Making money buying and selling cars

Everyone knows that cars are almost always a depreciating asset. You pay $20,000 for it and drive off the lot and it is worth $18,000. A year later it’s worth $14,500, and a few years later it’s worth $3500. This is the common story for most cars. And with the American obsession to spend so much of our income on our transportation, I am convinced that cars greatly affect our financial freedom.

So with so many people losing money on their car purchases, how could you possible make money with cars?

A video that discussed whether or not you should buy a new car or a used car that I published a while back just received this comment…

“Exactly one year ago I had a $375 truck payment on a $13,500 loan and the truck was only worth about $11k. I put the truck up for sale and luckly sold it for $11,500, with the difference coming out of my pocket. I bought a 95 4runner for 2k, drove it for a couple of months and sold it for $3200. I used that money to buy another 4runner for $1,500. Again drove it a couple of months, sold it for 3,000. I did this a couple more times with various vehicles.

Yesterday I paid cash for a 2004 GMC Envoy fully loaded. It books for about 13k and I have about $3k of my money that wasnt made off of buying and selling vehicles. It can and will work. It takes many hours of searching on craigslist and such and a little bargaining with people but I now have almost $400 a month going to pay off student loans.”   -Cameron

I have to say that I never really thought about doing this, but if you think about it, it is just what used car dealers do every day. With the “gotta-have-it-now” society we live in, you can bet that there are a lot of people who are willing to sell their car below the KBB value in order to sell it quickly.

So in Cameron’s case, it looks like he spent a lot of time looking for great deals (I am sure he never paid too much for a car!) and used patience to make a profit. I am going to see if I can get Cameron back to comment with a little more detail on how he did it…

Anyone else ever successfully buy and sell cars for a profit?


















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18 Comments
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  1. The father in law of a friend does this for a living in retirement. He was formerly a bank branch manager and he knows virtually every small car dealer in the city. He buys 5 or 6 cars each weekend (at the major local auto auction that’s open to dealers only), and re-sells them all week long … to dealers. He may do something simple like wash and vacuum them, but that’s about it. According to my friend, he makes several hundred dollars per car and if he can’t sell it, he will put it back in the auction with a reserve very close to what he paid for it. He rarely doesn’t sell a car.

  2. I was in the car business for 15 years and buying and selling cars is a great way to make quick money, but be careful when you buy or you might loose money.

  3. Mike D.

    I haven’t done this personally, but I know from looking on Craigslist for cars to buy that there are deals to be had if you’re willing to look. If you would be buying cars to sell, and not one to driver personally than you’re able to be much less picky in order to find a deal. Then all you have to do is make sure it’s clean and list it at a fair price.

  4. I have thought about this a lot in the past. I had made a significant about of money buying and selling cell phones over the course of the year and was looking for something a little bigger. Doubling $50 on the side was fun, but my mind was wondering what it would be like if I could double $500 instead. The biggest thing that kept me from this was that I didn’t have any knowledge of cars. I am considering trying it out this year, but first I want to build up my account first so I can afford to do it.

  5. I think the time of year makes a difference. Several years ago, I had a van for sale. It was in clean condition, decent mileage, etc. I priced it based on KBB and Edmonds. In October, I got zero response. Our newspaper allows you to keep running the ad until the car sells, so I kept running the ad. I placed signs in the car and parked in prominent locations. I drove it around (a single man in a mini-van is a strange site). I got 1 or 2 calls.

    Then one week in late February, I received three phone calls about the van. The first person who called that month, bought the vehicle.

    The difference? Folks were just getting their tax refund. So you should buy cars in the fall (when people have spent their tax refund) and sell in the spring (when they all get them)

  6. My father-in-law used to do this in a low-tech way back in the mid-nineties. He was a charming older man who would buy an under priced vehicle he found by reading Auto Trader, responding to newspaper ads, or cruising around (we live in Detroit). He would set a target price, put “For Sale” signs in the windows of the vehicle, and drive it around until someone met his price. Then he would repeat the process. He wasn’t in a hurry to sell so he could wait awhile to make the sale. His selling costs were negligible. A warning, though: Ira had to cease operations when his auto insurance agent threatened to charge him dealer’s insurance rates.

    One vehicle that will almost always payoff (even if you don’t know a lot about them) is an underpriced (even an old, rusty one) Jeep Wrangler. They hold value remarkably well and the components are salable (seat belts, doors, lift kits, dashes, tail gates), too.

  7. This seems very risky. How do you really know what you’re really getting when you buy a car off Craiglist? I can imagine that many people wouldn’t tell you the things that are wrong with the car, and you’d be stuck trying to resell a lemon.

  8. You have to be careful about state laws in terms of how many vehicles you can buy and sell each year as an individual before you have to become a registered dealer.

  9. This sounds like buying and flipping houses, only you’re doing it in a much more liquid market at lower prices and margins.

    Apart from dealers, where do you sell the cars??? Doing it yourself is risky because it could take months to sell a single car. You’d have to have a horse trader mentality, so I’m not sure it’s for everyone.

    Still, I’d like to know more about it if you are able to get Cameron back for a more complete story.

  10. I am glad to see such a response to this. My wife and I were making what we thought were pretty good incomes when we decided to trade in our paid off cars on new vehicles because “we could afford it”. It didnt take me long to see that the truck that I was working so hard to pay for was starting to become worth less than what I owed (thank you 72 month financing). The more I stared at the statement the less I understood why I had to have a new vehicle like all my friends and co-workers had. (hmmm?) I decided that the truck was dragging me down and keeping me from getting ahead. I saved up a small amount of cash to put towards the truck when it sold. Like I said before I sold it for around $11,500 having to pull the rest of the money out of my piggy bank (ouch!) That was the final straw. I told my wife that I would never have another car payment. A vehicle gets you from point A to point B. If you need to work out of it, buy a older truck that wont depreciate as much when you scratch up the bed. If you need to haul kids, buy an older model SUV. I needed a 4 door for my kids and something to rack up the miles on. I found a 4runner on Craigslist for $3k. I called and met the kid who told me that his dad had just bought him a new truck and he didnt need it anymore. Thats not something you tell someone you are selling your can to. I offered him $2k cash on the spot and money talked. You have to know a little bit about vehicles to do this. I know how to spot most problems but I leave most of the fixing to the pros. Its important to listen to the motor, transmission, etc. Drive it and feel how it drives and turns. Check the tires. If you have to put new tires on a vehicle you can blow half your profit right there . KBB doesnt deduct or add for new tires but if you are planning on driving it for awhile that expense will come out of your pocket. This is also a good bargaining point. Most of the time on Craigslist the worst you will have to do is give a car a good bath. I have had to sink upwards of $1500 in a vehicle I bought for $1500 to keep it running. But thankfully so far I still have managed to break even on those lemons. Dont forget to figure in your tax and registration. Also, some states will not allow you to buy and sell over a certain number of vehicles per year without buying your dealers license.
    There is no magical formula for making money on vehicles. You win some and you lose some. I have only been doing this a year and so far I have won at it but thats not to say that I jump in the 04 Envoy (paid for with cash) tomorrow and the motor wont blow up. I am lucky to have figured this out when I was only 24 years old. I would hate to be older and look back on what I had WASTED on new vehilces. To me it doesnt make sense to buy new and have something that depreciates as much as a new vehilce does. If buying new does make sense to someone please explain it to me because I cant see it. I know this got a little long but I hope that this somewhat explains how I have done this. Like the guy posted earlier about cell phones, this can be done with anything as long as you do a little research on what you are buying and how much similar items are being sold for. My best advice is to know what the vehicle is worth. You obviously want to pay less than what it is worth and that is were a little patience and bargaining come into play. However much you think you like a vehicle, if you pay too much for it, you will have a difficult time making money or even breaking even especially if you have maintnace issues. You are not buying with the mentality that you did when you signed papers on that new 30k vehicle that you couldn’t live without. Good luck.

  11. Question…

    A close family member who lives in another state told me he would sell a car to me for $1,000. The car is worth over $2,500. Would it be wrong of me to buy and sell it for those amounts? Are there any Biblical teachings on this subject? I’m afraid he won’t sell it to me if I tell him my intentions. I also don’t want to ruin our relationship. Should I tell him I could try selling it for him in the better market in which I live?

  12. Essentially this is what used car dealerships do, but they also may be some maintenance into it. Sounds like a hard task swapping cars, but if you have the time and patience I could see how you could make some money off of it.

  13. To all those who voiced valid concerns, remember that this isn’t some get rich quick scheme, it’s work. Yes, you should know something about cars so you don’t buy a lemon. Yes it could take a while to sell the car, so you should use cash to buy the car, and use money that you save for this specific purpose. Don’t use emergency funds or anything else for this in case you do have to hold on to the car for a while. Make no mistake that there is risk involved in doing this. Take your time, do your research, and be prepared to wait on both ends, while trying to find a deal to buy and waiting for a buyer to take it off your hands at a fair price.

    @Kayne, I agree with the Wrangler statement. I really want to buy a Wrangler for myself and the used ones aren’t cheap, even what people would consider older and with high mileage. Ones that are underpriced don’t seem to be available for long.

    I was thinking of doing the same thing with watches a while back. I never really got my act together with it but I love watches and they’re something I wouldn’t mind learning about while I look for ones to buy, get fixed up if they need it, then sell. Also that way I’d get to wear a wide variety of watches while I’m in the process of selling. Maybe I’ll have to look at that again.

  14. I do a version of this but at a cheaper price point with a higher return. It does take a little more work, some room, and some knowledge. I part out classic fords. I can pick up a classic car for $500 to $1500 and make around $1500 profit parting it out. Of course I have the tools and garage to do this, but it isn’t hard. I’m parting out a 68 mercury cougar right now. The engine was stuck and the floor and rear 1/4s were badly rusted, so I was able to pick it up for $800. I got the motor to turn over (now unstuck) and now I’m about to start taking it apart. I will make about around $1500 profit from the cougar. Last year I bought a 77 F100 for $600 that was running and driving. I drove it for about six months while I painted and install AC in my 71 F100. Then I parted out the 77 F100. I kept the disc brakes from the 77 to put on my 71 and sold the rest. I profited about $700 on that truck but I got to keep the disc brakes and some othe misc parts that I could have sold for more profit.

    When we get a little behind or need some cash I leave the emergency cash alone and start looking on craigslist for something to part out.

  15. I stumbled upon your post and I found it very interesting. To be honest, I’ve sold cars for about 5 years now. What I do is I buy and sell my cars online with eBay. You can make a lot of money if you do it right.

    I lost my day job about 3 years ago when the economy got tight and the company I worked for went bankrupt and laid everyone off. Unlike everyone else, I had my Car Business to fall back on. I started to put ALL my time into my car sales and it really took off. With the economy tight, people are looking to buy USED, not new cars…

    I’ll tell you right now. Buying a NEW car is very foolish. There are so many amazing deals and beautiful used cars out there you would not believe it. Much like all the foreclosed homes on the market, there are so many beautiful used cars available I don’t see why anyone would buy brand new from the dealer.

    A Used car is truly much better than a brand new car for many reasons, the first is you have several years of production to research if the particular model your looking at is known for reliability or problems. With a Brand New car, you have no way of knowing if that particular model will last or if it will have many problems. This is especially true with a Brand New Model that the Car Manufacturer just released. Often, these new models are untested and the customers are the testers. An Example of this is the Mini Cooper when it first came out. These early models had many issues. Sure it has a warranty but do you really want to own something that breaks down all the time? The point is, if you buy USED you can research and find models that are PROVEN to be reliable.

    Second, if you buy Used, your going to be able to get a MUCH better deal $$$ wise and the car will HOLD this value much better and VERY OFTEN, you can even INCREASE the value with just a little wax and polish work. So when you buy used you get a great price, then you get to enjoy the car and drive it and with just a small amount of Clean up, Wax and Polish and perhaps a few very minor repairs you can have a car worth MORE than you paid for it.

    The best values are actually used cars that have been involved in minor accidents and given Salvage Titles. Insurance companies will call even MINOR damage a “total Loss” and just pay out the book value of the car to the owner. Then the Insurance company sells the wrecked car at an auction.

    Here’s my best story… I have a friend who is a licensed dealer with a very small car lot. I pay him a few dollars to get me into car auctions with him. I have been blown away by what I find at these auctions! My friend and I went to one auction a few years ago and we find this amazing 2002 Lotus Elise, a car worth about $45,000 book value that had some pretty bad body damage. The damaged looked really bad but it was purely cosmetic however this scared most people away. My friend put in a bid and ended up winning this car for only $16,000. It still ran and drove perfectly, we even took it for a test drive around the auction lot, it just needed a few body parts. So My friend bought this car for $16,000 CASH on the spot, Drove it home, Ordered the body parts online through a supplier he found, took it to a local body shop and had it fixed and re=painted for around $6,000 and ended up with a Showroom Condition Beautiful 2002 Lotus Elise for only $22,000 total investment. He drove it around for about 6 months and ended up selling this car for $34,000!! So he got to enjoy and drive a Lotus Elise for 6 months and then sold it for a $12000 profit. Not a bad way to make money if you think about it!

    Good Luck to all of you!!

  16. whenever i have have money problems, i always look to part them out. i use a site called iPartCars.com because they seem to be very fair and i’ve never have a problem with them. i’ve tried selling cars, but you always run the risk of an unhappy customer or problems with the car you didnt know about prior to the sale. and even with the as is method, you still run the risk of soiling your reputation. so my suggestion to anyone with a little mechanical no how, and some free time on their hands, they should consider parting out a few old cars, you will make 3x what you would selling them..at least….

  17. Wow great info on here. I just started “turning cars” this week. Bought a 99 Ford Explorer “Eddie Baurer” w/ 106K on Craigslist for $2400. Had a few minor issues put $375. into it, KBB has it at over $6000. Was about to list it back on Craigslist when the wife said “NOWAY” thats her car. She had a 89 Toyota Camry she loved. It has 130K on it she drove for 18 months. We gave $1200. have put $1200. in tires, tune up, timing belt etc. Listed it for $2500. SOLD in one day. Looking for next oppertunity. Good Luck to all.

  18. As noted by an earlier poster, there are some amazing used cars out there – even in today’s relatively tight economy. I recently bought a very nice used Toyota for $5k, and it runs as well as any brand new car for 4x the price. I was able to buy it after selling my old Nissan pickup after only two days of listing it on Craigslist. What I learned:

    Selling -
    * Clean your used car/truck up thoroughly. Make it spotless. Vacuum everywhere, and use Armour All (just like dealers do) on the interior and the tires. This last step takes about an hour but it’s amazing how many used car sellers don’t do it; and yet dealers ALWAYS do it.
    * List your used vehicle on the free sites first – don’t pay to sell on AutoTrader or eBay (for a few days, initially). See if you get calls from the free sites. If you don’t, your price might be too high.
    * Consider only using an e-mail address for contact as opposed to your phone number. Serious buyers will contact you by e-mail; an e-mail only contact can weed out brokers and looky-loos (time wasters). Once someone seems serious via e-mail you can send them your phone number.

    Buying:
    * Look for ads with LOTS of pictures and detailed information. Chances are the car was well cared for and the seller is more responsible.
    * Look for a fair price BEFORE you call about the car. It’s easier to negotiate when you know you already have a reasonable price to begin with. Don’t waste your time calling about a car where the seller is asking a ridiculous price – move on. There are far too many used vehicles out there.
    * Meet the seller in a public place in broad daylight. Bring a friend if possible. Most people are decent and responsible – but if you feel uncomfortable with the proceedings, leave.
    * Try to purchase the car during regular business hours. Of course, cash talks – but don’t carry large amounts. Instead, allow the seller to follow you to your bank or credit union, where a cashier’s check can be drawn from your account to hand over to the seller. Everyone is protected and you don’t have to carry large bills, putting yourself at risk. The seller should also have free and clear title and sign it over to you on the spot at the bank at that time.

    I’ve owned new, and I’ve owned used. A well-maintained and paid-for used car rides MUCH better!

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