Car Dealer At Home Insurance

Tradex. Car Dealer At Home Insurance

If you are considering selling cars for a living, basing your business at home could be a better option to help keep overheads down while you learn more about running your own company. Putting the right car dealer at home insurance in place is also an essential source of protection for all motor trade businesses and a priority when setting up.

Whether you wish to sell cars part-time or on a full-time basis, there is quite a lot of planning involved in setting up your own vehicle dealership.

As motor trade insurance experts, Tradex has advised many new and expanding business owners about the right steps to take in setting up a company. Here is our guide to everything you need to know about setting up a car dealership.

Getting Started as a Car Dealer

Market research

Before starting a car dealership, you will need to do plenty of research into the market to ensure that there is a demand for used cars in that area.

Think about who you’re selling to and whether you want to specialise for a specific market, for example, a make or model you are more familiar with, or a focus on more luxury vehicles.

Find out what types of cars are selling most frequently in the city or town in which you will operate and the price range. You can get an average price by looking at local advertising together with price evaluation websites.

Where does your target market currently purchase their used cars and what will you do to encourage them to purchase from you?

A business plan

If you have completed your market research successfully, putting together a business plan should be quite straightforward. Although this can often be overlooked, it is the opportunity for you to set down your objectives, review how scalable the business may be in the future and set some targets for at least the first 12 months.

In addition, once you have calculated your expenditure, you will have a better idea of how much you can afford to purchase a used car for and can determine if you need any additional finance in the form of loans or investments. A business plan is expected if you are applying for an investment loan and you are unlikely to get any financial support without one.

A business plan is also not just important if you want to apply for finance, it will identify any areas that may not be performing as well as expected so you can identify them and make the necessary changes.

Information you will need to include in your business plan:

·   Experience of working or trading in the motor industry

·   The types or models of vehicles you will be selling

·   Other competition within the area

·   Business financial support you may need or secured loans

·   Start-up costs to get your business established including any marketing, car dealer at home insurance, legal fees and car repairs

·   The sales you will need to do each month to generate a profit

Additional considerations

Below are a few more questions it is worthwhile considering when operating as a motor trader from home. How you respond will help you to further develop your business strategy and plans for future expansion.

1. Do you intend to spend your time buying cheaper price cars to repair and restore for a greater profit or are you wanting a quick sale and intend to ‘flip’ cars more quickly?

2. Where will you source your vehicles and will there be a steady enough supply?

3. Are you able to do the vehicle repairs and restoration yourself or will you need someone to fix the cars that you buy? If you do need to outsource someone, will this eat too much into your profits or will it still leave you with sufficient mark up?

Informing your local authority

Selling cars from home is the ideal way to save money when you’re starting your used car dealership or setting up a part-time business.

Remember, if you have decided to take this route, you will need to get in touch with your local authority and inform them about the number of cars you will have parked on the road at any given moment. You also need to consider your neighbours if local parking is at a premium.

The Pros and Cons of Selling From Home

Some pros include:

·   If you are starting small, your costs will be low

·   You do not have any additional overheads such as employee’s salaries or property rental

·   Financial risks are minimised while you to make the decision of whether it is the right business for you

·   It can be utilised as a second income if a part-time business

·   Starting small can enable you to see the level of demand and future potential of your business should you wish to expand.

·   Having your own business means you are the boss and can make all the decisions as well as choosing your own working hours.

·   The likelihood of a better work life balance, as you will be based at home and might not need to travel a great deal

Some cons include:

·   You may find yourself very limited on space to store your vehicles

·   You will need to make sure it is legal to sell vehicles from your property and the local council will allow this to happen

·   You will need to notify neighbours of any extra vehicles being kept at your property and they may not be happy

·   Customer reach could be limited depending on how much publicity you can generate on a budget

 

Buying Cars to Sell From Home

There are a number of ways to buy used cars. The most popular tends to be through online websites such as Auto Trader, or auction sites including eBay and Gumtree. Alternatives may be auction houses.

What you need to remember is to always stick to your budget and try to estimate any repair costs before purchasing.

Places you could start looking for vehicles to sell include:

·   Auction houses

·   Private sellers

·   Auction websites (eBay and Gumtree)

·   Car selling websites (Autotrader, Carwow)

If you are new to auction houses, it’s a good idea to visit them a few times to understand how it all works before you start bidding and always view the vehicles before making a judgement on the price you are willing to pay.

When purchasing a car make sure it has the:

·   V5C document

·   Maintenance history

·   MOT certificate

You will need these documents if you are to sell your vehicle. They are also essential for you to make sure the car hasn’t been stolen or has any performance issues/MOT advisories. These also provide proof that you are the registered owner of the vehicle as well as information on any services or repairs.

Remember, it is your responsibility to ensure the vehicle is roadworthy and has no undisclosed faults before selling privately, not the purchasers.

Additional information about the car’s history can also be found on car history websites including any remaining finance that would make the car unsellable.

A few useful car history websites include:

Totalcarcheck: https://totalcarcheck.co.uk 

Carcheck: https://www.carcheck.co.uk

Ultimatecarecheck: https://www.ultimatecarcheck.co.uk

 

Buying Car Dealer at Home Insurance

After you have contacted your local authority and received permission to operate a car dealership from home, you will need to purchase a motor trade insurance policy. This will make sure you are covered when driving the purchased vehicles without you having to insure each cover individually, which would be time consuming and costly.

Car dealer at home insurance is useful because it gives you the opportunity to add and remove as many vehicles as you like, without significant changes to your premium, as well as adding and removing vehicles from the Motor Insurance Database or MID.

Tradex’s car dealer insurance policies vary in their scope and price and each policy can be tailored to suit the dealers specific needs, from the small part-time business owner to those with storage facilities.

It is also advisable for any car dealers who operate from home to think about having additional cover in places. The most commonly requested cover includes public liability insurance and for office or business equipment kept at home.

Other options for car trader insurance include cover for locations when stock or your own vehicles are stored away from your home address such as out buildings or a separate garage.

Tradex also offers car dealer at home insurance policies to part-time sellers and, unlike other insurers, does not specify a minimum MID threshold. Its policies are designed to include:

  • Car dealers who trade from home on either a full or part-time basis.
  • Insures vehicles being worked on by you, together with every day, personally owned vehicles and business vehicles that may possibly be used for another occupation.
  • A policy specifically tailored to suit your business requirements.
  • No minimum MID threshold.
  • Bonus Booster available. Offers those with no bonus a six-month policy to accrue the discount for 1 year’s bonus and subsequently use this with Tradex on a full-term policy. Ideal if you are a younger, more inexperienced driver or need to build up your no claims.

 

What Car Dealer Insurance Will I Need?

If you are buying and selling vehicles, then you are classed as a motor trader and you will need road risk insurance as part of your car dealer at home insurance.

Roads risk insurance will allow you to drive trade vehicles or customers’ vehicles on the road. There are three options within this policy:

Road risks insurance

Third-party only insurance: This is the most economic and basic type of insurance. If you are involved in an accident that is your fault, you will be covered for any damage to the other person’s vehicle but not your own. Therefore, you would have to pay to repair any damage to the vehicle which you have purchased to sell.

Third-party fire and theft insurance: This offers the same protection as basic third-party insurance,  with the additional cover in the event your car or other vehicle types are damaged in a fire or stolen.

Fully comprehensive policy: Unsurprisingly, this type of cover is the most expensive option but will make sure you are fully insured should anything happen to the vehicles you have in your possession. As you will likely be taking cars out for test drives, the additional premium will pay for itself in the long run. The insurer will pay out for any damage to the vehicle you are driving as well as to the other person’s vehicle no matter who is a fault.

Liability insurance

This will provide your business with protection for any claims against you for a variety of reasons including poor workmanship, customer or employee injury. It includes all legal fees together with rectifying any damage done. There are three main categories of liability insurance to consider depending on your company.

Public liability insurance: This will ensure you are protected against claims if something should happen to a client when they are visiting your premises, for example, if they trip over something and injure themselves. It will also include cover for defective workmanship which leads to an injury to one of your customers.

Employers insurance. This is a legal requirement if you employ staff, even part-time or casual workers. It provides cover for your business if one of your employees were to have an accident at work, resulting in their injury or even death.

Sales and service indemnity insurance: This is an important insurance when selling used cars. It provides cover if any problems or faults are found after you have sold or serviced a vehicle for a customer.

Combined motor trade cover

This is the most popular type of motor trade insurance as it combines road risk with liability insurance in a single policy. This type of policy offers the ultimate flexibility and other options can also be included such as cover for office or business equipment at home.

Updating the MID?

When selling cars, it will be your responsibility to make sure that you keep the Motor Insurance Database (MID) up to date. Some people prefer doing this themselves, while it can also be carried out by your insurance company when updating the cars in your possession.

You will need to add any insured vehicles and trade plates owned by you to the MID and your car dealer at home insurance will need to be in place before any cars can be added. The authorities will then be aware that you have the correct insurance in place covering the following vehicles:

·   Owned by you

·   Registered to you

·   Temporarily in your possession

·   Leased to you

It is your responsibility to provide accurate vehicle details when you or your insurance provider updates the MID. Any car detail updates must also be carried out immediately and vehicle records should legally be kept for at least seven years. Failure to keep the MID updated is a serious offence which could lead to a fine of up to £5,000.

Unlike other insurers, Tradex does not specify a minimum MID threshold, which makes it more economic for small and part-time car dealers who may not have many cars at a time to be entered onto the MID.

 

Applying for Trade Plates

If you are running a car dealership, you will need to have trade plates. These are basically mobile tax discs and prevent you having to register and tax each of your vehicles. You can buy trade plates for all cars that you temporarily own.

Why do you need trade plates?

You will need trade plates for any car owned by a dealer or manufacturer which is unlicensed. Therefore, if you are going to be collecting the car from the seller or an auction or allowing a potential customer to take the car for a test drive on a public road, you will need trade plates.

Where to apply for business trade plates

It is easy to apply online at the government trade plate license website https://www.gov.uk/trade-licence-plates. Here, you can choose whether you want your trade plates to last for six or 12 months. If you are buying your trade plates for the first time, you do also have the opportunity to purchase them for a different number of months due to them expiring on June 30 or December 31.

You will find a variety of forms to fill out for different scenarios including:

·   Your first trade plate license

·   Renewing an existing license

·   Applying for a refund on your current trade license

·   Getting a replacement or duplicate trade license

Full or part-time motor trade plates

If you are a part-time motor trader and you are only moving the vehicle on private property then you do not need to have trade plates. However, as you are likely to need to collect cars from their sellers and take potential clients for test drives on public roads, you will highly likely need trade plates.

Full-Time traders will need trade plates when any vehicle is on the public highway whether stationary or being driven.

Selling a Used Car

Once you have invested in your first car, it is time to prepare the vehicle for resale. Firstly, you need to ensure that the car has passed its MOT if you want to sell the vehicle for as much as possible. A fully valeted car will also help sales, together with attention to any dents or scratches. A clean, well-maintained car that looks in good condition will encourage buyers that they are purchasing a good car.

It is important that you follow authority rules when you sell cars from home. You will not be able to have any company signs on your property, price boards on the cars, or make any alterations to your premises to accommodate the vehicles.

The options you do have when selling cars from home are advertising in local newspapers or their websites, online car sales websites or social media platforms such as Facebook, where you can list on locally based groups.

Remember to include a variety of high-quality images with as much detail about the car as possible. Answer any enquiries quickly and be honest and upfront about any issues with the car.

Registering as a Sole Trader or Limited Company

Once you start trading, you will be expected to register as a sole trader and inform the HMRC for self-assessment tax purposes. As your business expands, it may be more beneficial to set up as a limited company, especially if you are intending to start employing additional people.

Whether you are a sole trader or a limited company, it is wise to open a separate bank account for your car dealership. This will help when it comes to doing your tax returns as all income and expenditure will be in one account.

Advertising Your Business

When selling cars from home, you need to be a little bit more creative in how you attract your customers as you are unable to display sales boards outside your property. You may need to pay for advertising or wait for word of mouth to spread.

Social media

Used correctly, this can be an effective way to get your motor trade business in front of the right people, particular as Facebook and Instagram allow you to target local groups or individuals as well as those who have been searching online for used cars.

Research how your competitors are advertising on social media and which platforms they choose to use.

Instagram targets a younger audience and lets you post full-colour pictures of your inventory, along with the vehicle’s specifications. Facebook often has local car sales groups and there are no fees for posting. The comments section encourages customers to ask important questions before a sale, but it is important to reply quickly if you want to make that deal.

Traditional marketing

Simple and traditional methods of marketing can still prove cost-effective when starting out. Business cards and flyers offering exclusive deals and offers can be delivered locally or left at shops, libraries or community centres to give your business greater publicity.

 

Other news

Whether you are a classic car restorer or collector, enjoy it as a hobby or operate from a business premises, you are likely to have many high-end and extremely rare and expensive vehicles on your premises. Making sure you have the right motor trade insurance in place to keep your assets protected is a top priority.

If your motor trade business is responsible for moving a customer’s vehicle from one destination to another, whether as a car jockey or a chauffeur who drives a customer’s own vehicle to their home, you will need either Tradex’s get me home service insurance or a car jockey insurance policy.