How to sell used cars without a Dealers License
How to sell used cars without a dealers license in any state in this country? In this article I will tell you my tried and true method on how to sell used cars without a dealers license. Most people start in the business this way, flipping cars in their neighborhood. If you have a joy for the business and/or a little ambition, you may try to increase your sales volume. You may go from 1 car a month sporadically, and wind up selling 3+ cars a month. Now most states will only allow you to sell up to 5 cars a year. So if you want to sell used cars without a dealers license, you have to get creative. In this article I will show you an alternate way to sell more volume of cars legally without getting a dealers license. And this works in every state too.
The Usual way of selling or flipping cars
Typically when you are just flipping cars without a dealers license, you take physical possession of the vehicle and the title, but you don’t actually sign the title as the new owner. I know plenty of guys who buy 3-4 cars week off Facebook Marketplace and sell them, back on Facebook MarketPlace! How are they doing this? Well they are not signing titles, or leaving any kind of “paper trail” of their transactions. This is operating in a very grey area of the law. Actually it’s illegal in most states. Once you have sold 5 vehicles (in most states) you are classified as operating as a used car dealer (so they expect you to be licensed). This is called “curbstoning” and “open title” method of selling cars, used by professional car flippers all over this country. But there is also a legal way to sell cars without a dealers license in whatever volume you like.
The Method
The best way I have found how to sell used cars without a dealers license is to set up multiple companies. A company that you control, can buy a vehicle and then sell it. Let that sink in. There is no state that bars you from having multiple companies. You can have LLC’s and Inc.’s and states do not restrict the number that one entity owns and/or controls. So, you see where I’m going with this. An entity is you and a corporation is an entity too, as far as the state is concerned. So an LLC or Corporation can buy and sell cars just like a human entity. So let’s say you want to sell 1 car a month. Once you sold 5 cars, you have already went past the “No Go” zone. You are half way thru the year and cannot legally sell anymore cars in your state. So what can you do instead? Set up 5 different LLCs, pertaining to relevant industries that rely on vehicles. Or you can be obscure in your naming. If you don’t have an LLC, then start creating them. Most states charge you $100-175. Don’t create them all at once, but stagger them over at least 30 days apart.
How to buy a car in your company name
Once you locate a vehicle that you want to buy, simply do all of things you normally do. You can buy from a private owner or you can buy from an auction like IAA. Whatever you do, check the vehicle condition, test drive, etc. Then you hand over the funds to the seller. The Seller will ask you your name. You give him the name of your LLC. He signs the title and hands the title to you to sign as the new owner. Now you have a choice here, you can immediately flip the cars (sell it without signing the title) or you can go the legit way. The legit way is you get insurance for the car, and register it at your local DMV in the name of your LLC. Yes, will pay sales tax and a registration fee, however the good news is you can deduct this on your taxes. You can also deduct the cost of storage, towing and the actual mileage on the car. So the legit way is to spend the upfront money to register the vehicle under your different companies. Rotate the usage so that each company is only buying selling 1 vehicle every 3-4 months. This way you say under the legal limit of 5 cars per year. If you are in a state that only allows 3 cars per year, yoo will need to set up more companies!
Now obviously this is not a long term solution. It can get a bit bulky to manage if you are really doing volume. Then it can be too much to keep up with…having 50 LLCs to buy and sell cars thru! Way too much. So, you will come to a point where you feel like you need a Dealer license to get to your next level of success. You will get some Dealer Plates with that upgrade, as well as be able to offer financing to your customers (and get some financing for your Dealership too). I can show and tell you how to sell used cars without a dealers license and you can make it work for you. This is easy to maintain if you are a causal car flipper and just sell 3-15 cars per year. That number varies for everybody. But when you are ready to get your Georgia Dealer License, you might want an expert to set up your Dealership. Contact me so I can do that for you. We have locations, and we do all the filings for you too.
Gerard Fairley
