to a normal car dealer. When you are starting out, buy the smallest quantity you can purchase. These cards should list your name, phone number, and address and indicate that you purchase automobiles, or whatever else you wish people to know about you. The N.A.D.A. book stands for National Automobile Dealers Association and can be purchased at most bookstores. This book is published quarterly by the National Automobile Dealers Association Used Car Guide Company. This book is a widely accepted price book for used vehicles because the N.A.D.A. has been collecting, analyzing and publishing values on used vehicles since 1933. It is a small book that is 5.5 inches by 3.25 inches. The pricing should not be considered absolute. The price of vehicles in your area may be more or less than the published national norms presented in the N.A.D.A. book. The book should be used as a guide to vehicle pricing but you should learn your own market. Finding The VehicleTo begin the process of selecting the correct vehicle, let's start with the magazines. You should look for ads where the seller seems blatantly willing to negotiate, these will be your best bet. These ads are easily spotted by looking for things such as the following: obo (or best offer), must sell by some specific date, lost my job must sell and priced to sell. All these are dead give-aways, and those ads should be highlighted with your highlighter. Before you can look up the prices in your N.A.D.A. you must have all pertinent information about the vehicle, such as the year, make, model, mileage, and equipment. This might require you to call the person who placed the ad in order to obtain this information. Once you have all the data, look up each vehicle in your N.A.D.A. and find its average retail value. Make sure to make the appropriate additions and subtractions for different equipment packages, miles and other options. Write that number somewhere close to the ad. The N.A.D.A. number is almost always within a few hundred dollars of the loan value (loan value is how much the bank is willing to loan on a particular vehicle.) The reason for having a N.A.D.A. book is so you can obtain relatively close loan value prices, even if the phone isn't handy to call the bank or if the banks aren't open. Almost all ads will have a few lines explaining the vehicle, such as the year, make, model, miles, how much it's equipped and the price. Vehicles in the six to twelve thousand dollar range seems to be the largest profit zone versus the least financial risk in terms of depreciation and cost of major repairs. You can start narrowing your choices immediately by marking out the vehicles that are one thousand dollars or more above the loan value. Next step is to find the exact loan value of the vehicle. To do this you will need to call the bank you plan to take a loan out with, unless you're going to pay cash for the vehicle. Ask to talk with the loan officer. You will definitely need to give some basic information to the loan officer before they can give you the amount the bank will loan, such as the year, make, model, miles and the particular options package like: XL, XLT, LS, SPORT PKG., and possibly and equipment list i.e. power windows (pw), power locks (pl), and sun roof (sr) etc. Run Do Not Walk From Vehicles With The Following Characteristics Make sure that you select vehicles that are no more than one thousand dollars over the loan value. Anything less than that is even better. Now you probably won't have a lot of vehicles to choose from, but that's okay, you have the cream of the crop and your chances are high that you will find a vehicle that will make you money. You're now ready for pre-qualifying. Phone Script To BuyAfter you have established that the vehicle in question is a four door, compact, sport utility, and that the vehicle is no more than one thousand dollars above the loan value, it is time to contact the individual. Get your writing pad out and jot down these questions to ask each person you call from the ads. When calling, use one full sheet of paper for each vehicle so it doesn't get too crowded.
If the answers to the questions suggest that there are serious mechanical problems I say, "Thanks for your time, but I don't think I'd be interested." I suggest you do the same, because this normally suggests that high-dollar maintenance will need to be done on the vehicle and that's the last thing you want. When asking about how flexible they are on the price you already know you're talking to someone who will negotiate on price because of the kind of ads they have written. But if you get a response like, "Oh, my gosh my bank is going to repossess it tomorrow!" then that vehicle should be at the top of your list to go look at. The reason you ask if they have receipts is because it's easier to sell a vehicle if you can prove any work that has been done on it such as a new alternator or an engine over-haul. This business is a numbers game. The more vehicles you see, the better your chances are at getting a bargain. Keeping that in mind, you'll have to decide how much time you have and how many vehicles you want to go see. Budget your time wisely and use the map you bought to plan the quickest route to view the vehicles. Inspecting The VehicleNow that you have collected all the necessary information, and it's all written down, you're ready to go see the vehicle. Once there, walk around the vehicle looking for hail damage (some banks won't loan on hail damaged vehicles nor will insurance companies give full coverage.) Look for dents, scrapes and discolorations in paint that could mean a wreck or major bodywork. If the vehicle was in a wreck and the work was completed by an excellent body shop it is very difficult for most people to tell if a vehicle was partially painted. Normally if only the right front section of the car was damaged only that part will be painted after repairs. In the past, a change in color of paint between one section and the rest of the car was easy to see but with today's paint systems you may have to be told. If any of these things are present, ask about them. These are not immediate turn offs, just be careful. Look under the vehicle for rust, especially around the tail pipe and wheel wells. Check under the engine for oil and transmission leaks. Get inside and check everything and I mean everything; ask if the heater works as you check it and ask about all the other systems as you inspect them. If the vehicle is a four-wheel drive, which most will be, you'll need to check this, but ask the owner's permission first. To do this properly, put it in four-wheel drive on dry pavement. Crank the wheel all the way to the left, proceed to put on the gas very slowly and go forward about ten to fifteen feet. The vehicle should act as if it doesn't like this - it will bump, skid and rock back and forth. What you are listening for is any metal banging or grinding. Repeat this process with the wheel cranked all the way to the right. If you hear no banging and grinding, the four-wheel drive system works just fine. Write down all your notes about the vehicle on your legal pad. Include everything that is wrong with it. Even if it's minor. Your job is to break down the seller's notion that their vehicle is perfect and demands a perfect price. If everything checks out on the vehicle, it it's within the right price range, and if you feel comfortable, then it's time to make an offer. Give them a price twenty five hundred dollars below loan value. If they choke on it, that's okay. Leave your business card with your offer written on the back and tell them to call you if they change their mind. You'll soon be getting more calls than you'll know what to do with about vehicles ready to be sold and at the right price. Buying The VehicleGo to your bank with all the information pertaining to the vehicle and fill out the credit information necessary to get a loan. You may want to do this ahead of time. Most loaning institutions have a maximum amount they will loan you ahead of time. Take the check they give you and go to the tag office to pick up all the documents you need to complete a vehicle sale. Usually this is a Federal odometer disclosure and a Bill of Sale. Make sure you ask for all necessary documents as every city and state if different. With this information, go to the seller, have him sign all pertinent documents and give him the check. The Bill of Sale and title probably needs to be notarized, Good job! You now own the vehicle. Go back to the tag office and tag your vehicle. Don't forget your proof of insurance, including name of company and policy number, also the notarized title from the previous owner and the current mileage. They will probably take your title and send it to the state capital. Ask for priority title or rush title delivery so they will process your title within fourteen working days and rush it back to you. There may be an extra fee for this, but it's better than waiting six to eight weeks to get your title back, especially since you can't sell your vehicle without it. Of course, if you plan to keep you vehicle longer than that then don't bother with the rush service. How Long To Keep The VehicleEven if you fall in love with the vehicle and decide never to part with it you are still better off than before you started this program. A vehicle that retains its value can be driven longer than a vehicle that depreciates quickly and that's why we recommend that for this program you stay with vehicles that retain their value. The faster the depreciation the shorter the time you can own the vehicle. A low-mile vehicle can be driven longer than a high-mile vehicle. Normally people drive between 12,000 and 15,000 miles per year. Normally about six to ten months is the right time frame for owning your vehicle before selling it to acquire another vehicle. Keep around a very old but serviceable vehicle to drive between vehicles. When you get a good offer on your vehicle you should take it. You can start selling your vehicle the day you buy it by placing sign in the window. Receive consistent calls off this type of advertising and it is certainly inexpensive. On the average you need to generate $3,000 to $4,000 dollars a year in order to reduce your driving costs to zero. Preparing The VehicleSince you purchased the right vehicle the amount of work necessary to get the vehicle ready to sell should be minimal. The old saying that you only have one time for first impressions is true here as well as in any other endeavor. Cleaning the vehicle inside and outside is critical in making that great first impression. Please do not neglect the engine compartment. Engines are often cleaned with a steam cleaner. Some do-it-yourself car washes have the capability to clean engines. Most vehicles you are going to buy should not need an engine-cleaning job. But once in awhile you will find such a good deal that you cannot pass up and a few dollars of cleaning is well worth the cost. Check the interior. Torn and worn upholstery has a negative impact on sales. Do any minor upholstery repair--but please do not do major repair unless your are absolutely sure you can double or triple the cost of upholstery in the sales price and still have a good value. Sometimes the floor mats are not very pleasing. In this case new floor mats can do wonders to the appearance of a vehicle. If you are driving the vehicle every day be careful that you don't let the appearance of the vehicle degrade to the point your prospective customer won't have a good first impression. AdvertisingThe ad process is very important. The better your ad, the more phone calls you'll get. The more phone calls you get, the better your chances are of selling the vehicle! A good ad contains the following:
What do I mean by a catchy phrase? These are statements like fantastic, tu-tone paint, immaculately cared for, definite must-see vehicle, and if you have receipts for it you might want to mention that. Also use seasonal phrases like: Super buy 4x4 for barging through the winter snow, or don't get stuck again, come see this one. Be creative and think up your own. The purpose for these phrases is to attract attention to your ad and to put ideas into the buyer's head, "yeah, I did get stuck a lot last winter, maybe I should invest in a 4x4 this year." Place ads in the same magazine's you went to look for them in the first place. You're local newspaper is just fine too, if you don't mind five-thirty A.M. wake up calls, which you normally don't get with the specialty automotive magazines. Specialty magazines generally generate better-qualified prospects. Remember that an inexpensive sign mounted in your vehicle during the period of time you are driving the vehicle for your own purposes is an excellent method of advertising. Also parking the vehicle at a busy corner over a weekend can also generate interest in the vehicle. Normally around your town there are certain places that do not mind you parking your vehicle as an effort to sell it. Phone Script To Sell The VehicleMake a brief outline of the features on the vehicle and remember to sneak in some catchy phrases. Write these things on a three-by-five card and leave it by the phone, then when they call, you can use if for reference. After you're done spouting off the information on the card, jump right in and ask them when they can come and see it. If they say right now, give them the address. If they seem hesitant, ask if you can bring the vehicle to them. If still hesitant you're probably not dealing with a serious buyer. Either way, ask for the person's name and phone number and say, "Well, maybe I'll go crazy on the price and surely you would want me to contact you." You're not going to get everyone's phone number but make it a habit to try every time. After the third day, if you haven't sold it, take the names and numbers of the people that called the first day or came to see it and call them back. Ask them, "Have you come any closer to a decision yet?" Repeat the ad and calling process until the vehicle is sold. Remember, everything should be written down on your legal pad. When you do get someone who wants to come and see it, setting up a specific time and date is very important. This makes the potential buyer feel more obligated and will cut down on no-shows. (However, no matter how hard you try, you will still have people who won't keep the appointment.) How To Sell It Every TimeWhen the person shows up at your house, greet them with warmth. You want them to feel at home and at ease. You should already have their name and number, but if for some reason you do not, now is the time to get it. Take a walk around the vehicle, tell them how good it looks even it it's ugly to you. (They may think it's the most beautiful thing they've ever seen, everyone is different.) Focus on the strong points of the vehicle. If it's a V6, talk about performance as well as good gas mileage. If it's a V-8, talk about its torque and horsepower. Mention it's towing capabilities or anything else applicable. On the test drive, tell them how smooth it rides even if its' a bit bumpy (maybe their vehicle is worse). You must and should be very up-front and honest about the vehicle you are selling but don't try to prejudge what they need or want. Their needs may be quite different from yours. Our goal is to put positive images of the vehicle into their head and build up value. The higher you build the value, the easier it is to sell at your price and not theirs. On the test drive, get to know the individual a little bit. Show them you care. This sometimes eases tension and puts the buyer in their comfort zone where you can deal with them more easily. On the test drive ask qualifying questions such as "How soon do you think you're going to need a vehicle?" As you're pulling back into the driveway ask, "Does this vehicle basically fit your wants and needs?" If yes, begin the process to get them the vehicle as soon as possible. If there is something wrong with the vehicle such as a power window that will not work, or there is a chip in the paint, offer to fix it. Then say "If I could fix that would you buy the vehicle?" Now, of course, you should know the approximate cost to fix that item so you can decide if you can take that kind of expense, because obviously that cost has to come right out of your profit. Sometimes, you may want to do that, just to sell the vehicle. Financing VehiclesFor most people the purchase of a vehicle is accomplished by borrowing money. Helping the customer secure financing can be very helpful in the selling process of the vehicle. Therefore, knowing a few loan officers around town can substantially increase your probability of selling your vehicle. . Most potential vehicle customers are concerned about two elements of financing: the down payment and the monthly payment. Many times the purchaser of the vehicle will be looking for a specific dollar amount as a monthly payment. If they have to go to their bank to get the figure, this slows the process. Bookstores have books on loan tables or you can use a business calculator to accomplish a more accurate calculation. To obtain a monthly payment, you need to get two things from your bank: the amount of time they will loan on a particular vehicle, and the percentage your customer will qualify for. Once you know these two things you can calculate the monthly payment quite closely. If the customer already has a vehicle, a dealer would normally take that vehicle as a down payment or at least partial down payment a trade-in against the new vehicle being purchased. Most often you will probably not want the trade-in because it will be a vehicle you do not want to drive and for a whole host of reasons. Loaning institutions want collateral for loaning money. Most often this is the vehicle you will be selling to your customer. Loan officers smile when the amount of money your customer wants to borrow is less than the value of the car. The amount of down payment that the loaning institution will require is also determined by the credit rating of your customer. A good loan officer can help you immensely in the selling process. You can push the process along by determining ahead of time some key elements:
A speedy selling process will help keep your customer committed before he or she loses interest or.finds another vehicle with more appropriate financing. Insurance And TaxesIf you're going to be borrowing money, you're required to get full coverage on the vehicle. But don't panic thinking you have to pay a lot of money for this.. As an option, you can pay for your insurance in six month intervals. You only pay for the amount of time you owned the vehicle and you'll get a prorated refund from your insurance company. Contact your agent for specific details. The same goes for personal property tax. However, to claim your refund, take the following important information when going to the tag office: the license tag, current registration receipt, purchaser's name and address, date of sale, and new owner's social security number. Profit MarginA word on the profit margin. You need to run your own numbers at home to see how much profit, you're going to make. It differs with every individual and with each vehicle: You must put into your calculations how long you're planning to keep the vehicle. This will tell you how much you'll have to pay for insurance and personal property tax as well as how much you think you'll spend on gas, the number of payments you expect to pay, etc. Add all those items plus the amount of your loan, then subtract that from your total selling price. This is the profit on the sale of that vehicle. If you are taking the approach of just wanting free transportation, you could actually drive the vehicle in the example on the next page a little longer than five months at no cost to you! Also note that if you offer to sell your vehicle at only five hundred dollars over the loan value, you can sell it faster. This is because the individual buying the vehicle only has to come up with five hundred dollars down plus the tax, which a lot of people are able to. So just How Much Money Can You Make? If we use $2,000.00 as an average profit margin and you sell just two cars a month, which is well within your reach, you can see that would be $4,000.00 a month. Please note that you want to start out slow with only one car at a time in process until you grasp the concept completely. Also you might want to start out with less expensive vehicle so you keep the risk down as much as possible. The hardest part in any, business is just getting started, once you are past this point you can roll it out take control of your life. What To Do Right NowOrder your business cards A.S.A.P. as your first step on the road to success. Get the supplies you needs as previously listed and buy the auto magazines. Remember to check out each vehicle thoroughly before making a purchase. You'll be rewarded for doing your homework. Also, never forget you are dealing with human beings and the nicer you are to them the better they're going to treat you. Important Note: There will be some people who will read this once, then twice and then again until they fully understand it and take action on these principles. They will not only be driving their dream vehicle but will be making a good profit. There will others who will scan it once and maybe implement some of the principles but never succeed to their fullest potential. Don't be in the second category. Take control from the very beginning. Get everything you've always wanted out of life and do it with a commanding attitude. Good luck with all your endeavors. | ||||||||||||||||||||||||
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