How to Start a Car Consignment Business

by Ashley Terrell

Some car owners would rather sell their cars themselves on social networking sites such as Craigslist and the Marketplace at Facebook. Other car owners, however, would rather not deal with the process at all. A car-consignment business can be a profitable way to help others sell and buy cars.

Get a car lot that holds 15-20 cars.

Rent or buy a car lot that can hold as many cars as you are able to sell. Start out with a lot that can hold 15 to 20 cars. Make sure your commercial lot has great lighting and is located in an area that has medium to heavy traffic. You also will need a small office to handle purchases, administrative tasks and phone calls.

Obtain a business license, your EIN (Employer Identification Number) and have the establishment inspected. Receive certification that your establishment is safe and in working order by an inspector.

Reasonable contracts are essential.

Develop contracts for your buyers and sellers. The seller's agreement should be based on how long the car will be on your lot (60 days is reasonable), the profit share such as 60/40 or 50/50, and the car's listed price. Add in a clause stating that if you don't sell the car within the 60 days, the owner has five to seven business days to pick up the car or it will become property of your car consignment business. The buyer's agreement should be based on how much the car cost, annual interest, the return-and-exchange policy and the monthly payments, if there are any, as well as costs such as processing fees for plates, tags, and insurance benefits.

Make sure each car is clean.

Clean each car thoroughly. If you want to cut an expense, put a clause in the seller's contract that the car must be cleaned thoroughly inside and outside before you will consign it. Customers are interested in a car consignment business that has great deals and clean cars.

Keep the overhead costs for your car consignment business low as possible. You want to open a business where you want to make a profit, not have a deficit. If necessary, talk to family and friends about investing in your business through no-interest or low-interest loans or gifts of money.

Flyers about specials help attract customers.

Promote your car consignment business. Make flyers that briefly explain your business and include hours of operations, location and any specials you offer, such as waiving deposits. Use social networking sites such as Craigslist and the Marketplace at Facebook. Utilize local newspapers, auto-trader publications, local radio stations and magazines.

Items you will need

About the Author

Ashley Terrell has been writing professionally since 2007. Terrell has written for and "Parle Magazine." She also served as a beauty editor for "Raw Talent Magazine." Terrell is pursuing a degree in business from Bryant and Stratton College.

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  • photo_camera Cars and Parking Meters image by Towards Ithaca from