Diary of a Newbie Car Trader
Discussion
Please can I get some feedback on my first car trading experience from guys that have done this before? I'm currently out of work but will be getting another job in May. In the meantime I thought I'd give trading a go to bring in a bit of cash and give me something to do during the day.
I had a cash float of £1,750. I saw a car listed in the local bargain pages. Peugeot 307, 1.4 HDi, 2003 plate, 95k miles, £1,995 ono. I rang up and asked for more details. It was taxed and tested for 11 months. No service history. Some advisables on the MOT. The car was described as clean. I asked if he'd accept £1,500 for a quick sale. He said £1,700 was his last price. I went to check it out. Apart from some stone chips on the bonnet the car was in very good nick and drove fine. I texted the registration number to 83600 and got a HPi check for £3.00 and a valuation for £1.50. The HPi came back clear. The value of the car at 60k miles was described as Forecourt £2,795; Trade In £2,295; Private £2,395, Auction £2,145. I made another cash offer of £1,600. We settled on £1,650. On the V5 I asked him to fill out Part 6, the yellow Motor Trader section so that I could take the V5 with me straight away. He accepted and gave me a receipt for cash and I took the car.
I took the car home. I put in £5 diesel on the way and paid the local car wash run by nice Kurds to do a mini valet for £20 (knocked down from £30 for offering to bring all my future cars through). Then I took 9 pictures interior and exteriror and one of the engine bay and uploaded it all onto the autotrader site for £25 for a 2 week internet advert run. Total expenses now = £50 so my total outlay is now £1700.
I decide to list the car for £2,395 on a Wednesday. I get 3 calls in the first 3 hours all from canvassers. I create a new group in my phone with no ring tone and add all the canvasser numbers into them (by the end of the week I have 9 numbers, mainly starting 020 89207). The next day I get a steady number of calls (usually about 4-5) from people asking me further questions about the car and my location but no viewings. At the end of the first week I drop my price to £1,995. At this price I get 3 viewings within 48 hours and about 15 calls. The first is a young couple who come the same day, like the car and offer £1800 last price. I decline. The second is an elderly black man who says he will come back with his wife. However the next evening 2 Polish guys turn up with 1 car, meet me at a service station car park, take the car for a test drive, then offer £1900 cash to take the car immediately. I accept and I fill out the V5 in their name, give them a cash receipt and they're gone.
Here are my questions:
1) Was this just beginner's luck? It seemed relatively simple to me and I enjoyed the experience. A lot of people I've spoken to say that they've got fed up with trading and stopped especially as there's not much cash in it anymore.
2) Should I have used my cash float to buy sub 1k cars? I got a bit bored selling just the 1 car. I would have preferred to have had 2 cars so that I could field more calls and go on more viewings. Also I'd rather turn over more cars and keep flipping the cars rather than wait for a while to get a higher profit on 1 car.
3) I paid £20 for a mini- valet. Was this too much? I can see that if I start trading sub-1k cars that this and the £25 auto trader advert will take a huge chunk out of any profits coming back
3) Nobody questioned why my name wasn't on the V5, although I was ready to be asked and was surprised when no one did (I had a receipt ready to show my purchase but obviously with the purchase price covered up). Does this happen a lot? (I could have been selling a stolen car!)
4) What cars are best for resale at the moment? I've been told to stay away from Vectras and Mondeos. I've been told the Micras, Astras (not ex police cars), Corsas are the best sellers at the moment. Can anyone give me some further ideas?
5) Would you buy trader's insurance policy? At the moment my cars are only covered on my own car (which allows me to drive other people's cars third party only). Before I allowed the test drives I did ask for proof of insurance and the taxis drivers had motor insurance policies. The other drivers also brought their insurance policies with them which I checked (all were covered third party on my Peugeot). I think I'm right in saying that trader insurance policy will cover me and all other driver's in the car fully comp even if I'm just a passenger. Is this true? Is there a particular company you'd recommend for trader policy? How much does it normally cost (I'm 26, 7 years no claims, currently pay £275 for my own car insurance)
6) I'm told that if I sell another 2 cars via auto trader that they will list my adverts as a trade sale rather than private sale? Is this true? Does this affect whether I have to supply the cars with warranties?
7) I've also heard that if I sell more than 5 cars in 1 year then I am classed as a trader. I've kept all my receipts and my accountant has been told I've started trading before I accept my new job in May and he has advised me to keep a log of all miles driven on test drives and calls made as these are deductible expenses too.
8) Should I get a Glass's guide to help with 2nd hand valuations rather than the 83600 number?
Thanks all, look forward to the feedback and any other advice welcome
I had a cash float of £1,750. I saw a car listed in the local bargain pages. Peugeot 307, 1.4 HDi, 2003 plate, 95k miles, £1,995 ono. I rang up and asked for more details. It was taxed and tested for 11 months. No service history. Some advisables on the MOT. The car was described as clean. I asked if he'd accept £1,500 for a quick sale. He said £1,700 was his last price. I went to check it out. Apart from some stone chips on the bonnet the car was in very good nick and drove fine. I texted the registration number to 83600 and got a HPi check for £3.00 and a valuation for £1.50. The HPi came back clear. The value of the car at 60k miles was described as Forecourt £2,795; Trade In £2,295; Private £2,395, Auction £2,145. I made another cash offer of £1,600. We settled on £1,650. On the V5 I asked him to fill out Part 6, the yellow Motor Trader section so that I could take the V5 with me straight away. He accepted and gave me a receipt for cash and I took the car.
I took the car home. I put in £5 diesel on the way and paid the local car wash run by nice Kurds to do a mini valet for £20 (knocked down from £30 for offering to bring all my future cars through). Then I took 9 pictures interior and exteriror and one of the engine bay and uploaded it all onto the autotrader site for £25 for a 2 week internet advert run. Total expenses now = £50 so my total outlay is now £1700.
I decide to list the car for £2,395 on a Wednesday. I get 3 calls in the first 3 hours all from canvassers. I create a new group in my phone with no ring tone and add all the canvasser numbers into them (by the end of the week I have 9 numbers, mainly starting 020 89207). The next day I get a steady number of calls (usually about 4-5) from people asking me further questions about the car and my location but no viewings. At the end of the first week I drop my price to £1,995. At this price I get 3 viewings within 48 hours and about 15 calls. The first is a young couple who come the same day, like the car and offer £1800 last price. I decline. The second is an elderly black man who says he will come back with his wife. However the next evening 2 Polish guys turn up with 1 car, meet me at a service station car park, take the car for a test drive, then offer £1900 cash to take the car immediately. I accept and I fill out the V5 in their name, give them a cash receipt and they're gone.
Here are my questions:
1) Was this just beginner's luck? It seemed relatively simple to me and I enjoyed the experience. A lot of people I've spoken to say that they've got fed up with trading and stopped especially as there's not much cash in it anymore.
2) Should I have used my cash float to buy sub 1k cars? I got a bit bored selling just the 1 car. I would have preferred to have had 2 cars so that I could field more calls and go on more viewings. Also I'd rather turn over more cars and keep flipping the cars rather than wait for a while to get a higher profit on 1 car.
3) I paid £20 for a mini- valet. Was this too much? I can see that if I start trading sub-1k cars that this and the £25 auto trader advert will take a huge chunk out of any profits coming back
3) Nobody questioned why my name wasn't on the V5, although I was ready to be asked and was surprised when no one did (I had a receipt ready to show my purchase but obviously with the purchase price covered up). Does this happen a lot? (I could have been selling a stolen car!)
4) What cars are best for resale at the moment? I've been told to stay away from Vectras and Mondeos. I've been told the Micras, Astras (not ex police cars), Corsas are the best sellers at the moment. Can anyone give me some further ideas?
5) Would you buy trader's insurance policy? At the moment my cars are only covered on my own car (which allows me to drive other people's cars third party only). Before I allowed the test drives I did ask for proof of insurance and the taxis drivers had motor insurance policies. The other drivers also brought their insurance policies with them which I checked (all were covered third party on my Peugeot). I think I'm right in saying that trader insurance policy will cover me and all other driver's in the car fully comp even if I'm just a passenger. Is this true? Is there a particular company you'd recommend for trader policy? How much does it normally cost (I'm 26, 7 years no claims, currently pay £275 for my own car insurance)
6) I'm told that if I sell another 2 cars via auto trader that they will list my adverts as a trade sale rather than private sale? Is this true? Does this affect whether I have to supply the cars with warranties?
7) I've also heard that if I sell more than 5 cars in 1 year then I am classed as a trader. I've kept all my receipts and my accountant has been told I've started trading before I accept my new job in May and he has advised me to keep a log of all miles driven on test drives and calls made as these are deductible expenses too.
8) Should I get a Glass's guide to help with 2nd hand valuations rather than the 83600 number?
Thanks all, look forward to the feedback and any other advice welcome
Edited by fred1000 on Friday 27th February 19:25
Edited by fred1000 on Friday 27th February 19:26
Edited by fred1000 on Friday 27th February 19:29
This should be fun!fred1000 said:
5) Would you buy trader's insurance policy? At the moment my cars are only covered on my own car (which allows me to drive other people's cars third party only). Before I allowed the test drives I did ask for proof of insurance and the taxis drivers had motor insurance policies. The other drivers also brought their insurance policies with them which I checked (all were covered third party on my Peugeot). I think I'm right in saying that trader insurance policy will cover me and all other driver's in the car fully comp even if I'm just a passenger. Is this true? Is there a particular company you'd recommend for trader policy? How much does it normally cost (I'm 26, 7 years no claims, currently pay £275 for my own car insurance)
6) I'm told that if I sell another 2 cars via auto trader that they will list my adverts as a trade sale rather than private sale? Is this true? Does this affect whether I have to supply the cars with warranties?
7) I've also heard that if I sell more than 5 cars in 1 year then I am classed as a trader. I've kept all my receipts anyone and my accountant has been told I've started trading before I accept my new job in May and he has advised me to keep a log of all miles driven on test drives and calls made as these are deductible expenses too.
Your not insured, get a traders policy or a trailer / transporter but whatever you do dont drive another car you buy to sell on the public highway. if you look at your domestic insurance policy it will clearly state you wont be covered for any motor trade use6) I'm told that if I sell another 2 cars via auto trader that they will list my adverts as a trade sale rather than private sale? Is this true? Does this affect whether I have to supply the cars with warranties?
7) I've also heard that if I sell more than 5 cars in 1 year then I am classed as a trader. I've kept all my receipts anyone and my accountant has been told I've started trading before I accept my new job in May and he has advised me to keep a log of all miles driven on test drives and calls made as these are deductible expenses too.
You bought the car to trade, declare yourself as a trader or you will come unstuck at some point in the future, dont forget you also have to warranty the drive train for a few months, so you may want to look into getting warranty cover for it
Fair play to you, out of work and doing something that you obviously take pride in.
Have no comments on the viability of expansion and I dare say you will get bashed by a few people who have a nightmare trading with all the hoops to jump through and threats to margin.
But, stick to ebay and speak to the taxman as much or as little as you like and its sounds to me like you have a paying hobby.
Have no comments on the viability of expansion and I dare say you will get bashed by a few people who have a nightmare trading with all the hoops to jump through and threats to margin.
But, stick to ebay and speak to the taxman as much or as little as you like and its sounds to me like you have a paying hobby.
All sold units have to by UK Law have 3 months warranty. Autoprotect is the NO1 bootleg Warranty company in the UK so sold units often come with one of these. Depending on the car or how stingy the trader is will determine the level of cover.
I thought it was set at 12 cars per annum before you had to register as a trader?
The comments on insurance are right though, big time fail if you haven't let your insurers know what your doing.
I thought it was set at 12 cars per annum before you had to register as a trader?
The comments on insurance are right though, big time fail if you haven't let your insurers know what your doing.
The way I see it you have to decide if you're a trader or not.
If you decide you are, then you need trader's insurance and ability to warranty your sales (either through having big pockets or buying cover). You should declare income tax and NI on your profits and notify the council if trading from home. If your turnover exceeds their threshold, the VAT man will want a slice too. On the plus side, you could apply to the DVLA for trade plates enabling you to drive untaxed cars when necessary for your business.
If you decide you're not, or not yet, then you should register the cars in your name like anybody else, and tax and insure them.
Can't have it both ways. Sorry.
If you decide you are, then you need trader's insurance and ability to warranty your sales (either through having big pockets or buying cover). You should declare income tax and NI on your profits and notify the council if trading from home. If your turnover exceeds their threshold, the VAT man will want a slice too. On the plus side, you could apply to the DVLA for trade plates enabling you to drive untaxed cars when necessary for your business.
If you decide you're not, or not yet, then you should register the cars in your name like anybody else, and tax and insure them.
Can't have it both ways. Sorry.
The OP is treating it like a hobby. Which isn't a bad thing per se, but can't be compared to properly trading cars.
It takes a lot of legwork to 'buy right', as well as a time on the phone.
As pointed out, his notional £200 profit is an entirely black market sum; no VAT and no income tax, let alone any of the minimum overheads required to trade in an official capacity.
Just the basics reduce that £200 very quickly: £200 - VAT = £174 - Income Tax = £139
Probably a day's effort from purchase to sale, but given that his stock is one car, the 'earnings period' is the best part of two weeks. Acknowledging that he has done nothing to improve the capital position of his business, or to trade legally, it's hardly a 'living' to earn £100 a fortnight whilst being constantly under risk of prosecution.
It takes a lot of legwork to 'buy right', as well as a time on the phone.
As pointed out, his notional £200 profit is an entirely black market sum; no VAT and no income tax, let alone any of the minimum overheads required to trade in an official capacity.
Just the basics reduce that £200 very quickly: £200 - VAT = £174 - Income Tax = £139
Probably a day's effort from purchase to sale, but given that his stock is one car, the 'earnings period' is the best part of two weeks. Acknowledging that he has done nothing to improve the capital position of his business, or to trade legally, it's hardly a 'living' to earn £100 a fortnight whilst being constantly under risk of prosecution.
On a more positive note!
Well done for giving it a try, as you can see if your happy with the workload, fielding some calls etc its not a lot of bother. Sourcing cars at a good trade price is the difficult bit until you have built up some contacts or sources. However be prepared for warranty comebacks.
As you can see the margins are rather slim, but if it tides you over for a short term why not, gotta be better than watching daytime TV!. You will be needing a traders policy, however they are not as expensive as you might imagine.
Customers, there are loads of them out there, price the cars right & you'll get calls. If the cars are tidy, smart, respectable & people like you you'll get sales simple as that. Making a profit is another matter but it sounds as if you've a positive start but buy a lemon & you'll be stuck with it.
Best of luck & keep us all posted
Well done for giving it a try, as you can see if your happy with the workload, fielding some calls etc its not a lot of bother. Sourcing cars at a good trade price is the difficult bit until you have built up some contacts or sources. However be prepared for warranty comebacks.
As you can see the margins are rather slim, but if it tides you over for a short term why not, gotta be better than watching daytime TV!. You will be needing a traders policy, however they are not as expensive as you might imagine.
Customers, there are loads of them out there, price the cars right & you'll get calls. If the cars are tidy, smart, respectable & people like you you'll get sales simple as that. Making a profit is another matter but it sounds as if you've a positive start but buy a lemon & you'll be stuck with it.
Best of luck & keep us all posted
As already said, your personal insurance does not cover you for this as it will exclude trading. And besides, if you do use your "DOC" benefits to drive the other car, once you step out from behind the wheel there will be no cover on the car and that is an offence.
You could put the V5 in your name and then arrange temporary cover as an additional car on your own policy or use a site such as tempcover to arrange some sort of cover
well done for trying though.
You could put the V5 in your name and then arrange temporary cover as an additional car on your own policy or use a site such as tempcover to arrange some sort of cover
well done for trying though.
Edited by Steve H on Friday 27th February 20:34
op, youve only got one post and havent come back yet
but anyway,
at your price range i would be loking for high mpg/low co2/tax
they would be the most important things, along with reliability, but most modern cars are fairly ok
i dont know about the insurance/legality of what you are doing so ill leave that to someone else
be warned though, im assuming your doing this from your home
if you have to many cars for sale on your drive, your neigbours.council wont like it
there was a bloke near me that sells cars from his drive and got up to over 10 at the same time. i think there was a court case or something and he was set a 5 car for sale limit (not sure on actuall numbers)
now he sells vans, and guess what he has about 10 again
if your going to keep doing this, i wish you luck, yuo have ambision, don't waste it
doug
but anyway,
at your price range i would be loking for high mpg/low co2/tax
they would be the most important things, along with reliability, but most modern cars are fairly ok
i dont know about the insurance/legality of what you are doing so ill leave that to someone else
be warned though, im assuming your doing this from your home
if you have to many cars for sale on your drive, your neigbours.council wont like it
there was a bloke near me that sells cars from his drive and got up to over 10 at the same time. i think there was a court case or something and he was set a 5 car for sale limit (not sure on actuall numbers)
now he sells vans, and guess what he has about 10 again
if your going to keep doing this, i wish you luck, yuo have ambision, don't waste it
doug
Im pretty sure the £3 text HPI check, does not tell you if the car has any outstanding finance.
Well done for giving it a go. But no full time trader would bother for such little margin. Retailing a well priced decent car is quite easy. Buying these good cars, cheap enough to start with is the real challenge.
What if you get a £1,000 car home and find a mechanical problem that costs £500 to fix? It does happen, and with such little funds it would wipe you out.
Well done for giving it a go. But no full time trader would bother for such little margin. Retailing a well priced decent car is quite easy. Buying these good cars, cheap enough to start with is the real challenge.
What if you get a £1,000 car home and find a mechanical problem that costs £500 to fix? It does happen, and with such little funds it would wipe you out.
Thanks for everyone's replies. I checked with my insurance company on the DOC cover before buying the Peugeot, it entitles me to drive any car as long as it's under my control (i.e. I'm driving it). Leaving it parked or unattended anywhere public would be an offence. I asked about selling the car on but was advised unless I'm transferring the car to my name it wasn't required. I have a mate's lockup that he's allowed me to use so no cars clogging up the driveway or streets around my house 
I'd still like the trader's policy anyway so will check for quotes tomorrow, any particular companies worth checking out?
I got laid off before Christmas and have found it difficult getting full time work again quickly. I've got employment due in May and have been doing deliveries in the evenings for a local takeaway to make ends meet but don't have anything to do during the day so decided to use my redundancy money to do a bit of car trading. Got to do something to pay the bills. Can anyone post of that picture of Baldrick working the docks? I even considered doing that 
I sold the car within 6 days (2 days after dropping my price). Even say £100 gross/£65 net per week is better than the dole money I was offered worked out at £45.67 a week and I couldn't bring myself to sign on at the age of 26.
Thanks for everyone's helpful replies and encouragement, if there's anymore practical advice (best sub-1k make/models to go for, best companies offering trader's policies, establishing my pricing methods, examples of good advert text etc) would be much appreciated.
I'd still like the trader's policy anyway so will check for quotes tomorrow, any particular companies worth checking out?
Alfa_75_Steve said:
Bit of a risk for £200.
Listen mate, when you're out of work, £200 starts looking like £2,000 I got laid off before Christmas and have found it difficult getting full time work again quickly. I've got employment due in May and have been doing deliveries in the evenings for a local takeaway to make ends meet but don't have anything to do during the day so decided to use my redundancy money to do a bit of car trading. Got to do something to pay the bills. Can anyone post of that picture of Baldrick working the docks? I even considered doing that V8mate said:
As pointed out, his notional £200 profit is an entirely black market sum; no VAT and no income tax, let alone any of the minimum overheads required to trade in an official capacity.
Probably a day's effort from purchase to sale, but given that his stock is one car, the 'earnings period' is the best part of two weeks. Acknowledging that he has done nothing to improve the capital position of his business, or to trade legally, it's hardly a 'living' to earn £100 a fortnight whilst being constantly under risk of prosecution.
No like I said, I've declared my intention to trade so it will all be booked by my accountant, he told me multiple V5s to the DVLA would probably get flagged by HMRC anyway. He didn't discuss VAT with me presumably because it doesn't apply as I'll be done by May and don't envisage crossing the threshold (which is around £60k turnover I think)Probably a day's effort from purchase to sale, but given that his stock is one car, the 'earnings period' is the best part of two weeks. Acknowledging that he has done nothing to improve the capital position of his business, or to trade legally, it's hardly a 'living' to earn £100 a fortnight whilst being constantly under risk of prosecution.
I sold the car within 6 days (2 days after dropping my price). Even say £100 gross/£65 net per week is better than the dole money I was offered worked out at £45.67 a week and I couldn't bring myself to sign on at the age of 26.
kentmotorcompany said:
Im pretty sure the £3 text HPI check, does not tell you if the car has any outstanding finance.
Please could you tell me the best way to perform the HPi check mate? (preferably before going to the viewing)Thanks for everyone's helpful replies and encouragement, if there's anymore practical advice (best sub-1k make/models to go for, best companies offering trader's policies, establishing my pricing methods, examples of good advert text etc) would be much appreciated.
Edited by fred1000 on Friday 27th February 23:04
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