Car Sales Startup - Traders Insurance
Discussion
After some advice from the PH gods...
Me and 3 others have decided to start down the route of a car sales garage, not re-inventing the wheel, sub-£10k performance cars kept to a high standard that we would want to drive ourselves. We're all going to stick to our main income for the time being, but all nights/weekends will be spent on this to get it up and running as smoothly as possible.
Traders insurance - Any recommendations or different insurance types that might fit the situation better? Aged 23, 23, 22 and 22, the insurers aren't exactly our best friends even with clean licenses and no accidents on any, all past since 17. The only quote I've received came in at £6.5k. We're only going to hold a maximum of 2/3 cars for the first year, and all under around £5k to start with.
Any further advice would be appreciated, it's something that we all enjoy and want to start building, and if it goes wrong then we're all comfortable with backing away from this. Just want to give it a shot! Thanks in advance
Me and 3 others have decided to start down the route of a car sales garage, not re-inventing the wheel, sub-£10k performance cars kept to a high standard that we would want to drive ourselves. We're all going to stick to our main income for the time being, but all nights/weekends will be spent on this to get it up and running as smoothly as possible.
Traders insurance - Any recommendations or different insurance types that might fit the situation better? Aged 23, 23, 22 and 22, the insurers aren't exactly our best friends even with clean licenses and no accidents on any, all past since 17. The only quote I've received came in at £6.5k. We're only going to hold a maximum of 2/3 cars for the first year, and all under around £5k to start with.
Any further advice would be appreciated, it's something that we all enjoy and want to start building, and if it goes wrong then we're all comfortable with backing away from this. Just want to give it a shot! Thanks in advance
I suspect that only Tradex would touch you, probably via a broker, probably Alfreton insurance but I'm sure others will add on a similar percentage.
However you look at it, the insurance will be large. What would be the cost of you each insuring one of the cars in your own name with the others as named drivers?
However you look at it, the insurance will be large. What would be the cost of you each insuring one of the cars in your own name with the others as named drivers?
Yes, I'm sure Tradex would go for it.
£6.5k does seem a bit rich for Road Risks though. Are you hoping to use the cars for SD&P, Commuting etc? That'll bump it up.
How did you want it set up? Unless you've set up a separate business I guess it's one of you as the Policyholder and the other 2 named? Can you get away with just one of you driving? The older one preferably!
If you were starting it on your own I'd suggest taking the bonus off your daily driver, downsizing it if needs be to reduce that cost, and putting the bonus onto the Motor Trade policy if they'll accept it.
I'd still reckon on spending at least a 3rd of the price you have even after all that, mind. And you'll be running round in a clapped-out Micra every day with something tasty on the drive at home with a For Sale sign in it.
£6.5k does seem a bit rich for Road Risks though. Are you hoping to use the cars for SD&P, Commuting etc? That'll bump it up.
How did you want it set up? Unless you've set up a separate business I guess it's one of you as the Policyholder and the other 2 named? Can you get away with just one of you driving? The older one preferably!
If you were starting it on your own I'd suggest taking the bonus off your daily driver, downsizing it if needs be to reduce that cost, and putting the bonus onto the Motor Trade policy if they'll accept it.
I'd still reckon on spending at least a 3rd of the price you have even after all that, mind. And you'll be running round in a clapped-out Micra every day with something tasty on the drive at home with a For Sale sign in it.
PistonBroker said:
Yes, I'm sure Tradex would go for it.
£6.5k does seem a bit rich for Road Risks though. Are you hoping to use the cars for SD&P, Commuting etc? That'll bump it up.
How did you want it set up? Unless you've set up a separate business I guess it's one of you as the Policyholder and the other 2 named? Can you get away with just one of you driving? The older one preferably!
If you were starting it on your own I'd suggest taking the bonus off your daily driver, downsizing it if needs to reduce that cost, and putting the bonus onto the Motor Trade policy if they'll accept it.
I'd still reckon on spending at least a 3rd of the price you have even after all that, mind. And you'll be running around in a clapped-out Micra every day with something tasty on the drive at home with a For Sale sign in it.
Did think £6.5k was steep! More than happy to downgrade , for the time being, I'm an IT Contractor so having something on the side to keep things ticking over in and out of contracts is ideal for me. We are sorting a small unit to work from which we're hoping to move into next week. £6.5k does seem a bit rich for Road Risks though. Are you hoping to use the cars for SD&P, Commuting etc? That'll bump it up.
How did you want it set up? Unless you've set up a separate business I guess it's one of you as the Policyholder and the other 2 named? Can you get away with just one of you driving? The older one preferably!
If you were starting it on your own I'd suggest taking the bonus off your daily driver, downsizing it if needs to reduce that cost, and putting the bonus onto the Motor Trade policy if they'll accept it.
I'd still reckon on spending at least a 3rd of the price you have even after all that, mind. And you'll be running around in a clapped-out Micra every day with something tasty on the drive at home with a For Sale sign in it.
Going to set up as a separate Ltd company, meaning we can have a company account, plus clearly track how things are being spent and where the money is being made. It was just road risks insurance that I'd gone for, I'd budgeted around the £4.5k mark so I'll see how my hunting continues this week!
I have spoken to Tradex today, but when calling one broker you spend the day being forwarded to every other broker saying "they can do it", then when you call back a different number from Google, and they say "We told you earlier, we can't quote you"... It's all getting confusing quickly.
Trader's insurance has gone through the roof over the past 5 years as kids had found they could insure their first car far cheaper on a trader road risks policy than they could on a standard private car policy. They sussed out what was going on eventually and hence the whopping rise in the cost of the premiums. £6.5k doesn't surprise me at all if that covers all 4 of you on road risks and private use for vehicles up to £10k value, considering you're all only just into your 20s. What's the excess on that £6.5k quote out of interest? How much was the quote just for one of you to drive?
Also how much is your policy costing you to protect against your buyers returning with a broken car 2 days later with something expensive needing replacing? Or is this just a young lad's way of tooling round in some flashy expensive metal for a few weeks and then hope you get what you paid for it when you sell?
Also how much is your policy costing you to protect against your buyers returning with a broken car 2 days later with something expensive needing replacing? Or is this just a young lad's way of tooling round in some flashy expensive metal for a few weeks and then hope you get what you paid for it when you sell?
Old Tyke said:
Trader's insurance has gone through the roof over the past 5 years as kids had found they could insure their first car far cheaper on a trader road risks policy than they could on a standard private car policy. They sussed out what was going on eventually and hence the whopping rise in the cost of the premiums. £6.5k doesn't surprise me at all if that covers all 4 of you on road risks and private use for vehicles up to £10k value, considering you're all only just into your 20s. What's the excess on that £6.5k quote out of interest? How much was the quote just for one of you to drive?
Also how much is your policy costing you to protect against your buyers returning with a broken car 2 days later with something expensive needing replacing? Or is this just a young lad's way of tooling round in some flashy expensive metal for a few weeks and then hope you get what you paid for it when you sell?
Initially, this is only to cover up to £5k value on the cars, we're going to start out on the lower end and see how it goes. Sub-£10k cars would be the end goal. We wouldn't be using any stock as we all have cars that we'd rather drive, the insurance is purely to cover us for collecting the cars and test drives.Also how much is your policy costing you to protect against your buyers returning with a broken car 2 days later with something expensive needing replacing? Or is this just a young lad's way of tooling round in some flashy expensive metal for a few weeks and then hope you get what you paid for it when you sell?
Wouldn't regard it as flashy metal at all. For anything we have in stock, we'd still take our own cars.
spikeyhead said:
I suspect that only Tradex would touch you, probably via a broker, probably Alfreton insurance but I'm sure others will add on a similar percentage.
However you look at it, the insurance will be large. What would be the cost of you each insuring one of the cars in your own name with the others as named drivers?
Missed this one, have spoken with Tradex so see what they come back with. However you look at it, the insurance will be large. What would be the cost of you each insuring one of the cars in your own name with the others as named drivers?
I was willing to pay around £4/4.5k, at the moment there are 5 cars between four of us and the insurance total is £2200, but that's just insured for ourselves individually, all the cars are worth between £7-£15k. So I thought to keep a maximum of 4 cars, not including putting our personal ones on there, under the value of £5k - that this might double it, not triple it!
Have you done a business plan? How many of you have experience in the motor industry? Where are you sourcing your finance options? What is your estimated cost of warranty work? Do you have any mechanical skills between you? Where are you sourcing your cars? Have you priced up the other required insurances?
JimmyConwayNW said:
Car dealer here.
What are all 4 of your roles going to be in this small operation?
Really split in all honesty, 2 of the guys involved are service engineers and are away at different times, so realistically 2/3 people will only ever be around or in the area. Not planning on taking any wages from it, we just want it to slowly become self-sufficient. Not hoping for any miracles.What are all 4 of your roles going to be in this small operation?
KevinCamaroSS said:
Have you done a business plan? -In terms of a 5-year business plan for a bank, no. Hoping to slowly start with a few cars at sub £5k and build towards for a good few years, letting the business become self-sufficient before any of us consider leaving work to take this on. How many of you have experience in the motor industry? - None, all experience purely through family
Where are you sourcing your finance options? -Speaking with a finance broker to arrange all customer finance
What is your estimated cost of warranty work? -Fully dependent on which cars we get in, as mentioned above we won't be taking a wage from this, so any money in the account can be used for this.
Do you have any mechanical skills between you? - Yes, between all 4 of us we've done jobs from engine conversions to clutch changes etc.
Where are you sourcing your cars? - 1Link, gumtree
Have you priced up the other required insurances? - Waiting on quotes back for liability insurance.
Answers in bold above, thanks for the questions.Where are you sourcing your finance options? -Speaking with a finance broker to arrange all customer finance
What is your estimated cost of warranty work? -Fully dependent on which cars we get in, as mentioned above we won't be taking a wage from this, so any money in the account can be used for this.
Do you have any mechanical skills between you? - Yes, between all 4 of us we've done jobs from engine conversions to clutch changes etc.
Where are you sourcing your cars? - 1Link, gumtree
Have you priced up the other required insurances? - Waiting on quotes back for liability insurance.
JimmyConwayNW said:
4 people won't all put the same effort in.
Highly unlikely to work.
2 people if you both have different skill sets can work.
If you are friends now you may well not be in 6/12/24 months.
Coming from a guy who had a lot more friends before I went into business with some of them.
My recent experience too. What type of company are you going for, partnership, LTD? If you do anything get a contract so everyone knows what happens when it goes tits up, or it can be very expensive. Highly unlikely to work.
2 people if you both have different skill sets can work.
If you are friends now you may well not be in 6/12/24 months.
Coming from a guy who had a lot more friends before I went into business with some of them.
benjeffrey said:
KevinCamaroSS said:
Have you done a business plan? -In terms of a 5-year business plan for a bank, no. Hoping to slowly start with a few cars at sub £5k and build towards for a good few years, letting the business become self-sufficient before any of us consider leaving work to take this on. How many of you have experience in the motor industry? - None, all experience purely through family
Where are you sourcing your finance options? -Speaking with a finance broker to arrange all customer finance
What is your estimated cost of warranty work? -Fully dependent on which cars we get in, as mentioned above we won't be taking a wage from this, so any money in the account can be used for this.
Do you have any mechanical skills between you? - Yes, between all 4 of us we've done jobs from engine conversions to clutch changes etc.
Where are you sourcing your cars? - 1Link, gumtree
Have you priced up the other required insurances? - Waiting on quotes back for liability insurance.
Answers in bold above, thanks for the questions.Where are you sourcing your finance options? -Speaking with a finance broker to arrange all customer finance
What is your estimated cost of warranty work? -Fully dependent on which cars we get in, as mentioned above we won't be taking a wage from this, so any money in the account can be used for this.
Do you have any mechanical skills between you? - Yes, between all 4 of us we've done jobs from engine conversions to clutch changes etc.
Where are you sourcing your cars? - 1Link, gumtree
Have you priced up the other required insurances? - Waiting on quotes back for liability insurance.
What happens if a car needs more work than you thought, and one of you ends up putting in hours and hours more graft than the others? That person might be happy doing it once for the greater good but it doesn't take too much for the thought "I'm generating the value here but not being rewarded fairly" to enter someone's head regardless of how well intentioned they are (I've been that person in the past).
You mention finance, have you thought about FCA compliance? If you're making an introduction to a credit broker you may well be acting as a broker yourself just by doing that (even if you weren't making money). Becoming FCA approved isn't particularly cumbersome but you will need a business plan in order to do so.
If you're buying cars off gumtree be very considerate of your warranty strategy - you effectively need to warrant everything you sell for 6 months as per the Consumer Rights Act 2015 - potential problems if you're buying from the bottom of the market. It's a lot harder to find a good car than it is to sell one.
I don't want to do the proverbial on you bonfire. The fact you're the one here asking for advice says you want to make it work. Even if you grew it over the next 2/3 years, growing it to the point where it can support 4 people is going to be very tricky. You might be better starting up on your own and getting your mates to chip in for mates rates as and when.
Best of luck! Drop me a PM if you need any help, i've just navigated the minefield of trade insurance myself (I'm 28 so that's a bit more straightforward but trying to find a reasonably priced classic specialist has been a chore!)
When I started, I was 25.
I got insurance through Think insurance. The premium was about £5500 which was cover upto £30k per car including road risk.
I know you're saying to start out with a couple of cars and slowly build it up but surely all of you realise how little money you'll actually make for a long time??
Monthly costs (roughly and assuming you were to sell 3-5 a month)
£500 insurance
£600 advertising
£600 in prep
£400 in warranties
£800 in VAT
£50 phone/s
Plus more that I can't think of off the top of my head so that's more or less £3k a month just to break even. Again this assumes you are going to do it properly and not try and act as a private seller.
I got insurance through Think insurance. The premium was about £5500 which was cover upto £30k per car including road risk.
I know you're saying to start out with a couple of cars and slowly build it up but surely all of you realise how little money you'll actually make for a long time??
Monthly costs (roughly and assuming you were to sell 3-5 a month)
£500 insurance
£600 advertising
£600 in prep
£400 in warranties
£800 in VAT
£50 phone/s
Plus more that I can't think of off the top of my head so that's more or less £3k a month just to break even. Again this assumes you are going to do it properly and not try and act as a private seller.
rich12 said:
When I started, I was 25.
I got insurance through Think insurance. The premium was about £5500 which was cover upto £30k per car including road risk.
I know you're saying to start out with a couple of cars and slowly build it up but surely all of you realise how little money you'll actually make for a long time??
Monthly costs (roughly and assuming you were to sell 3-5 a month)
£500 insurance
£600 advertising
£600 in prep
£400 in warranties
£800 in VAT
£50 phone/s
Plus more that I can't think of off the top of my head so that's more or less £3k a month just to break even. Again this assumes you are going to do it properly and not try and act as a private seller.
Plus property costsI got insurance through Think insurance. The premium was about £5500 which was cover upto £30k per car including road risk.
I know you're saying to start out with a couple of cars and slowly build it up but surely all of you realise how little money you'll actually make for a long time??
Monthly costs (roughly and assuming you were to sell 3-5 a month)
£500 insurance
£600 advertising
£600 in prep
£400 in warranties
£800 in VAT
£50 phone/s
Plus more that I can't think of off the top of my head so that's more or less £3k a month just to break even. Again this assumes you are going to do it properly and not try and act as a private seller.
JimmyConwayNW said:
4 people won't all put the same effort in.
Highly unlikely to work.
2 people if you both have different skill sets can work.
If you are friends now you may well not be in 6/12/24 months.
Coming from a guy who had a lot more friends before I went into business with some of them.
There speaks the voice of experience! Highly unlikely to work.
2 people if you both have different skill sets can work.
If you are friends now you may well not be in 6/12/24 months.
Coming from a guy who had a lot more friends before I went into business with some of them.
Vaud said:
KevinCamaroSS said:
Plus property costs
OP said, "We're all going to stick to our main income for the time being, but all nights/weekends will be spent on this to get it up and running as smoothly as possible."So sounds like they'll be kept at home?
OP said:
We are sorting a small unit to work from which we're hoping to move into next week.
In my view it is utter madness.KevinCamaroSS said:
Vaud said:
KevinCamaroSS said:
Plus property costs
OP said, "We're all going to stick to our main income for the time being, but all nights/weekends will be spent on this to get it up and running as smoothly as possible."So sounds like they'll be kept at home?
OP said:
We are sorting a small unit to work from which we're hoping to move into next week.
In my view it is utter madness.Gassing Station | Business | Top of Page | What's New | My Stuff