A good deal of people have already been doing it for years, for example used car dealerships. The basic concept is the same as with every other kind of business that relies on buying and selling stuff — purchase inexpensive + market high = profit.
Today I am going to show you a unique spin that you may use to generate some money by flipping used cars.
Let us discuss something unexpected: Maybe you have heard of a used car increasing in value?
This guide is especially going to be talking about rented automobiles, because it is the peculiar nature of the leased-car scenario in which this increase in value comes from. But if you are leasing a vehicle, you can actually sell it for a gain rather than trading it in!
This is all because of how leasing a car works– the value of your vehicle at the end of its lease has been calculated before you even lease it. That is the set-and-done cost the leasing business will sell you the car for in the end of the term.
And based on Edmunds.com, the main reasons for this growth in value seems to be reduced new-car inventories and tight credit.
This car that would’ve been $15,000 from the leasing firm has now gained a market value of $18,000! Which enables a host of ways that you make some cash, which we’ll be talking here.
But you already understand the marketplace for this car, and you are completely confident you could sell it for $15,000. You truly have the choice of purchasing the vehicle from them and then selling it privately, which while expensive to perform, will net you an immediate profit.
Simply putting an advertisement about the vehicle someplace and pricing it above your purchasing price could get some buyers lined up.
What if I Don’t Have the Money to Actually Buy the Car?
But let’s say that you don’t have the capability to just purchase the whole vehicle.
In cases like this, you truly have the option of selling the car when it’s still on lease.
If you’ve got a buyer lined up who is ready to cover the entire cost, you can actually just have them pay the leasing company, then pay you straight.
If you are wondering why the customer would do this (as they are paying the leasing firm and hence know exactly what the car would’ve cost) it’s because, well, the rental is on your name.
Paying the price of the car in addition to your profit margin may nevertheless be a better deal than they would’ve gotten the automobile for elsewhere, so some customers are comfortable taking that route.
Another question may be bubbling in your head at this stage, though.
If this whole car-value system is benefiting the client over the leasing company, why would they let it continue? Why not just hike the price up into the new market worth?
They are just doing too high of a quantity of business to try to leverage new buyers and the like, when they have you, the lessee, ready to drop $15,000 on the car that you simply leased.
They would rather take that level of benefit rather than opening up a completely new wing of business to maximize their gains.
Obviously, it needs to be mentioned at this stage that selling an automobile (and one which has such a higher market value) isn’t a simple prospect. There is paperwork to do, advertisements to pay for, the unbelievable job of finding a buyer, and the unavoidable legwork that comes with any business venture.
It’s true that there is some work to be performed, but just imagine the excess effort may be netting you a couple grand, which might soften your stance on all that work.
Is There an Easier Way to Profit Without Doing All the Work?
Is There an Easier Way to Gain Without Doing All of the Work?
Maybe, though, you are totally set in your stance: you want the equity money, but you really don’t want to do this network and legwork.
The good news is that somebody has turned this into a business!
CarLotz, a company based out of Virginia, is a good example of this type of business.
Officially, they’re a type of consignment service, but they have also been called a”firm.”
Technicalities aside, the notion is that they’ll do all the messy work mentioned up above for you, as long as you’ll pay them a fee. You don’t have to meet customers, participate in discussions, or do the DMV paperwork.
It is a hands-off support.
There’s the initial $200 they bill for the beginning of the process, which includes cleaning the car, taking it into a mechanic, also posing it in all kinds of nice photographs to advertise it with on automobile sales sites.
And after that, following the procedure is around, they will bill you $600 (nicely, $599) for a successful purchase. $800 are a steep cost if you were only slated to earn $1000 in profit, but if you’re looking at something like $3000 or $4000 in profit, then perhaps $800 does not seem too bad anymore.
Obviously, the general market attitude on cars will play in the capacity to sell.
CarLotz says officially that sort of automobile is not a substantial factor in gain, nevertheless, fuel efficient, electric, and hybrid vehicles are undoubtedly the very highly desirable at this moment.
As strange as it seems, however, a leased car does build equity up that can translate into profit for you when you sell it.
1 final note to make is that (as you probably know, if you are a lessee) exceeding the mileage limitation on your rental will incur fees to the leasing business when you go to turn it into.