How to Buy Cars Cheaply and Sell Them at a Profit
Many people have created an at-home business of buying and selling cars. You don't need a huge capital outlay to start this business or even great mechanical knowledge, although naturally this would give you an advantage.
However, if you are interested enough in cars, you will generally pick up a grasp of what goes wrong mechanically with cars along the way. There's plenty of books to learn all about this too.
Buying a cheap car is actually fairly easy. There's plenty of sources such as your local auctions, craigslist, Ebay, your local newspaper classified ads, and supermarket community boards. You just need know what to look for.
Car auctions are my favorite place to find cars as they are fast and can be very cheap buying. They can be loaded with repossessions or dealer trade-ins.
What I look out for at car auctions are dirty-looking cars. Everyone avoids a dirty car because they think it's an old wreck. It sure might be, but it could also be an older person's car that was left outside under the trees or someone's who couldn't be bothered cleaning it.
I bought a ten-year-old Volvo a few months ago for $250 at auction. I was the only bidder even though there were another hundred or more possible bidders in the room. The Volvo was sitting amongst the other cars but had a flat rear tire and its dark blue paint looked incredibly dull, flat and tired.
When I opened the passenger door, the inside was full of old McDonald's wrappers and a ton of other rubbish but there wasn't any smell. It turned out to be a repossession and the dealer took one look at it and was so disgusted he sent it straight to the auction.
I started the car up and went through my checklist (see below) and couldn't fault it. I couldn't drive it because of the flat tire, although I could have had it changed, but I knew if this car was cheap enough, it was going to make some great profit for me. One final check was wetting one of my fingers and running it across the paint. The shine came back.
So, I got the Volvo towed to my garage at home and got to work. First, I cleaned the inside right out, vacuumed, and cleaned it thoroughly.
I then started on the outside which I had to buff and put a final coat of polish on. Then I cleaned the engine, door shuts and boot, and the rims and the tires. I had a fantastic-looking car.
Volvos at this age go between $6,000 to $8,000. I can never be bothered to hold out for the higher range, so I sold it quickly by advertising it in our local newspaper classified ad block for $6,500.
A middle-aged couple bought it and were totally happy. They wanted a Volvo for its safety record and reliability. Frankly I didn't really care. I just wanted to get on with the next one.
Seriously Great Car Cleaning Kit
Craigslist, Ebay, and Local Newspapers
Some great buys can be had from all of these sources.
My preference is local newspapers and supermarket boards, however, because I can easily contact the seller and start negotiating.
Also, it's easy once you've met the person face-to-face to really work out the reason for the sale. Are they elderly and can't drive it any longer? Do they need the money?
I very rarely buy on the spot unless it's a bargain. What I tend to do is go away and say I'll think about it. I leave my number with them and hope they'll call me first and then I'll know their desperation level.
If I don't hear back from them, I'll call them back three days later. If the car's gone, I don't care. Rule one here is don't get emotionally involved. Remember you don't want a car. This is just a money-making tool.
There's a bit of luck and a lot of pushiness involved in buying a cheap car. If you don't like the idea of confronting and negotiating with someone, then stick with car auctions.
Here's my list of what I look for.
1. Check the Oil Level
If it's low, don't be too worried until you start the engine. When the car's warm, get the owner or a friend of yours to operate the accelerator peddle.
You go around the back of the car and monitor the exhaust while the accelerator operator stabs the accelerator from idle to full about eight times.
Two or three times, they should hold the accelerator about halfway (mid revs). What you are watching for is oily smoke. If the exhaust is blowing excessive smoke out while under power just say thanks to the owner and walk away.
You don't want this car no matter how cheap it is. This means it's burning oil through the piston rings. It's an old worn out engine. Don't buy.
2. Check the Color of the Oil
The lighter color it is, the better. If it's dark that may just mean it hasn't being changed in some time. That can still be fine. If the oil has some water in it, once again, walk away and don't buy.
This means it's got a blown head gasket and is going to cost a fortune to repair.
3. Check the Radiator
Take the cap off the radiator or cooling tank and get someone once again to rev the car in bursts. If water bubbles up with air, walk away and don't buy. It's got a blown head gasket.
Buying a cheap car is one thing but it's still got to be trouble-free.
4. Check Water Temperature
Leave the car idling for 15 to 20 minutes, all the time checking the water temperature gauge in the car. If it gets to about 3/4 hot on the gauge, you don't necessarily have to walk away this time.
If the radiator isn't bubbling with air and there isn't water in the oil, the reason for the high temperature may be something reasonably easy to fix, like a leaky hose in the engine compartment.
Have a look under the engine. (Be careful though. Remember this is boiling water you're trying to find.) If you see water dripping and you can spot where it's coming from, then this could be bargain time.
You should be able to convince the owner that the engine's about to blow, so offer him a fraction of what he wants.
However, if you don't see any drips under the engine, walk away. The problem is probably serious. The owner probably knows that and he's actually trying to get the better of you.
5. Check Water Hoses and Engine Belts
With the engine off and cooled down, go over all the water hoses and engine belts. Have a look at their overall condition.
If they all need replacing, that can be expensive and take any profit you could have made out of buying anyway.
6. Listen to the Engine
Turn the engine on and have a listen to the motor while it's idling. There shouldn't be any loud ticking noises. Get someone to rev it up halfway and listen again.
Make sure it was running on all cylinders while being revved. If it was stuttering on the way up the revs, that could mean that one of the spark plugs or spark plug leads is failing.
This isn't a bad sign, and if this is correct, the owner may be selling the car cheaply because he thinks the problem is worse. It may be. At this point get a mechanic to check the problem out if you are keen on the car.
7. Is It Leaking Oil?
Make sure there's no horrendous oil leaks. Reverse the car out from where it normally sits, whether it be in the owner's garage or driveway.
If its got lots of fresh oil drops on the concrete surface, don't buy it. Oil drips can be expensive to repair.
8. Check the Transmission
For a car with automatic transmission, after turning the car on, put it into drive and see if there's any delay before it engages. Do the same for reverse.
When shifting into reverse or drive, it should be totally smooth and instant. If there's any hesitation or the car literally jumps when you shift the lever, then it's not a great transmission.
This is just a worn transmission, and depending on the hesitation time (shouldn't be longer than say one and a half seconds) the car may still be worth buying if it's cheap enough.
9. Test Steering
With the engine turned on, check for play in the steering when you turn the wheel from side to side.
Best to do this on a straight open road. While you're traveling straight you shouldn't have to correct the wheel all the time. It should just sit in a straight-ahead position.
10. Test the Brakes
While you are out on the open road, check how good the brakes are by coming to a fast stop. Make sure you haven't got a car riding on your tail at the time, and if the owner's next to you, give him a warning before you brake.
It's never a great time for friendly negotiation later if you've just buried the owner's head through the front windscreen. The car should stop absolutely in a straight line, especially if it's equipped with ABS brakes.
If it comes to a stop on a big scary angle this can be remedied reasonably cheaply. It could be still worth a buy.
11. Check for Rust
If you live in a dry state, rust shouldn't be an issue but in a state that sees all four seasons, you'll want to check this out carefully. Some states put salt on the road to combat snow and you bet that this rots a car quicker than anything else.
Have a good look underneath and around the inner guards on the car. The trunk floor can be a target, so check that and the car sills. The sills run down the sides of the car beneath the doors. If it's got rust, don't buy it.
The reason is that rust can go into all sorts of areas that you won't even see, like the bulkhead. So the car can be rotting from the inside out.
So these are my tips for buying cheap cars and hopefully developing a nice home business from it.
I would suggest that the first time out, you set yourself a budget of $1,000 to $1,500 and try to make a smaller profit of $500 to $1,000. This will give you lots of experience and will not be a huge risk.
If it goes badly due to a mechanical issue that you didn't pick up, as long as you've bought the car cheaply enough you should at least be able to get your money back.
Use the comment section if you've got any questions. Best of luck.