Many people sell their vehicle when they're done with it, hoping to make some cash back. But some people do it as a side hustle and they're not dealers.
It's called car flipping.
Car flipping and reselling are different. By reselling, a person is ideally trying to get back what they paid for the car, or it could potentially involve taking a hit.
Car flipping is done with the intention of making a profit.
Some car flippers search around for great deals on used cars, make upgrades, and sell them for a profit.
Other times, car flippers buy directly from a vehicle manufacturer. The buyer will need to put down a deposit, but the vehicle will be locked in at a fixed price.
For in-demand vehicles, like electric or rare models, the buyer can sell them with big markups because the vehicle is scarce and traditional rollout is typically slow.
But before jumping in, Chanelle Bessette, a banking expert with NerdWallet, warns there's a lot for people to consider:
- Think about upfront costs and related fees - sales tax and registration - as well as local laws.
- Know what you're required to do as far as titling and depending on how many vehicles you sell, your state may require you to have a dealership license.
More on Arizona's licensing requirements.
Don't forget the market research and sweat equity.
"If you live in a really mountainous area, you might sell a lot of outdoorsy SUV-style vehicles. If you're in a place where you have to drive a really long distance, you know, without gas, then you're going to want to look for something with really good gas mileage," said Bessette. She advises going with cars you know a lot about and could troubleshoot issues if needed.
Research and work aside, Bessette warns a lot depends on the timing. "As things are stabilizing and as new cars are becoming more available and more affordable, car flipping can become riskier because prices could change in the time that you buy the car versus when you decide to sell it."
What if you're in the market to buy a vehicle that was potentially flipped?
Like any vehicle transaction, look for someone who is reputable with a proven track record. For peace of mind, have your mechanic take a look at the vehicle before you finalize the deal.
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