Do you want to start a business selling classic cars but you are doubtful? If YES, here’s an analysis on how profitable it is to buy and sell classic cars.
Selling classic cars is something that is being practiced by a lot of people as a hobby, past time and as a business. From classic car collectors to enthusiasts, classic cars have managed to warm their way into the hearts of many, thus ensuring that they are always in demand even though these cars were manufactured a few decades ago.
If you want to get into this business, you can source for classic cars which are in good condition or you can look for classic cars which need some restoration. Some places where you can find these types of cars include eBay and other online car dealerships and classifieds.
In addition, you can also check out newspaper listings, car magazines and online classic car forums. These usually have numerous listings of all kinds of classic cars with different conditions. As you look at cars to buy, make sure to read all the given details and specifications which could help you assess their value.
When you buy a classic car, you will need to determine the type of repairs and restorations that it will need. Ideally, it is best to send the car to a classic car restoration expert so that its original appeal and beauty can be brought back. Even though the cost of restoring a car to a state where it will be aesthetically pleasing may be costly, but if you play you cards right, you should be able to recoup all that investment with a profit.
You should make sure that you are an expert on the vehicle you have as well as the company that made it. Read historical books on the manufacturer, along with books and documents about the specific make of your car. You can also obtain information from classic car clubs, as well as a list of other individuals who own similar vehicles.
Make use of the VIN code to tell what series it was or what type of model it is, such as if it was a limited edition or not. Add this information to the original paperwork of the car and its original maintenance manual, if you have them. Classic car buyers usually love to find out all about the history of a car before they buy it.
Have the car cleaned and polished, inside and out before the buyer gets to see and inspect the car. Park the car in an appealing area, where its features will stand out. Make sure you have tools handy such as a flash light, screwdrivers, adjustable wrench, pliers and a rag. Create a list of the known mechanical problems of the car and how much it would cost to have them repaired. Have a copy of the promotional packet you made to provide to prospective buyers.
In order to get the best deals from classic cars, you should not try to sell them just before Christmas. This is always a bad time as people are preoccupied with the holidays and spending their disposable income on other things, so a classic car is at the bottom of any list.
The best time to sell is in spring, especially if you own a convertible. People are thinking ahead to summer and driving round in something that looks good, especially if they can do it with the top down. This is also a key time for enthusiasts who might want a vehicle that can be displayed in summer shows.
Is Buying and Selling of Classic Cars Profitable?
With the increased popularity of TV shows dedicated to finding, fixing and selling classic cars, it is not surprising that there are a lot of investor who would like to enter onto this line of business. Here are some tips that can make this business profitable.
a. Don’t Invest in a Classic Car on Impulse: it is never a good idea to buy a classic car on a whim. The ideal thing to do would be to first familiarize yourself with the market before buying so you know you’re getting a reasonable deal.
An old adage say that your profit is made when you buy the item for a great price. This is true for all businesses that involve buying and selling. Counting on your ability to negotiate an exceptional price when you sell later is a poor way to make money.
b. Do You Want to Drive Your Classic: How long do you plan to drive the classic car that you bought for an investment? Will it be your everyday vehicle? Would you be happy if your classic car was your primary mode of transport for a while?
You should factor in the probability that it may take you some time to fix and sell the classic car. As such, you should consider buying a car that you not only know about but also are willing to drive for a while if you need to. You don’t want to get stuck with a car you only bought because you thought it was a good investment.
c. Extra Maintenance Costs: Classic vehicles can be expensive to fix and maintain, and you can’t let those costs sneak up on you. If your margins don’t include a cushion for “unexpected” maintenance costs, you’re much less likely make a profit on your restoration.
d. Get Car Insurance Designed for Classics: it’s a good idea to purchase specialized car insurance. The best way to find a good deal is to shop around for an insurance company that specializes in classic cars. Those types of insurance companies might very well be the best route for you and your investment to ensure that it’s properly covered.
In the same way you would value a work of art, the values of classic cars can fluctuate over time — they don’t simply depreciate like new cars start to do the moment you drive them off the lot. You’ll want to make sure that your insurer considers recent sale prices from reputable auctions and other venues when it values your classic car.
e. Get a Dealer License: all the states in America have laws on the books that address car dealer licensing requirements. For instance, Florida considers anyone who sells three or more cars in a 12-month period a car dealer.
The practice of buying and selling a lot of cars without a dealer license is known as “curbstoning.” And as you would expect, it is illegal. In addition, it can also be a red flag for buyers — which can make reselling your restored classic more difficult.
As such, if you are buying and selling a lot of cars in a year, you should definitely get a dealers license. That often will entail shelling out for an annual fee, insurance, bonding, and other costs.
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