Anyone ever have a dealer license? (insurance, vehicle, auto, windshield)

[zoonik]

Maybe this belongs in the business forum, but has anyone out there ever gone through the processes to obtain a car dealer license? It's something I have been considering as a part time venture to satisfy my love of fixing cars and earn a little extra money. I would like to get access to auto auctions and be allowed the ability to legally sell more then 3 cars a year in my state. I was looking to do this only part time, 1 car a month max. Ideally, I would like to buy around the $2000 level at auction, fix up and sell for $3-4000 on the market. Small potatoes, but is it worth the cost and fees of the license?

[JoshB]

zoonik, I work for an auction... We have many guys that are just like you, want to sell a few cars and make a little cash. In Wisconsin we're only allowed twelve vehicle sales a year without a license. In order to obtain one you need to sell at least 12 cars a year and pay $500.00 a year. I see your in CO so maybe there is a local university where you could sell cars to students for a few bucks more than you paid etc.

[southernnaturelover]

I had one years ago but I let it expire. Here in Alabama there are two types, a retail dealer license, and a wholesale only license (dealer to dealer). I had the wholesale license. I had to go to an insurance company and get bonded (can't remember amount), then I had to apply for a county business license, and then finally I applied for my dealer license. In order to qualify for a retail license in Alabama you must a have sign stating you are a automobile dealer, exterior lighting, and a public restroom. It's probably different in every state.

[Steve Bagu]

Basically you can buy/sell used cars privately to your hearts content without paying all the fees and license. Solution is to register the vehicle in your name while paying the sales tax and registration fees, and while waiting for the title you can be repairing/paint/tires etc and have a legally registerd car to drive in the meantime. The state is interested in the "tax" revenue. There is no law that says you are limited into how many vehicles you can own at one time. I would buy from a private party a car that needed paint/tune up/tires/detailing, invest $100-150 dollars in the process and sell for $3-500 profit in 30 days of down time in the process on one vehicle only. Completed one and started to work on another all in part time with a good turnover. Steve

[sunsprit]

Originally Posted by zoonik

Maybe this belongs in the business forum, but has anyone out there ever gone through the processes to obtain a car dealer license? It's something I have been considering as a part time venture to satisfy my love of fixing cars and earn a little extra money. I would like to get access to auto auctions and be allowed the ability to legally sell more then 3 cars a year in my state. I was looking to do this only part time, 1 car a month max. Ideally, I would like to buy around the $2000 level at auction, fix up and sell for $3-4000 on the market. Small potatoes, but is it worth the cost and fees of the license?

If the volume you're contemplating is only 1 car/month at your projected price point, then you'll hardly justify the expense of the Colorado dealer license, commercial insurance, bonding, dealer plates, and overhead of a "part-time" business.

Keep in mind that you may find yourself with a zoning problem for this as a "home-based" business in many areas of Denver, and have to get commercial space somewhere else.

Your price point will have you competing with a substantial number of used car lots ... South Broadway, Colfax Ave, Federal Blvd, and many other places around the metro area with a large selection, financing and insurance arrangements for their buyers, and sizable advertising budgets.

IMO, you'd be better off to strike up a working relationship with an existing used car dealer who will allow you to buy at the auction under their license and then sell the cars through their dealership. Paperwork would effectively be run through their dealership in compliance with CO dealer law. You'll get better exposure for your cars and full time pro's to sell it ... while you're out doing your real job.

Originally Posted by Steve Bagu

Basically you can buy/sell used cars privately to your hearts content without paying all the fees and license. Solution is to register the vehicle in your name while paying the sales tax and registration fees, and while waiting for the title you can be repairing/paint/tires etc and have a legally registerd car to drive in the meantime. The state is interested in the "tax" revenue. There is no law that says you are limited into how many vehicles you can own at one time. I would buy from a private party a car that needed paint/tune up/tires/detailing, invest $100-150 dollars in the process and sell for $3-500 profit in 30 days of down time in the process on one vehicle only. Completed one and started to work on another all in part time with a good turnover. Steve

Sorry, Steve ... NOT IN COLORADO. By Colorado dealer law statute, a "private party" buying and selling more than a certain minimal number of cars per year is functionally a DEALER and must be licensed, insured and in compliance with the dealer licensing laws, even if they've paid the sales tax, ownership, and registration fees on a car purchase.

This statute was specifically put in force to "protect" the automotive buying public from the (shady) dealings of a fair number of "casual" car dealers that existed in Colorado, who did as you suggest ... buy cars for resale and pay the taxes and ownership fees. You cannot do that in Colorado, and haven't been able to for many years. It's true that Colorado law doesn't limit you to how many cars you can own at one time, but they sure specify how many you can sell each year before you're considered to be a dealer.

I used to work with a few bodymen who specialized in buying very damaged cars and they'd replace a couple of panels, pull the frames out straight, and put some very compromised cars (from a safety/structural/systems functioning standpoint) back on the road to unsuspecting buyers. That was before "S" Titles came into the system, but even now, with an "S" title today, they can still make a car look cosmetically very straight but without the structural integrity of the correct car ... and sell it to an unsuspecting buyer. As a private party seller, there's little recourse except for a buyer to go through the courts ... but buying from a licensed "dealer", there's a higher expectation of knowledge on the part of the seller and many more avenues for a buyer to proceed if they've bought an unsafe or emissions impaired car. Many times, a seller will represent that a (crashed) car got an "S" title because it was a theft recovery vehicle and wasn't damaged ... but I've looked at a number of these cars for pre-buy inspections and the crash damage repair was so obvious it wasn't funny.

Also, your price points don't make sense to me. $100-150 budget to spend on a car for recon, paint, tires, detail?

Almost any car needing tires today ... even with "cheapies" from a discount source ... will need at least $200 in tires, plus the cost of mounting and balancing.

A decent "detail" job will cost $100-150 alone. Sure, you can do this yourself, but what is your time worth? Materials alone can easily run $20-40, or more. I'd like to say I know what I'm doing with a hotsy and buffer and pro detail supplies ... and I can't detail an average car in less than a full day to my standards for re-sale. More time/money spent if I need to get color matched touch up paint for nicks/door dings/spot repairs.

If you're painting a car yourself, you'll still spend $150-250 these days on prep materials, primer, paint, and application disposables. Even if you've got a spray gun and compressor ... where are you going to paint the car?

Tune-up? 'Plugs, air & fuel filters, possible sensors (oxy and/or fuel metering), fuel injection system cleaning/purge .... anywhere from $100 to many hundreds of dollars on a typical car today that's being sold because it needs a "tune-up". If it was running good, it wouldn't be likely to be sold as a distress sale car unless it had serious cosmetic problems.

You haven't even mentioned glass. In Colorado, due to the winter road conditions, few windshields last more than a couple of years. Even if you're getting best rates, you'll still be spending close to $200 on an average tint/shaded front windshield.

I know other states have similar "dealership" laws. Wyoming, for example, considers you a dealer at 6 cars bought/sold per year.

[Steve Bagu]

In essence, I was referring to small problems that an individual with some knowledge is able to repair without dealing with severe body/frame damage etc. I never would touch that stuff. My cars were straight deals that a few people without knowledge were selling due to misinformation given by mechanics only looking for the dollar. Example, bought one that she was told needed a master cyl which was not the case. Another, the old couple were told by NEW car dealer that they needed a NEW tranny due to a leak, while I just snugged the bolts and the leak stopped and the car ran beautiful and my wife just loved that car cause it had been well taken care of by the old couple. Bought a chevy from a man who claimed to have had TWO????? recent valve jobs and was told it needed another?????. Some garages are crooks. Anyway, one rocker nut repaired the problem and it ran real smooth. So you can see where I'm coming from. Nothing big and everything legit with little time lost. Steve

[southernnaturelover]

There are also public car auctions, there is one in my area that I have been to many times. The cars are likely to have very high miles and need work, but it's fun for me just to go and watch.

[sunsprit]

Originally Posted by Steve Bagu

In essence, I was referring to small problems that an individual with some knowledge is able to repair without dealing with severe body/frame damage etc. I never would touch that stuff. My cars were straight deals that a few people without knowledge were selling due to misinformation given by mechanics only looking for the dollar. Example, bought one that she was told needed a master cyl which was not the case. Another, the old couple were told by NEW car dealer that they needed a NEW tranny due to a leak, while I just snugged the bolts and the leak stopped and the car ran beautiful and my wife just loved that car cause it had been well taken care of by the old couple. Bought a chevy from a man who claimed to have had TWO????? recent valve jobs and was told it needed another?????. Some garages are crooks. Anyway, one rocker nut repaired the problem and it ran real smooth. So you can see where I'm coming from. Nothing big and everything legit with little time lost. Steve

Perzactly my point. You, as a casual buyer, "lucked out" in finding a few cars that were "distress" sales due to ignorance or misinformation about the merchandise. It can be a good deal for you as a buyer to take advantage of the situation with a cheap re-con and quick turn, but these deals don't happen consistently enough to make a business out of it. Not when dealership overhead and fixed ongoing expenses are there every month and you need volume sales to meet them and turn a profit. Finding a couple hundred dollar upside car now and then won't get the job done, especially when you're competing against full-time pro's in a competitive re-sale marketplace such as Denver.

Keep in mind that those dealerships are competing with you for those "finds" to buy out there, too. Most folks don't realize that the toughest part of the used car biz is finding "good" merchandise for inventory, not the re-sales aspect of the business.

I, too, have bought cars from distress situations for pennies on the dollar from time to time for over 30 years. That's what got me started in my pro automotive repair shop, which brought me yet more possible "deals" than I'd ever imagined possible. But enough volume to justify a dealer license? Nope.

[sgtjoebear]

Originally Posted by Steve Bagu

Basically you can buy/sell used cars privately to your hearts content without paying all the fees and license. Solution is to register the vehicle in your name while paying the sales tax and registration fees, and while waiting for the title you can be repairing/paint/tires etc and have a legally registerd car to drive in the meantime. The state is interested in the "tax" revenue. There is no law that says you are limited into how many vehicles you can own at one time. I would buy from a private party a car that needed paint/tune up/tires/detailing, invest $100-150 dollars in the process and sell for $3-500 profit in 30 days of down time in the process on one vehicle only. Completed one and started to work on another all in part time with a good turnover. Steve

I am sorry but this is pefect example of misinformation there are many states that limit the number of vehicles u can own at one time or before you are required to get a fleet license and or a dealers lic like in my state Alabama it is 5 best place to check is your local tag office or DMV Alabama law) requires you to have a fleet license and dealers lic which is about ten dollars if you own, or sell more than 5 vehicles... fleet lic is required if u own more than 5 at one time even if they ar in your name also a dealer is required by law here to have the title in their name unless it is own by the bank (or else how are u going to sell it if you do not have proof u own it)

[plsalzman2003]

You have a lot of pro used car guys at the dealerships in Denver that curb cars on the side also. They kick the trade ins and sell them on the curbs."Curb-stoners". There is good money in it , especially if you work at an existing dealership. Some make more money than surgeons or docters until the dealer-board catches wind!! I know!!!! I was a curb-stoner!!