Here’s the hard truth. Operate any business without a state license and you might get fined for it. In fact, the penalties can be fierce!
You can have a misdemeanor or felony charge if the fuzz catches you trying to sell too many cars without a dealer’s license. That is if you’re selling more than your legal limit. And get ready to shell out some big bucks when they do. That’s it. Game over. Remember our story: a $400,000 fine is steep!
Of course, these laws should also get your mental gears turning a bit too! The fact of the matter is that licensed dealers will do anything to protect their turf. You can be sure that auto dealer organizations lobby politicians to protect their interests. It is to the advantage of dealers to stop curbstoning. Why would they care? Because it’s the little guy that eats their profits.
Remember when I said that licensed dealers want to protect their turf because they know that even an average Joe can make big bucks from this field? Well, the lobbyists are helping them trying to cover their tracks.
If it’s not already clear, curbstoners are people who flip cars without a license – but on the down low. A curbstoner will not buy and sell cars from an “office” with a “Sam’s Used Cars” sign shining in neon lights on the top of his roof.
I wouldn’t exactly say it is the smartest thing to do
Though I wouldn’t exactly say it is the smartest thing to do, but a lot of people share their car dealer license. Interestingly, it’s not that easy to get caught with this method. All you do is sell a car to someone and give the license holder a small percentage of the profit. It’s that simple.
However, if your customers find out, they may feel as if you’ve broken their trust. They may even report you. Worst of all, if the fuzz find out, you’re both gone so be careful. And remember, this is exactly what happened with our story of the curbstoner that received a $400,000 fine.
I know a few people who tried to flip cars under the radar by sharing licenses and while some were caught in a few months, others have been operating for years with no problem at all. It’s about how lucky you are, and about how well you stay on the down low.
Here is what happened to a buddy of mine (let’s call him Zack) who tried selling a Land Rover by using an out-of-state dealer’s license he shared with another buddy.
The licensed dealer lived in California while Zack had an apartment in Colorado. Zack had to pay this dealer guy $500 every month to make his own practice legit.
Anyone could smell a rat for miles. But Zack was strapped for cash and the Californian dealer guy looked like the real deal. It all came crashing down when the police took him away in handcuffs while he was trying to buy a Cherokee from a guy. The court also threw the book at the Californian dealer. And waiving his “official” dealer license didn’t save him either. The state took that away too.
On the other hand, another friend of mine, (let’s call her Denise) has been successfully sharing a license with a dealer for the past 18 years without a problem. Most interestingly though is the fact that Denise sells almost 5 cars every month. I guess lady luck is on her side.
Another friend of mine (let’s call him Martin) works a full-time job and has been sharing a license with a guy in New York for over 20 years. Martin has never been caught because he sells only 1 or 2 cars every month. He always sells cars at least 3 weeks spaced out. Sure, Martin is pushing the envelop on this “grey area,” but he succeeds because he is generally smart in keeping a low-profile.
Bottom line is, sharing a license is an easy way to sell cars, make substantial profits and still appear legit. Then again, it is illegal. And I cannot really condone it.
Don’t get me wrong! I am all for buying and selling cars with a dealer’s license. But you should get your own! If you want to get one, more power to you.