If you do this in North Yorkshire then you will have to register with Trading Standards as a Dealer in Second Hand Goods and keep certain records.
A number of other counties considered following N Yorks example in attempting to keep tabs on what goes on in the second hand market, so check with your LA.
DVD
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The Inland Revenue dont regard it as trading unless you sell more than 4 cars for profit each tax year.
If its a personal car then its not trading. If you make a profit then fairplay.
Try Saabs (they seemed v.cheap when i was at Blackbushe) or even the common old Ford Escort - easy to shift.
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As an ignorant outsider, it seems to me that as an occasional trader (for a hobby) the best you might manage by trading say 4 cars a year, is to cover normal depreciation on one of them, even by making a fair profit on each deal? So relatively cheap motoring, with variety, but with quite a lot of hassle. And you have to factor in the cost of getting to all the sales.
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If you buy/sell three or four cars in a year and use them as your own transport then I would think it unlikely that you would run into any real problems with the authorities(plenty of 'private' motorists swap their cars this often). On the other hand you are unlikely to make any money either! Think about all the messing around with tax discs, possible MoT's and changes to insurance documents (which you usually get charged for) - plus cost of advertising and collecting cars from auction site etc. :-(
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Out of interest, does anyone have any experience of how much trade insurance actually costs? I know this is a bit of a "how long's a peice of string" question, but just a rough idea - £1000, £2000, £5000?
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I agree with Aprilia. I change my car about that often. On the last three cars i have had, i have seen two small profits after auction fees, road tax etc, and one loss which more than cancelled out the gain. I don't do it to try and make a quick buck, i just want to keep my motoring costs to a minimum while i am a student.
Which cars are best for you all depends on your skills and where you live. If you are not good a fixing things, buying £1000 cars to do up wont be a good idea. It all depends how much cash you want to tie up , and importantly how much risk do you want to take- fancy that sold as seen p reg laguna etc.
I use elephant who don't seem to mind me changing cars- i see no logic in one month policies if you wish to be driving cars for the foreseable future.
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In answer to Owen I pay £750 a year third party fire and theft road risks only for vehicles worth up to £15,000.
HJ
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Okay SmartDealer, if you really want to know what to buy, go for popular models and only ever buy top-of-the-range spec. Escorts, as someone above mentioned, are good sellers. But don't bother with the 1.3, with the black plastic bumpers. Go for the Si, the Ghia, the Ghia X. Same with Mondeos, same with Vectras, etc, etc. You have to get into the habit of looking at a car and assessing whether people will aspire to owning it when they see it in the Autotrader or where-ever you are going to advertise it. Also, what is popular in the auction is not always popular on the second-hand market. You can often find that cars go for more in the ring than they do in the 'trader. So know your prices instinctively, before bidding on anything.
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Owen, I contacted Norton on the recommendation of HJ (I think he uses them as well). They quoted around £5,000 for fully comp cover of my own car (up to £30k worth) and TPF&T for stock up to £50,000. I have trade plates so wouldn't need to register the cars in my own name, but if you are looking at owning a car at minimal cost or even turn a small profit, then you're better off buying just 2-3 cars a year through Autotrader.
A lot of private sellers don't know the value of their car and/or are very keen to convert to cash for a variety of reasons.
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Cheers HJ.
I've traded a handful of cars in the past, but am tempted to try it ligitimately this time!
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Thanks for the comments everyone.
Not surprising to see that trade insurance varies a lot! I've heard that some companies offer a casual "second job" type of policy so perhaps I might look into that.
One thing I'm still a little curious on though is typical profit margin when buying from auction (if such a thing exists!) The last time I was at auction I came away thinking things looked a touch expensive to make a nice profit. I suppose some days things get expensive and others there are bargains - it's the nature of the business. Just wondered though if anyone would care to share what a "good day" would be for them? Or any stories of a "bad day" for that matter! Hope you dont mind me asking but I'm genuineley interested and this is an anonymous forum afterall.
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I would expect profit margin depends on who you are and what sort of set-up you have. If you have a big plush slow room with loads of flags, professional car preparation facilities, warranty on offer etc, you would expect a larger profit margin. However, you would have greater overheads.
If something looks cheap there is nearly always someone willing to bid that extra £50, or whatever it takes, and cut a few corners to see a small profit.
The only people i know that make a lot of money out of cars are either dodgy (clocking, poor accidient repairs etc), sell a lot of cars (low margin,big turnover), or those that use the cars to sell very overpriced finance packages.
If you are a small time private ad type trader, you only have to buy one lemon to wipe out a significant proportion of your profit.
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Owen, I know of someone who runs a 'hands on' course for individuals wanting to start trading. I understand the course is recognised by Business Link (Gov start-up help). He is an ex proprietor of a main dealership, and generally operates on a one-to-one basis. The course includes buying at auction. If you are interested, or indeed anyone else, just reply to this message and I will post the details.
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Thanks Judge, any info gratefully recieved!
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Judge, thanks for link. Do you know this guy personally or know people who have attended his course? It looks interesting.
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Owen, the answer to your question is both. If you are interested I suggest that you call Chris and and just talk it through. There is nothing to loose other than the cost of a phone call.
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Got a quote for trade insurance today, and it is certainly reasonable for me to consider the idea of casual trading in a bit more detail. Quote was £1000 for myself and my wife, TPFT cover for our own private cars, TPFT on stock (up to £5000 per vehicle) and demonstration cover. Considering this would replace our current private car policies (which amount to nearly £700) then this is only about £300 extra a year - i was expecting a lot more, given our age (24).
So, with that question answered, any of you seasoned traders got any more advice on the basics that i need to know learn? For instance, if an auction is trade only, how do i prove i'm a trader, if i've only just started?
What about price guides - which is best, Glass' or CAP? Or are they the same? How much are they? How do i get them?
What about warranties? Do most dealers just buy them "off the shelf"? What do they cost?
Sorry for all the questions, but any help is very gratefully received!
P.S. Judge - have looked at Chris' course - looks excellent, but the cost is a bit of a put off. Definitely something i will consider though.
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Good questions Owen. Other than insurance, what other "Fixed" overheads MUST a home trader pay for? £100 to register a company?
Membership of a trade organisation?
I also like the look of Chris's course, maybe we can get a group discount!
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Owen, which company quoted you for trade insurance? Like you, our combined insurance is currently around 800 so I wouldn't be too unhappy about paying a grand for a traders policy!
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Smartdealer - quote was from Choice Quote (0151 221 5425).
Thanks for the links Colin - but any idea of which one is used more in the trade?
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Thanks Owen, will give them a try.
At the auction I sometimes go to I notice that most people seem to be clutching the Glass's guide rather than CAP but I understand they are much the same.
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OK, another novice question - what exactly are trade plates? I thought they meant that you had trade insurance - is this true?
Also, i'm assuming that when a dealer buys a car, they register their ownership with the DVLA but this is not counted as an extra owner on the V5 - is this correct?
I've noticed elsewhere on this site that the trade buyer's premium is less than the private buyer's premium at auction. How do you prove that you are a trader (especially if you've just started out?)
Sorry for all the daft questions, just trying to find out as much as I can before I wade in to my nearest auction!
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Don't 'forget'to register for VAT.
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Trade plates are those red plates you see dealers using. They are effectively road tax for cars you are dealing in so you can use them on the road.
The application is thorough and you will have a visit from a DVLA inspector (mine was an ex traffic policeman too). They cost £160 a year, the equivalent of a tax disc. There are strict criteria to their use, you can't leave a car parked on a public road with them, they can't be used for anything other than trade use (no trips to the shops etc).
Trade insurance is separate to your trade plates.
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Thanks Colin. When you say that the application procedure is thorough, what are they actually inspecting? Whether you are a proper trader or not?
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Owen,
Your insurance certificate for your Motor Trade policy should be enough for an auction house to accept that you are a "trader", although sometimes they might need to see you buy several cars first.
When you buy a car at auction, the V5 will normally have had the red section sent to DVLA. You do not register your ownership with DVLA yourself, however, the law now is, as far as I can gather, that any car you keep in stock for more than 14 days, which is also taxed, must be registered on the Motor Insurance Database. You would do this I guess by informing your insurance company. This situation has never arisen for me, so I'm not sure if that is 100% right.
When you sell the car, you must give the new owner the green section of the V5 and send the blue part off yourself, just as in a private sale. Make sure you do this, partly because that's the law but also to avoid the hassle of constantly having to reply to penalty charge notices that you are not the owner of the car.
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