Used Car Business – Key Factors to Consider Before Starting Up


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Setting up a used car business is a great way to make huge profits. However, starting such a business and running it smoothly is a challenging task. The success of an auto business is governed by a number of factors. The auto business industry consists of many unique aspects that call for extra attention.

Although the business needs you to follow the same basic steps, which you would have followed for any other type of business, but there are certain regulations that apply to this business.


Listed down are a few factors that you should consider before setting up an auto business.

Wholesale vs. Retail:

Firstly, you need to decide whether you wish to see vehicles as a wholesaler or a retailer. Retail dealers can sell automobiles to the public only while wholesalers can sell vehicles to other dealers. Different laws of zoning, advertising and licensing, are applicable to wholesalers and retailers. Hence, thorough research should be done before choosing the path.


In addition to fulfilling the licensing requirements of a general business, you need to attain a dealer’s license for starting an auto business. Individuals who are not associated with any business can sell only a limited number of vehicles if they do not own a license. However, a person linked with a business must not try to violate this law. In case you are selling vehicles for profit, it is important for you to get a license so as to comply with the “consumer rights and safety laws”. Violation of this law can lead to criminal penalties or hefty fines.

You can obtain a dealers license by applying at the office of your state’s “Department of Motor Vehicles (DMV)” or any approved provider. The processes and fees have variations depending upon the state, but in most of the states, the dealers need to qualify an exam. This exam covers the industry’s laws, rules and regulations.

Bonding and Insurance:

The Used Vehicles business needs adequate insurance coverage, including general liability and comprehensive plans. A surety bond is an insurance type, which guarantees contract performance. Though surety bonds are quite expensive, but they are an essential part of such a business. The main reasons behind businesses purchasing surety bonds are –

• For preventing losses resulting from any failed contract with a vendor or supplier.

• For assuring a satisfactory delivery to customers.

For example, if you are a retail dealer, you may attain a surety bond for safeguarding your transactions with wholesalers from whom you purchase inventory.


The location chosen for setting up a used auto business would be governed by certain laws and regulations. The business owner needs to consider certain practical factors like accessibility and proximity to customers. As the owner, you need to pay heed to the associated zoning laws and space requirements. There are variations in the regulations depending upon the dealer type i.e., wholesale or retail and the state. To know the way property is zoned, you may contact the zoning office or the local planning agency.


These are the key factors that need to be considered before proceeding ahead with your used auto business. Follow the laws governing the business and make sure that all the legal requirements are met. This would ensure that your business runs smoothly in the future.

Author Bio: Joana Hall is an avid writer who likes to write blogs on Used Car Business. She has written many articles on used peugeot cars for sale in uk. In this article she is providing the readers some valuable information on Used Car Business – Key Factors to Consider Before Starting Up.