How to Register for Private Wholesale Auto Auctions

January 27, 2012

In order to attend private wholesale auto auctions you need to have a car dealer license. In most states it's mandatory to have this type of license in order to buy and sell vehicles. You can buy cars wholesale and then sell them at a profit.

Step 1 - Forms

The requirements vary from state to state, but you'll generally have to start by contacting your state's Department of Motor Vehicles. They'll be able to send out all the appropriate forms as well as the information needed to take the test for a car dealer's license. Even if you're just selling cars from home you will still need this. Don't try to attend private wholesale auto auctions without it, as you won't be able to register.

Step 2 - Business Registration

You'll need to register your car business with the state and with the IRS as well as the local Business Registry, who will give you a registry number.

Step 3 - Testing

Pass the DMV test for car dealers. It's not generally complex, but take the time to study well. There's a fee involved to take the test.

Step 4 - Premises

You'll need approval for your business premises from the zoning board in your area. It doesn't matter if this is your home. All that will affect is the number of cars you're allowed to keep there.

Step 5 - Bond

You will need a $40,000 bond for 3 years to be approved for the license. You'll also need the correct amount of liability insurance. The DMV will specify what forms need to be turned in for this. To complete the process, undergo a dealer education course and submit the original pass certificate to the DMV. After this you'll have your license and be ready to register to attend private wholesale auto auctions.

Related Questions and Answers

What is the Average Sales Commission Percentage at an Auto Auction?

The average sales commission percentage at auto auctions tends to range from five to seven percent. Although the commission will vary between auctions and locations. In addition to the commission, some auctions also charge a buyer's or seller's fee. Some auto auctions do not operate on the commission structure. Instead, they charge a flat fee in lieu of commission when the vehicle is sold. Auto auctions may also charge other fees for paperwork, light repair, and cleaning.

What Kind of Insurance Do Auto Auctions Provide?

The type of insurance auto auctions provide depends on the auto auction. Some auctions offer buyers no insurance or guarantee at all, while others offer insurance when a buyer opts for a post-sale inspection. The post-sale inspection brings forth any defects in the vehicle and gives the purchaser an out. If the purchaser decides to pass on the car when the post-sale inspection reveals a problem, they can usually get out of making the purchase. Additionally, this type of insurance generally provides a buyback option, if major problems not noticed during the post-sale inspection are found within a certain time period.

How Much Does it Cost to List a Car at an Auction?

The cost to list a car at auction varies greatly between locations and auctions. Some auctions charge the sellers a listing or administrative fee up front, while other auctions do not. This administrative fee usually costs around $100, if applicable. Some auctions charge a flat fee once the vehicle is sold, and some auctions charge a commission. If the car does not sell, the auction may also charge a no-sell fee or another type of administrative fee. This fee may range from $40 to $100, but it varies between auctions.

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