Unfortunately, credit issues might make it difficult to purchase a vehicle. People may consider shopping at a buy here, pay here lot since the requirements are typically less strict for approving customers for credit. Starting a buy here, pay here dealership can be a lucrative business, since your target market will be consumers who expect to pay higher interest rates.
Determine your capital for buying the initial inventory. To attract customers, you will need to have a wide selection of vehicles from which to choose. Consider a bank loan for purchasing vehicles and a location for your car lot. Check your credit score and report by visiting the credit bureaus: Equifax, Experian, and TransUnion.
Obtain a dealer and business license from your local Department of Revenue and Department of Motor Vehicles (DMV). Decide if you would like an independent or franchise dealer license. If you plan to sell new and used cars, then obtain a franchise license. Obtain an independent dealer license if you plan to sell used cars only. Depending on your state, expect the DMV to send a representative to inspect your car lot. The DMV may also request a copy of your lease, or proof or ownership of your car lot, proof of insurance, and a surety bond of at least $25,000.
Locate a property for your car lot. When choosing a property for your buy here, pay here lot check with your local or county government to determine what zoning laws or permits are required. Consider hiring a real estate agent to assist you with locating a commercial property for your car lot.
Purchase the initial vehicles for your lot. You can buy cars from individuals by placing ads in the paper or you can go to dealer auctions that sell cars at wholesale prices for those with dealer licenses. Bring a mechanic with you before purchasing any car to ensure they are in good shape.
Determine your criteria for approving your customers for vehicles. Consider employment, living situation and monthly income. Determine which interest rate you would like to charge for your customers to ensure you make a profit off your monthly payments. If you are unsure of how you will charge your clients, consider hiring a professional business consultant.
Use sites like cars.com and autotrader.com to feature your cars and obtain customers that may be interested in purchasing your vehicles. Also consider creating a website to feature your cars, and allow people to fill out inquiry forms to display their interest in your vehicles.
- full parking lot image by Aaron Kohr from Fotolia.com