How to find and buy cars at or below wholesale everytime

Photo by usedcars.com
WHOLESALERS
Wholesalers are the distributors of cars in the used car business. They move the cars between the lots.
They make the rounds of new and used car dealers to see what they have to wholesale. They buy cars, add a few hundred dollars to the price and sell them the same day to other car dealers. They act as the brokers between the new and used lots, buying and selling everyday. Wholesalers are usually independent and work alone. They know the market. They know who is selling what and who is buying it! When they buy a car,
they usually know where they can sell it. A good wholesaler can tell you immediately what a car will bring wholesale. He is "on the market". After you're in the car business, contact wholesalers. They are an excellent source of good used cars! They'll search and find the cars you want, at a price that will allow you to make a fair profit.
A wholesaler can be an invaluable source of information in knowing how the
market is doing. What's HOT and what's NOT! He can be your insider with all the
contacts.

The best way to find them is to ask used car lot managers. You'll also find
wholesalers listed in the Yellow Pages. You'll also find them renting an office on
independent used car lots. They can find cars for the lot and share the office
expenses. If you see a second sign on a lot for another car company, it usually
indicates a wholesaler has his office there, too.


LEASING COMPANIES

These companies usually sell their used cars through wholesalers. The cars
are going to be the newer, expensive models. These cars are not the ones to buy and
sell using this plan.

RENTAL COMPANIES

Rental companies have become the largest sellers of used cars in the United
States. Hertz sells over 60,000 cars a year to the public. National sells over 25,000.
The cars are the same types as sold by leasing companies. The rental companies
also wholesale some of their used stock. Contact the rental agencies in your area.

Note: Rental companies are getting out of the used car sales business. The
cars they rent are usually leased from companies owned by the manufacturers i.e.
Chrysler Leasing Corporation. The new car dealers have really been complaining to
the manufacturers because the rental company lots have all the one and two year old
cars. To help the dealers get access to these high demand cars, the manufacturer's
leasing companies are now giving leases with the options to return the car to the
leasing company at the end of the lease. These options have been made very
attractive to the rental companies. When the leasing company gets the vehicle back,
they have auctions for dealers only. Now the dealer has a chance to deal in this
attractive market. The dealer puts attractive names on them such as "executive
cars", Ford corporation cars or CLC (Chrysler Leasing Corporation) cars.

GARAGES AND BODY SHOPS

People take their cars in for repair and sometimes can't afford to pay for the
work. The owner of the garage or shop ends up owning the car. The person either
abandons the vehicle or a court awards the shop the car.

Some shops do not want the hassle of selling the car because of possible
problems or returns. The shop owner only wants the money invested in the repair.
These shops will usually sell them to wholesalers.

Make contact with the garages and shops in your area. Let them know you would
be glad to buy these vehicles. This can be an excellent source of good, low priced
cars.

BANKS

Drive by banks and you'll see cars, boats, trucks and RVs out in front for
sale. These are repossessions by the bank. They are normally the newer, high
priced models. Get to know your banker and tell him you are looking for older used
cars. The bank will get those when they are collateral for defaulted loans. Your
banker may be more interested in selling to you than a wholesaler if he wants you to
be a happy customer.

PRIVATE OWNERS

At last! The pot of gold at the end of the rainbow! When starting your
business, this is your absolute best source for automobiles for resale.

Remember, more than 50% of the used car sales are made by individuals.
You'll find them in the classifieds, sitting in shopping centers, in front of homes, in
weekly newspapers and in auto sale newspapers. They are everywhere and there are
thousands! Your job will be to decide which are the best and make the deals!

In later chapters, I'll show you how to select cars and how to make the best
deals. Here is the SECRET of this plan. There are people, right now, that need to
sell their car at a very low price. Find this person and your profits are absolutely
guaranteed!

HORSE TRADERS

The horse traders are the common of the used car business. You'll find them
everywhere. They may sell as an individual, have a small garage, a body shop or
even a small car lot. They take "lemons" and make them smell and look like
strawberries. Watch out for them! The best way you can protect yourself is by
being able to properly inspect the vehicle your buying. I'll show you how to do this
in the chapter on inspecting vehicles.


GOVERNMENT AUCTIONS

All governmental agencies, federal, state, county and cities have vehicle
auctions. By law, these auctions have to be publicly announced. Check your local
newspaper classifieds on the weekends.

Call your mayor's office and ask how sales are publicized. Call the police
and sheriff's offices and ask how abandoned cars are sold. Contact your state
representative or senator's office and ask how state owned vehicles are sold.

Contact the following federal agencies in writing. Ask to be placed on the
mailing lists for the announcements of public auctions and sales.

General Services Administration
Centralized Mailing List Services
Bldg 41, Denver Federal Center
Denver, Colorado 80225
www.gsaAuctions.gov


Department of Defense
Defense Reutilization and Marketing Service
National Sales Office
74 Washington Ave., N., Ste
6
Battle Creek, MI 49017-3092
www.drms.com


Your local
Internal Revenue Service
Collections Division Office
(Auctions Mailing List)


Your local
Small Business Administration
Liquidation Officer


Your local
Post Office
Motor Vehicle Service Department


WHOLESALE AUCTIONS

These are auctions open only to dealers. Ask a dealer friend to let you tag
along to an auction. It will be a real learning experience! Understand that some
dealers do this for a fee so individuals can purchase at the auction. If there's no
charge, buy his lunch.

If you become a dealer in your state or have a dealer buy for you, remember
this.........It's the only thing I'll say about auctions!

NOT EVERY CAR AT AN AUCTION IS A BAD CAR,
BUT EVERY BAD CAR GOES TO AN AUCTION!

If you do decide to try auctions, be careful, many who have talked with me
after buying this plan have had BAD experiences with the cars they purchased at
wholesale auctions. The auction block can be a dumping ground.

I don't recommend you buy from any auction until you have experience in
appraising the value and condition of cars. As an EXPERIENCED buyer you will
find good cars at low prices at auctions, but there are no "steals".

CONSIGNMENT LOTS

A consignment lot is where an owner puts his car on consignment to sell.
The owner of the lot attempts to sell the car for either a percentage of the selling
price or a fixed fee. In my area consignment lots charge a set fee based on the
selling price of the car. For example: If the car sells from $0 to $1000 the owner of
the lot receives $100. For $1000 to $2000 the fee is $150. This fee escalates with
increases in the price.

I have found you can get good deals at these lots. Here's why. Sellers who
place their cars on such lots may be unsophisticated in selling cars. They may not
want to be bothered. They may want to sell the car as soon as possible.


The lot owner wants to move cars. The more cars sold, the more profit he
makes. Because of this, the lot owner may not always have the best interests of the
seller as a top priority. The following is an actual example showing this.

A young woman I know spotted a nice four-year old Toyota Camry last year
on a consignment lot. It had less than 30,000 miles and was in perfect condition.
The buyer had put it on the lot asking $9,000 for it. The loan value was $7400.
This young woman offered $7000. While she was standing in the office, the lot
manager called the owner and encouraged her to take this offer. She did. The
young woman paid $7000 for a car that was easily worth $8,000 if the owner had
sold it through newspaper ads. The car lot owner was more concerned about
moving the car than in maximizing the car seller's profits.

Check the consignment lots in your area. They can be a great source of good
autos. When you visit the lot, ask the manager which cars have been on the lot the
longest. This is a way to find the motivated sellers.

RETAIL AUCTIONS

In large cities, you will find retail auctions where individuals and businesses
take their vehicles to sell. As with wholesale auctions you must be experienced
before you purchase. A reminder! When you go to an auction, don't get caught up
in the heat of the bidding. Set the maximum price you'll pay for the vehicle and
DON'T exceed it. Remember, the seller may have friend in the audience to bid the
price up. If you get in a bidding war, it can become an ego trip of I have to win,
rather than a common sense business deal.

One user of this plan goes to these retail auctions and buys cars with minor
physical damage or in need of a paint job. He has a body and paint man who works
cheap. After "fixing" the car cosmetically and doing the detail work, he takes the
car back to the same auction and makes a mint.


WHERE TO FIND THE CARS THAT SELL

When starting your new business, purchase the majority of your cars from
individuals. You will find they sell for the lowest price and are the easiest to
negotiate.

You'll find them in:

1. Classified Ads
2. Bulletin boards at work and grocery stores
3. Local auto shopper newspapers
4. Cars parked in malls and shopping centers
5. Cars parked at homes
NOTE: In newspapers, look under other headings such as legal notices,
estate sales, yard sales and miscellaneous.

Let your relatives and friends know you want to buy cars. Offer them $50
for every car they refer, that you buy. Always be on the lookout for cars. When you
find cars for sale, make some low-ball offers. You may be surprised that they'll
accept your offer! What do you have to lose? Have fun! Remember, you don't
have to buy every car you inspect.

Another good source are wholesalers. To deal with wholesalers, you must
develop a good business relationship. They must know the kind of cars you want.
You will have to buy occasionally from the wholesaler. They place a premium on
their time and don't want to waste it with you if you never buy. Begin with the
individual sellers. Then move into the wholesaler's market after you have a good
understanding of used cars and your ability to sell. You may also run classified ads
saying, "I'll buy your car. Cash! Call Don. 482-XXXX". This will generate calls
you can screen for those who NEED to sell. You can run a small ad like this in local
"shopper" newspapers very inexpensively, week after week.
Another reader gave me the idea of the "would you" program. Have some
small leaflets copied (or use a business card) that say, "Would you take $_____ for
your car? Call 555-1234. This is a great idea for buying specific models and year of
cars. Just prowl the mall parking lots. I would not write a dollar offer. I'd just leave
a note, "Would you sell your car for a fair price? Call 555-1234"
I also heard from a happy "Used Car Gold Mine guy" who prowls his
neighborhood looking for cars that don't seem to ever move from their parking spot.
He looks for trash under the wheels on street parked cars. Then he leaves a note if
he can't locate the owner. He also looks for older couples that have cars that seem to
be idle. He makes offers. He also leaves notes on bulletin boards in elderly
community service agencies and retirement buildings, "Cash paid for your car. Call
Don 123-5678".

HOW TO BUY THE RIGHT CAR EVERY TIME
The first decision to make is the kind of cars you are going to buy and sell. I
recommend you select one brand, model or type of car. This will give you the
chance to become an expert on that car. You'll know the models that have big
demand and sell fast. You'll know the lowest purchase price to buy and the top
price to sell. After you gain experience in one model or type, then expand to others.
You want to deal in reliable cars. This will enhance your reputation and
insure repeat business. The word will get around you buy and sell good, dependable
used cars. These referrals will make your business a success.

Remember the basic rules in selecting cars for use in this plan.

The car should be 7 to 12 years old.

The car should be a "pleasant" car, not necessarily a "cream puff". It should have
no major problems or detractions. It must have "curbside" appeal. A car the
buyer will be happy to own. No junkers!

The mileage should be below 100,000 miles. I'll show you mileage rules later. If
the mileage is above 100,000, your purchase price must be a "steal".

The car should retail for no more than $5995. The price range you'll be the most
successful in turning cars quickly is $2995 to $5995. This price range will sell
fast and for cash.


$500 PROFIT ON EVERY CAR

Remember the following! It will be the difference between you being a roaring
success or a complete flop in this business.

"YOU MAKE YOUR PROFIT WHEN YOU BUY THE CAR "

That's right! You must buy nice cars at a low enough price to sell with a good
profit. It's simple! Do it and your success is guaranteed.

As a rule of thumb, plan to make a profit of $300 to $1000 on each car you sell.
To know how to do this, you must do some homework. You'll have to have a good
understanding of the market. You'll need to study the current selling prices. That's
why I recommend you stick to a single brand or model at first. This lets you
specialize and makes it easier to study the selling prices.

Pricing in the used car market is not scientific. There are no stickers on the
windows. No one can tell you how much a used car is worth! If I look at five
Toyota Corollas they will be worth as little as $300 or as much as $3000, depending
on their condition, mileage and what a buyer is willing to pay.

The National Automobile Dealers Association (N.A.D.A.) Used Car Guide gives
the average prices for cars in your region. It is commonly called the "Blue Book".
It's really orange. You can look at one at your bank or credit union. Large
bookstores and magazine stands sell individual copies. The Consumer Version of
the N.A.D.A guide sold in bookstores is not useful. It gives retail prices only. Your
library reference section will have the Dealer/Bank version. The Dealer/Bank
version gives more information on loan values and trade-in values.. N.A.D.A. also
publishes a price guide for the older models.

The Kelly Blue Book publishes several price guides. They have the "Used Car
Guide" and the "Older Car Guide". You can subscribe to by calling 1-800-4441743. Or write: Kelly Blue Book, Box 19691, Irvine, CA 92713.

Note: The Kelly Blue Book sells to businesses only. Control the flow of
information and you control the market! When you order, it might be a good idea to


use the name of your "new" business. Be creative. Make one up. There is
absolutely no legal or logical reason why any group should exclude anyone from
this valuable information. I know they probably have their own "good" reason, but
it smacks of "BIG BROTHER" to me.

Magazine racks and bookstores also have magazines giving used car prices but
these are not as current as those above. A subscription to the price guides will be a
must once you get started.

Another good way to determine the values of your model is to track and record
local selling prices. This is the way to know exactly what the market is doing in
your particular area. Write down the prices advertised. Keep a log of the dates and
prices. Take time to go to the library and read the classifieds for the last two or
three months. Call some of the old ads. Inquire what they sold the car for. If they
are not sold, seize the chance. Maybe they will now be willing to come down in
price. Check used car lot prices. All this will give you a good start on knowing the
average selling price for your brand or model.

The most difficult and perplexing question for a person starting in the car
business is what is the wholesale market value for a car. Here is a general rule of
thumb. In the N.A.D.A. book there is a price called "average loan value". It is the
lowest price of the three given. This is the amount that your bank will normally loan
using the car as collateral. You should attempt to buy your cars at this price but no
more than average trade-in.

Why? This graph will show you. Let's assume you have a 5 year old Ford. You
open your N.A.D.A. book and find the following values for the car. Average retail
value is $9,000. Average trade-in is 7,700. Average loan value is $7,000. The
vertical area on the graph is the price range that wholesalers and dealers will
negotiate on this car.

Retail Trade-in Loan
$9,000 $7,700 $7,000 $5,000 $4,000

Trade-in value is usually the price that GOOD cars sell for at dealer's auctions.
Trade-in is usually considered to be the market "wholesale" price of a clean, average
mileage car.

This was a real eye-opener to me when I learned this pricing strategy. It was a
greater shock when I found that this same car would be priced on the used car lot at
a price of somewhere between $9,500 and $10,500. This gives the dealer a spread
to GIVE the buyer a lower price; a better deal!
Again, the general rule of thumb is buy between loan value and average trade-in
and sell at the retail price.
If you want to verify this for your area, here's a way to do it. It will be fun, too.
Take your personal car and look it up in the N.A.D.A. book. You can find the

N.A.D.A. books in the reference section of your public library. They usually keep
them behind the desk. You'll have to ask the librarian for it. After you find the
three figures for your car, do two things. First, shop for your car on the local lots.
Second, go to a few lots and ask to talk to the used car manager (He buys the cars
for the lot. Large dealers may have a separate buyer.). Tell him you need to sell
your car quickly and you'd like an offer for it. Compare these prices with the
N.A.D.A. prices for your car.
Here's a hint I learned from an old pro that will pay for this manual a hundredfold! When buying cars use the Kelly Blue Book or Old Car Guide to show the
seller how little the car is worth. These books tend to give lower prices then the
street market because they reflect the prices being paid by dealers.

When selling your cars, use the retail price in the NADA book. This is always
higher than the street (not dealer) market. When negotiating, select prices in the
particular book that will support your price whether buying or selling. Show the
book "PRICES" to the other person. Something in print always makes it TRUE or
at least it has more impact then you just saying it. This ploy can make you hundreds
EXTRA from the inexperienced!

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