Rules Of Thumb For Car Purchasing For An Auto Dealer

Posted on December 22, 2011 by Aaron


One of the best places for businessmen to acquire the dealer license is at They’re professional, experienced, and highly successful. Once the auto license is obtained, there are several proven rules of thumb for car purchasing every dealer should take into consideration.


With this type of car license, a dealer can buy vehicles at an auto auction with the goal of reselling them for substantive profit. But when at one of these auctions, it’s essential that a dealer not purchase any vehicle offered that’s over his budget. That will only get him into financial trouble and into more debt than he really should have at any given time. The dealer looking to buy should set a financial ceiling as to how much he’s going to spend and never be tempted to spend more than that no matter how appealing the vehicle offerings may be.

Profit Margins

Dealers must also seriously consider the profit margins they’re going to earn on each vehicle they purchase for resale. They need to determine the cost of the vehicle they buy at a dealer auction and the maximum price they can resell that vehicle at while still remaining competitive with other area dealers. This is research that should be done proactively before the first vehicle is ever bought and resold. The best financial results will be obtained this way.

Resale Potential

The resale turnover rate between the time a vehicle is bought at a dealer auction and the time it’s finally sold to a customer is extremely important to the success of an auto dealer. The faster each purchased car, truck, SUV or mini van sells the better. A dealer needs to be able to estimate turnover time for each vehicle to ensure that his carrying costs for any particular vehicle on his lot remain as nominal as possible.