How to Become a Car Trader in the UK

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If you have a natural love for cars, know how to identify good deals and have a knack for selling, becoming a car trader could be a great way to start a full-time or part-time business. The benefits of this business model are that you can either start with a minimal investment and work your way up or set up your own dealership from scratch.

But what exactly does it take to become a car trader in the UK? Here are some of the steps you’ll have to go through.


Find The Right Vehicles

Before you think about buying your first car, you should try to find out which cars are in demand. Specifically, try to find out which used car models are in highest demand since you’ll most likely be selling used vehicles at first. Try to find out for how much they’re selling and for how much you can get them for. You should also decide if you’re going to target a specific market. For instance, you could choose to specialise in one model or car make only. This could be because the vehicle in question is in high demand or simply because you have extensive knowledge about the model or car maker.


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Try to find out where your target market buys their cars from. Do they prefer buying cars second-hand directly from the seller or do they typically buy their cars from a dealer? This will make a huge difference in how you will advertise your vehicles and where you should put more attention. You should also learn specifics like how long it takes to sell a car. While some vehicles might seem like a steal, they might take much longer to sell whereas a vehicle with a lesser margin might be a better acquisition since it will leave the lot sooner.

Pricing is also something you’ll have to master if you want to be successful. There are different valuation sites that will allow you to get an approximate idea of how much you’ll be able to sell a car for. However, they might not always tell the full reality of the market. Sometimes, looking at adverts and seeing how much vehicles are selling for first-hand is a better way to evaluate how much you can expect to get for a particular vehicle.


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Have a Clear Business Plan in Place

Just like any business, you should have a clear detailed business plan laid out before you even start. Make sure that you evaluate your costs vs how much you’ll be able to get for a particular vehicle. After you’ve performed thorough market research and you’ve narrowed down which type of vehicles you’re going to sell, you can start building a long-term plan for your business. While it might not seem like a necessity at first, it’s essential that you do this, so you can get past the hobby state and really scale it into a genuine business.

Note that you’ll have to factor in costs to refurbish vehicles and perform minor repairs. In some cases, people might be able to fool you into buying a lemon, so you’ll have to be ready to cover your losses. Or you might simply want to make some minor or major aesthetic improvements to a vehicle to increase its value. Make sure that you evaluate what your total costs for refurbishing or upgrading a vehicle will be, coupled with the total costs of selling the car, including storage and advertisement.


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Speaking of storage, you’ll also have to think about where you will be storing your vehicles. There are many options that you can go with. If you’re just getting started, then you might be able to get by with minimal space. But if you’re thinking of buying multiple vehicles and eventually scaling up, then you might want to start looking at something like a temporary showroom for instance.

Temporary buildings are perfect for new car dealers since they cost a lot less than a permanent building and will allow you to get by until you can buy a permanent structure. Plus, it will make your business look more legitimate and allow you to reach a different market. A temporary structure will also allow you to store your vehicles, protect them from the elements, and also protect them against theft and vandalism.

If you’re looking for a temporary steel construction for your vehicles that you can also use as a showroom, companies like Smart Space offer temporary buildings that can be used as car showrooms; they will last you up to three years. What’s great is that they require no foundation and allow you to transform any vacant car lot into a fully-fledged showroom in a fraction of the time it would take to build a permanent showroom, and for much less money too.


Contact your Local Council

If you decide to start selling cars from home, then it would be a good idea to consult your local council first. Starting from home is a great way to cut costs, but there are rules that you have to follow. Your local council will be able to tell you how many vehicles you’ll be able to store on the main road legally before you have to get additional storage space.


Apply for Motor Trade Insurance and Trade Plates

Once everything has been sorted out with the local council, you’ll have to consider getting motor trade insurance. Motor trade insurance will allow you to transport vehicles without having to insure each of them individually. Motor trade insurance is more beneficial than private insurance, as it will allow you to remove and add vehicles without having to deal with additional costs.

You’ll also have to get your trade plates as well before you start selling. Trade plates are basically mobile tax disks that will allow you to own and sell multiple vehicles without having to register each one individually.



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Start Looking for Vehicles

Now that you have everything in place, it’s time to actually start looking for vehicles for resale. There are tons of place where you can start looking for second-hand vehicles to sell. Some of the best places to start looking for vehicles include online listing and auction sites like eBay, Gumtree or Copart UK, or car selling websites like Carspring, carwow, and Auto Trader.

You can also try your hand at car auctions, but unless you’re familiar with how car auctions work, this is not always the best option. It would be wise to try to attend as many auctions as you can with a seasoned buyer first and gather as much information as you can before you start using auctions as a source.


Start Selling

Now that you’ve found one or a few vehicles you feel you’ll be able to sell for a profit, it’s time to start selling. But before you do so, it would be wise to make sure that the vehicles you intend to sell have passed their MOT as it will make them easier to sell. Also, you might think of having the car thoroughly cleaned before you put them on sale. Giving them a spray job could be another great way to make them look more appealing.

If you do decide to sell them at home, note that there will be some restrictions as to how you can advertise your vehicles. For instance, you won’t be able to put any signage up, either on the car’s windows or on your house. You also won’t be able to make actual alterations to your premises. As an alternative, you can sell your car online through classified ads sites or in car dealer magazines or local newspapers.


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The best way to set your car apart is to have high-quality images and a nice description. If you want to know what works, the best thing to do is to look at other listings for vehicles similar to yours and copy them. Make sure that you check for how long the vehicle has been listed though, along with the number of views. This could help you evaluate if an ad is actually working or not.


Become a Sole Trader

Once you’ve made your first sale, it would be wise to register as a sole trader if you intend selling more vehicles. You should notify the HMRC immediately for tax purposes if you don’t want to deal with fines.

Once your business starts rolling, you might also want to create a company instead of operating as a sole trader. And even if you do decide to stay as a sole trader, it would be wise that you open a bank account specifically for your car trading, so you’ll be able to track financial activity better.


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Becoming a car trader is one of the easiest businesses to enter and demands very little money to get started. However, you have to be prepared to do your research before you enter the field if you want to reach any kind of success. Make sure that you follow the tips in this article if you want to start your car dealing business on the right foot.


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