Becoming a car leasing broker
Discussion
I am always on the lookout for cheap lease deals and have a huge interest in cars, I also enjoy finding the best deals for people and have sourced a few cars already for close family and friends. As sad as it sounds I actually like being involved in the new car situation, making suggestions and then finding out how the same people are getting on with their cars.
It got me thinking about doing this as a little sideline. I have a chap that emails me once a month with cracking lease deals and he then attaches an excel sheet that shows all the other vehicles he has available to lease, it seems pretty low outlay to set something like this up but I have a few basic questions:
Very early stages in the thought process but looking forward to reading some responses
It got me thinking about doing this as a little sideline. I have a chap that emails me once a month with cracking lease deals and he then attaches an excel sheet that shows all the other vehicles he has available to lease, it seems pretty low outlay to set something like this up but I have a few basic questions:
- I assume I would make my money from the "admin fee" charged to the customer when they initially place the order. Is there any more to be had? I read on line that some make a cut on top of the rental charges e.g. BMW charge £300 and the customer actually pays £310 with BMW paying the additional £10 back to the lease company i.e. £230 over the 23 month period on top of the admin charge. Is this right?
- Where do you access the deals to offer on? I have seen franchises etc but they seem like a waste of money to me? Surely theres a way to acquire such lists from the manufacturers?
- What exactly would my job entail? I assume its find the deals, market the deals, hook the customer, forward the Finance proposals to the customer, return them to the finance company and if the credit score checks out- thats it you have a "sale"?
- Any other comments anyone can make on this idea?
Very early stages in the thought process but looking forward to reading some responses
It's not a market I know, but I'd question whether it's realistic to do this on a small scale as you are unlikely to get offered the best deals by manufacturers and/or wholesalers as you will be selling such a small number of vehicles.
I think that to make it work you'd need to do it properly, and that market it pretty crowded already. You're likely to incur big costs setting up, marketing the business, getting on top of all the relevant legislation about consumer credit, VAT etc.
I think that to make it work you'd need to do it properly, and that market it pretty crowded already. You're likely to incur big costs setting up, marketing the business, getting on top of all the relevant legislation about consumer credit, VAT etc.
I used to do this, would be happy to help you out including pointing you in the right direction to get accounts.
It's an alright business for what you're after but for me it's just too difficult to scale so my current businesses are car parts and other e-commerce.
You'll need to get a consumer credit licence unless you're dealing only with ltd companies.
Send me an email if I can help.
It's an alright business for what you're after but for me it's just too difficult to scale so my current businesses are car parts and other e-commerce.
You'll need to get a consumer credit licence unless you're dealing only with ltd companies.
Send me an email if I can help.
I've been doing exactly this for a nearly 20 years. Not difficult to get into particularly and you're right about doing all the marketing yourself. The difficult part is getting into partnership with the leasing companies and agreeing terms with them. The larger leasing companies will expect a minimum number of cars to be delivered per year. You'll need a consumer credit licence and quite possibly will also need to be BVRLA registered too.
There are 2 ways of earning money depending on where you are getting the deals from - you can charge a document fee to the customer, or you can upsell the monthly rental and earn a commission from the finance company concerned.
Rules are getting tighter on who can offer finance under the new FCA regulations - good luck if you do decide to pursue this further.
There are 2 ways of earning money depending on where you are getting the deals from - you can charge a document fee to the customer, or you can upsell the monthly rental and earn a commission from the finance company concerned.
Rules are getting tighter on who can offer finance under the new FCA regulations - good luck if you do decide to pursue this further.
Thanks for the responses guys.
Andy I have emailed you
I appreciate certain suppliers may have a minimum order policy, do we have any ideas what these might be? In my first year I would be aiming to lease out approx 12-15 cars providing sufficiently desirable cars crop up.
I would be looking to "sell" premium brands, desirable/interesting models and the really cheap deals (£75 C1's) rather than offer loads of run of the mill stuff like Focus', Mondeo's etc. I would then heavily promote good deals like the 120d, M135, Golf R, C63 etc that we have seen in the past using things like Facebook, Twitter, Adwords etc.
Initially I would be aiming to get people who are new to leasing cars rather than fleet users etc and see how it goes. I cannot really see how this can be an expensive operation to set up? You could effectivley run it from a back bedroom with internet connection and a phone no? (Providing you were BVRLA registered and had a Consumer Credit Licence etc).
Andy I have emailed you
I appreciate certain suppliers may have a minimum order policy, do we have any ideas what these might be? In my first year I would be aiming to lease out approx 12-15 cars providing sufficiently desirable cars crop up.
I would be looking to "sell" premium brands, desirable/interesting models and the really cheap deals (£75 C1's) rather than offer loads of run of the mill stuff like Focus', Mondeo's etc. I would then heavily promote good deals like the 120d, M135, Golf R, C63 etc that we have seen in the past using things like Facebook, Twitter, Adwords etc.
Initially I would be aiming to get people who are new to leasing cars rather than fleet users etc and see how it goes. I cannot really see how this can be an expensive operation to set up? You could effectivley run it from a back bedroom with internet connection and a phone no? (Providing you were BVRLA registered and had a Consumer Credit Licence etc).
I've emailed you back. In addition, I'm not sure you'll make as much as you think on the premium models like BMW M's, Merc AMG's, etc.
I found Lexus were one of the better premium brands to make money on (if you could sell their luxury barges).
Another thing you should look at is cash deals. I.e. I want an Astra that costs £21k list, you get it for me at £15k having gone through a dealer selling to you at £13.5k. The client gets it from the dealer on the terms you've arranged for them. You don't risk any money but can make a fairly good margin if you can get a decent discount.
I found Lexus were one of the better premium brands to make money on (if you could sell their luxury barges).
Another thing you should look at is cash deals. I.e. I want an Astra that costs £21k list, you get it for me at £15k having gone through a dealer selling to you at £13.5k. The client gets it from the dealer on the terms you've arranged for them. You don't risk any money but can make a fairly good margin if you can get a decent discount.
At a self-employed level it's okay but the cost of staff at a business level looks prohibitive unless you're doing very well (plus they can break away and do it for themselves for the same or more money no problem).
To get enough money to pay somebody £30k (which is about market rate I reckon) you need them to sell around 200 cars a year approximately so you need them to be doing cars every day (from a non-dealership company) to pay their way and make the company a bit of money.
Not saying it's impossible but the competition is fierce while most deals will make merely okay money.
To get enough money to pay somebody £30k (which is about market rate I reckon) you need them to sell around 200 cars a year approximately so you need them to be doing cars every day (from a non-dealership company) to pay their way and make the company a bit of money.
Not saying it's impossible but the competition is fierce while most deals will make merely okay money.
ModernAndy said:
Just to add to the above.
There's only so much 1 person can deal with, after that you need staff and admin. The staff and admin in this business can be prohibitively expensive depending on how the business performs and what the market conditions are. That's what I mean.
Ah I see fair point. I had the same issue trading cars from home. The next step was full premises and all the costs that go with that and the hassle of having to be away from home almost 7 days a week.There's only so much 1 person can deal with, after that you need staff and admin. The staff and admin in this business can be prohibitively expensive depending on how the business performs and what the market conditions are. That's what I mean.
Frimley111R said:
Ah I see fair point. I had the same issue trading cars from home. The next step was full premises and all the costs that go with that and the hassle of having to be away from home almost 7 days a week.
Exactly. Not insurmountable but it's a very big barrier from going self-employed to running a business.We were looking at staff for the leasing biz but our online business picked up so fast that it didnt make sense to do both. Doing the calculations though, we'd have to sell a few hundred cars a year just to be able to pay ourselves checkout staff wages after paying for everything else.
Dick Dastardly said:
eliot said:
Plus you only need to pay £20 to a colour blind kid on Acid to design your website as one such company have proven!
I use Ling for company cars. Their customer service and the deals they offer are excellent. I wouldn't want to compete with them.The Moose said:
Dick Dastardly said:
eliot said:
Plus you only need to pay £20 to a colour blind kid on Acid to design your website as one such company have proven!
I use Ling for company cars. Their customer service and the deals they offer are excellent. I wouldn't want to compete with them.I find Freedom Contracts are usually close to being on the money but they fob you off from one sales assistant to the other and lack that personal feel. I have had lots of dealings with a chap that I email direct named Scott (Central Leasing I believe) and he has been top draw.
I would try to add a personal touch to my business by using my car knowledge to make suggestions on good deals for alternative vehicles, providing one to one assistance, being kept up to date with every order update etc. Basically I would try and create the leasing company I would use.
ModernAndy said:
At a self-employed level it's okay but the cost of staff at a business level looks prohibitive unless you're doing very well (plus they can break away and do it for themselves for the same or more money no problem).
To get enough money to pay somebody £30k (which is about market rate I reckon) you need them to sell around 200 cars a year approximately so you need them to be doing cars every day (from a non-dealership company) to pay their way and make the company a bit of money.
Not saying it's impossible but the competition is fierce while most deals will make merely okay money.
If I could create a suitable demand and start turning over sufficient orders the next step would be asking my partner to quit her job and assist me with the running of the business. She could also assist with the running of my current business so the cost impact would be small as her wages would be covered by the both companies.To get enough money to pay somebody £30k (which is about market rate I reckon) you need them to sell around 200 cars a year approximately so you need them to be doing cars every day (from a non-dealership company) to pay their way and make the company a bit of money.
Not saying it's impossible but the competition is fierce while most deals will make merely okay money.
I have done a lot of deep thinking the past day or two and will pick holes in my own idea all weekend to see if it is worth it
Tuvra - I fear that the stumbling block for this idea may be the impending (effective 1st April 2014) takeover of the FCA from the OFT (current issuer of CCL's required to undertake this line of work).
Brokering consumer credit is no longer going to be a straightforward case of writing to the OFT, paying your £1,000 odd and thanks very much - your CCL arrives in the post.
The FCA are going to be running things very differently indeed. Full encryption on all electronic devices, secure storage, compliance policies equivalent to that of a small bank, formal complaints handling procedures, and bi-annual updates made by the broker directly to the FCA detailing margins, customer profile, demographic, etc etc.
It will be very, very difficult for someone new to operate in this industry from April 1st, if they are not already - and more to the point already operating to the standards detailed above.
Take it from someone who's buried in this ^^^ currently. There are tremendous costs involved in all of the above, relative to earning potential.
Best of luck, whatever you chose to do.
Brokering consumer credit is no longer going to be a straightforward case of writing to the OFT, paying your £1,000 odd and thanks very much - your CCL arrives in the post.
The FCA are going to be running things very differently indeed. Full encryption on all electronic devices, secure storage, compliance policies equivalent to that of a small bank, formal complaints handling procedures, and bi-annual updates made by the broker directly to the FCA detailing margins, customer profile, demographic, etc etc.
It will be very, very difficult for someone new to operate in this industry from April 1st, if they are not already - and more to the point already operating to the standards detailed above.
Take it from someone who's buried in this ^^^ currently. There are tremendous costs involved in all of the above, relative to earning potential.
Best of luck, whatever you chose to do.
Hi All,
A quick search of Google and this post appeared. I've sort of stumbled into this sector. I've been selling used vehicle's for a number of years however after a 'chance' meeting I decided to give car leasing some serious thought....
As I stand at the moment I have a premises from my current business, a website that should be transferable, a reasonably active social media presence and due to fortunate circumstances I have a handful of verbal agreements to take over contracts over the coming 12months.
My intention would be for these contracts to cover my startup costs and then secure more business alongside my current business.....
However, I literally have no idea of this sector and it sounds like there are some people on here who know the sector inside out. I appreciate this post was from sometime ago but if somebody could get in touch with some advice I'd be most appreciative.
Many Thanks,
CJSP
A quick search of Google and this post appeared. I've sort of stumbled into this sector. I've been selling used vehicle's for a number of years however after a 'chance' meeting I decided to give car leasing some serious thought....
As I stand at the moment I have a premises from my current business, a website that should be transferable, a reasonably active social media presence and due to fortunate circumstances I have a handful of verbal agreements to take over contracts over the coming 12months.
My intention would be for these contracts to cover my startup costs and then secure more business alongside my current business.....
However, I literally have no idea of this sector and it sounds like there are some people on here who know the sector inside out. I appreciate this post was from sometime ago but if somebody could get in touch with some advice I'd be most appreciative.
Many Thanks,
CJSP
I was wondering whether any of you knowledgeable people could help me.
I am thinking of starting a new car leasing broker company and am not sure about the end-to-end process.
I.e. going from receiving a phone / email enquiry through to delivering the vehicle.
As a brokerage, what would be our responsibility to the customer?
Do we provide the finance?
Where / how do we get the finance rates?
What do we need to have in place before we can get these rates?
What paperwork would need to be completed on each lease deal and where would we get this paperwork from? The finance company?
Would we have to credit check each applicant ourselves?
What is the average lead time to source each vehicle?
Where would we get the vehicles from? Do you need to have an arrangement with a manufacturer / wholesaler / dealership?
How easy / difficult is it to get these arrangements?
An advice much appreciated, especially from anyone who has run their own vehicle leasing brokerage before.
TIA,
Brian AKA Petrolhead
I am thinking of starting a new car leasing broker company and am not sure about the end-to-end process.
I.e. going from receiving a phone / email enquiry through to delivering the vehicle.
As a brokerage, what would be our responsibility to the customer?
Do we provide the finance?
Where / how do we get the finance rates?
What do we need to have in place before we can get these rates?
What paperwork would need to be completed on each lease deal and where would we get this paperwork from? The finance company?
Would we have to credit check each applicant ourselves?
What is the average lead time to source each vehicle?
Where would we get the vehicles from? Do you need to have an arrangement with a manufacturer / wholesaler / dealership?
How easy / difficult is it to get these arrangements?
An advice much appreciated, especially from anyone who has run their own vehicle leasing brokerage before.
TIA,
Brian AKA Petrolhead
petr0lh3ad said:
I was wondering whether any of you knowledgeable people could help me...
Is there anything you know about the business at all? What makes you think it would be viable for you, apart from simply wanting to do it?You are asking a lot of questions but providing no information at all on yourself, your circumstances and your skill set.
Car-broking infuriates me. Someone sat at a pc in the back bedroom with no other investment but some time, expecting to make more than the dealer who has invested millions in premises, franchise, dealer standards for appearance, equipment and training, and who, effectively, does all the work involved in ordering/sourcing the car, preparing it, delivering it, and completing the handover.
If and when the manufacturers and retailers get their head around it and start selling direct at something closer to broker prices, this market could disappear - rather like the accident management companies that charge £100 a day, when the insurance company could include provision of a hire car in their policy and achieve very low rates based on the volume of business they would offer.
If and when the manufacturers and retailers get their head around it and start selling direct at something closer to broker prices, this market could disappear - rather like the accident management companies that charge £100 a day, when the insurance company could include provision of a hire car in their policy and achieve very low rates based on the volume of business they would offer.
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