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How do used cars traders make money?

How do used cars traders make money?

  • Answer:

    By the simple principle of arbitrage. 1. the seller of the used car wants to get a new vehicle and hence wants to dispose of his old ride. lets say a used car's intrinsic value is $12,000. If maintenance, insurance, parking etc add up to $1000 a month, then a seller will value his car from $11,001 to $12,000 for the car. 2. Now, if a potential buyer wants to get a car but cannot afford a new one, and spends $1000 on transportation and other miscellaneous activities (not to mention the convenience of having a car which might be valued at much more than a grand), he will be willing to pay anything from $12,000 to $13,000. Depending on how good a trader is, he can pocket the difference $13,000 - 11,001 = $1,999 on the deal

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WRONG, WRONG WRONG. It's the American way. Buy low and sell high. There is nothing wrong with making a profit on anything. How do you think Wal-mart or any other company makes a profit. They offer a product at a price and people perceived value exceeds that price so they buy it. Something is only worth as much as someone wants to pay for it. So the used guy goes out and finds a car that someone wants to sell. It isn't cleaned up or running just right so they get it at a lower price. Then they go and clean it up or get it running right and sell it at a profit. They have sweat equity in the car and will get paid for it. Most everybody drives a car and have a common thing they can talk about. The experience of buying that car, good or bad. So the car business gets a bad rap. Are there bad used car salespeople out there yup. But there are also bad department stores, doctors, restaurants etc. as well.

Patrick J

by buying vehicles from people at lower price than they are worth, then reselling them at a higher price

aabbcc

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gomavs45

Easy: first, they screw a seller, and second - they do the same to a buyer.

Autoinspector

They buy them cheaper than they sell them.

tree8588

By ripping girls off!

cindy

autoinspector is correct, sell your old car on your own and use that money to help purchase a newer car.. they b.f. you both ways if you do a trade in

freakin out!!!

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