New Dealer Introduction & Questions

[Crich5]

Hello!

I wanted to reach out and introduce myself to everyone on the forum! Looking forward to connecting with you all and contributing where I can. My business partner and I opened up an Independent car lot at the beginning of the year in the KC market. My partner and I have extensive automotive and mechanical backgrounds and have been repairing and fixing cars for about 8-10 years. We have been acquiring inventory through Facebook Marketplace and Craigslist right now looking for good sweat equity deals to make some money on. We want to get a floorplan within the next 2-3 months..

What financing companies are best to start out with? We have Dealer Center for our DMS and are in progress of signing up with Westlake and Western Funding currently. I have reached out to a lot of other lenders to make connections with and get affiliated with (CAC & Vantage Finance to name a few). CAC stated they wanted their dealers to have 6 months in business before signing up. I want to make sure we have sub-prime financing options available in order to help all of our customers get financed. Are there any sub-prime lenders that dealers like/prefer to use? Our inventory right now consists of units from 2010-2014.

We've also talked about Wholesaling since we are getting cars that we can have a high profit potential on since we're doing a majority of the recon and repairs in house starting out. What are the best ways to market units for Wholesale to other dealers? Should we be sending them to auction?

 

[BillKVMotorCo]

Hello!

I wanted to reach out and introduce myself to everyone on the forum! Looking forward to connecting with you all and contributing where I can. My business partner and I opened up an Independent car lot at the beginning of the year in the KC market. My partner and I have extensive automotive and mechanical backgrounds and have been repairing and fixing cars for about 8-10 years. We have been acquiring inventory through Facebook Marketplace and Craigslist right now looking for good sweat equity deals to make some money on. We want to get a floorplan within the next 2-3 months..

What financing companies are best to start out with? We have Dealer Center for our DMS and are in progress of signing up with Westlake and Western Funding currently. I have reached out to a lot of other lenders to make connections with and get affiliated with (CAC & Vantage Finance to name a few). CAC stated they wanted their dealers to have 6 months in business before signing up. I want to make sure we have sub-prime financing options available in order to help all of our customers get financed. Are there any sub-prime lenders that dealers like/prefer to use? Our inventory right now consists of units from 2010-2014.

We've also talked about Wholesaling since we are getting cars that we can have a high profit potential on since we're doing a majority of the recon and repairs in house starting out. What are the best ways to market units for Wholesale to other dealers? Should we be sending them to auction?

I wish I could be of more service here, but this just isn't my area.

 

[Todd Thompson]

Hello!

I wanted to reach out and introduce myself to everyone on the forum! Looking forward to connecting with you all and contributing where I can. My business partner and I opened up an Independent car lot at the beginning of the year in the KC market. My partner and I have extensive automotive and mechanical backgrounds and have been repairing and fixing cars for about 8-10 years. We have been acquiring inventory through Facebook Marketplace and Craigslist right now looking for good sweat equity deals to make some money on. We want to get a floorplan within the next 2-3 months..

What financing companies are best to start out with? We have Dealer Center for our DMS and are in progress of signing up with Westlake and Western Funding currently. I have reached out to a lot of other lenders to make connections with and get affiliated with (CAC & Vantage Finance to name a few). CAC stated they wanted their dealers to have 6 months in business before signing up. I want to make sure we have sub-prime financing options available in order to help all of our customers get financed. Are there any sub-prime lenders that dealers like/prefer to use? Our inventory right now consists of units from 2010-2014.

We've also talked about Wholesaling since we are getting cars that we can have a high profit potential on since we're doing a majority of the recon and repairs in house starting out. What are the best ways to market units for Wholesale to other dealers? Should we be sending them to auction?

I was listening to "Car Dealership Guy" the other day and one of his interviews talked about floorplan and who they managed to finally get. "Haddar" something like that was the dealer. Might be worth a listen. Used car guy who has done well for himself

 

[Tallcool1]

Hi Christopher.

Congratulations on the new business.

Lending options when you are brand new are tough. Go ahead and get signed up with Westlake and Western as you are in the process of doing. Vantage is a really good option for a new dealer. Not only will they give you access to lenders that you won't be able to get on your own, they are also good teachers. Pay close attention to the lenders that they place your deals with. Those will be the ones you want to sign directly as soon as you meet their criteria.

Whatever lenders you end up with, make sure that you get some phone time with your rep. Attention to detail on the paperwork is really important. You need to know all of the rules so you don't make mistakes that cause you heartache. Sub Prime lenders are extremely particular about documentation, and won't hesitate to bounce a deal back in funding.

Floor Plan is a good option as long as you have a solid understanding of the lender's programs. When the reductions (curtailments) come due, you must have the cash to pay. In your situation in which you are doing extensive recon on some inventory, you may not be able to floor plan some of these units. However, I assume not all of the inventory requires a lot of recon. You could certainly floor those.

Wholesale is a different animal. I don't know a great deal about it but do occasionally wholesale some stuff. I would sign up with Open Lane, ACV, Carsker, and Manheim. You can list vehicles for sale while they are on your lot. You will save on transportation. If they don't sell, you don't pay. That is likely your lowest risk opportunity to get wholesale units found.

Good luck. Message me if you want any individual help. I am always happy to offer any assistance that I am qualified to give. If I don't know, I can get you in touch with someone that does.

 

[Jon Singo]

Hello!

I wanted to reach out and introduce myself to everyone on the forum! Looking forward to connecting with you all and contributing where I can. My business partner and I opened up an Independent car lot at the beginning of the year in the KC market. My partner and I have extensive automotive and mechanical backgrounds and have been repairing and fixing cars for about 8-10 years. We have been acquiring inventory through Facebook Marketplace and Craigslist right now looking for good sweat equity deals to make some money on. We want to get a floorplan within the next 2-3 months..

What financing companies are best to start out with? We have Dealer Center for our DMS and are in progress of signing up with Westlake and Western Funding currently. I have reached out to a lot of other lenders to make connections with and get affiliated with (CAC & Vantage Finance to name a few). CAC stated they wanted their dealers to have 6 months in business before signing up. I want to make sure we have sub-prime financing options available in order to help all of our customers get financed. Are there any sub-prime lenders that dealers like/prefer to use? Our inventory right now consists of units from 2010-2014.

We've also talked about Wholesaling since we are getting cars that we can have a high profit potential on since we're doing a majority of the recon and repairs in house starting out. What are the best ways to market units for Wholesale to other dealers? Should we be sending them to auction?

Welcome to the group!

I can't help too much with floorplan options but I can offer my two cents on wholesale vs retail.

If it were me getting started buying from the public and faced with choosing between retail and wholesale I would 100% get established as a wholesaler first. This isn't to say retailing can't be lucrative but getting started in wholesale requires way less staff and effort. Currently, the wholesale market is incredibly close to retail. If you can make the same amount of money unloading to dealers vs retail customers it'll help you grow your cash on hand, which could help you avoiding floorplans altogether. Margin compression has killed front end profit leaving dealers to rely on financing and trades to be profitable. If you can't do that right away you may find retailing challenging. This isn't even taking into account marketing, additional sales staff, time answering leads, etc.
The avenues listed above are great places to start. Find the auction that best suits the kind of inventory you have. Be up front, honest, and make connections with sellers. It'll start paying off before you know it. As your revenue grows, start picking out the nicer units the retail. Might make for an easier transition!