B
Buyer's fee
The buyer's fee is what the auction adds once the hammer has fallen. It is not part of the bid. It is a separate charge for buying the car, and it is easy to leave out when you are deciding whether a lot is cheap. Auctions do not all publish it the same way. Some put a price-band card in public, so you can look up the fee before you have an account. Others publish an account ladder and an online fee, and keep the premium on the hammer inside your own login. Either way, the fee belongs in the cost of the car before you raise your hand. VAT is often added to it. If you are VAT registered you may be able to reclaim that part, which is a question for your accountant, not for the auctioneer. Transport, storage and any inspection product sit on top again. A hammer price with no fee next to it is not a price you can compare with a car you bought direct.
BCA buyer fees explained →
C
CAP average / CAP below
CAP average and CAP below are the two trade guide prices under CAP clean, for the same car in weaker condition. Average is the book for ordinary wear. Below is the book for a car that needs more than a tidy before anyone would call it ready. They are not a polite way of saying the clean price is negotiable. They are there because a clean figure on an average car is the wrong starting point. The gap between the three changes with the car, the mileage and the month, so there is no single discount to memorise. Look this car up. Then match the grade to what you can see: panels, tyres, previous repairs and paperwork. If you are buying, start at the grade the car is, and only move towards clean if the metal earns it. If you are pricing a part exchange, do the same. Paying clean for average metal is how the allowance gets away from you.
CAP clean, average and below →CAP clean
CAP clean is the trade guide price for a car that meets the clean condition standard in the book. It is the top of the three condition prices, above average and below. It is a reference for a car in that condition, not a price the market has to pay and not a price you should assume at auction. Most cars in a lane are not clean. Reserving them, or bidding them, at the clean figure is how the metal costs more than it is worth to you. The standard behind clean also changes with the age of the car. A mark you would accept on an older car can take a newer one out of clean. Look up this car, at this age and mileage, and then look at the panels, the tyres and the paperwork. If your appraisal is worse than clean, use a lower grade. The book has not walked around the car.
Trade, retail and part-exchange values →Cat S / Cat N
Cat S and Cat N are the insurance write-off categories you will still see on a used car in the UK. Cat S means the insurer decided the car was a structural write-off: the shell was damaged, even if it was later repaired and put back on the road. Cat N means the damage was not structural. Neither label tells you the quality of the repair, who did it, or whether you should retail the car. A Cat N with a poor repair can be a worse buy than a Cat S that was put right properly, and the other way round. The category belongs in the provenance check, next to the finance and the mileage, before you bid. It also belongs in the advert if you sell the car. A customer who finds the marker after they have paid will use it, and they will be right to. The category is a fact about the car's history. It is not, on its own, a reason to buy or to walk away.
D
Days in stock
Days in stock is the count of how long a car has been yours and unsold. It starts when you buy it, not when you advertise it, because the money is tied up from the day you pay. Every extra week costs you something, even when no invoice arrives: the interest or the cash you cannot use elsewhere, the space on the pitch, and the price the market will still pay, which rarely goes up while you wait. A small site feels this faster than a group, because one stale car is a large share of the stock. Keep the count somewhere you will look at it, and decide in advance what you will do at 30, 60 and 90 days. Cutting the price late, after everyone local has already seen the car, is more expensive than cutting it while it is still fresh. The number is a management tool. It is not a reason to panic on day three.
Used car margins →
F
Full service history (FSH)
Full service history, FSH, means the car has been serviced in line with the schedule for its age and mileage, and you can see the proof. A stamped book is one kind of proof. Invoices from a specialist are another. A seller's memory is not proof. Missing stamps do not all mean the same thing. A gap at six years old, with invoices either side, is a different car from one that has never been near a ramp. Main dealer stamps are not magic, and a folder of invoices from a good independent can be the better record. Read the mileage on each stamp against the MOT history. A service that does not fit the mileage is a question, not a selling point. The history is part of the price. It is not a sticker you add after you have already bid.
What a full service history is worth →
G
Google Business Profile
A Google Business Profile is the free listing Google shows for your dealership on Maps and in local search. It is the name, the address, the hours, the phone number and the photos a customer sees before they see your website. It is not an advert you buy, and it is not a substitute for the site. The facts have to match the real pitch: the name on the gate, the hours you actually open, and a phone that a person answers. Categories tell Google what you are. Photos tell a customer whether to bother driving over. A profile full of old cars and last year's hours is a quiet way to lose the people who were ready to visit. Keep it current. Do not stuff it with keywords.
Google Business Profile for dealers →
H
Hammer price
The hammer price is the bid the auction accepts. In a hall that is the moment the gavel falls. Online it is the moment the lot is sold to you. It is the number people remember, and it is not the amount that leaves your account. The buyer's fee, any online charge, VAT where it applies, and anything sold with the car such as an inspection product, are all extra. So is the cost of getting the car to you, and the work it needs before a customer can buy it. When someone says they bought a car for a certain figure, ask whether that figure is the hammer or the amount they actually paid. Comparing a hammer with the price you would pay a private seller is not a fair comparison. The private seller's price is usually the whole price. The hammer is the start of the invoice.
The hidden costs of buying at auction →Holding cost
Holding cost is what a car costs you for each week it sits unsold. The money is tied up from the day you pay, so the count starts then, not when the advert goes live. Interest, or the cash you cannot use on the next car, is the obvious part. The space on the pitch is another. So is the retail price, which rarely rises while the car waits, and often falls once local buyers have already seen it. None of these arrives as a single invoice with the car's registration on it, which is why they get left out of the margin. Write a weekly number you believe, even a rough one, and look at it when the car is still fresh. Cutting the price on day sixty is more expensive than cutting it on day twenty.
What a car costs you for every week it sits →
L
Landed cost
Landed cost is what the car has cost you by the time it is on your pitch and fit to sell. Start with the hammer, or the price you agreed with the seller. Add the buyer's fee and any other auction charge, the transport, and the prep you will actually do: tyres, brakes, a valet, the advisories you have chosen to fix. VAT you cannot reclaim stays in the number. VAT you can reclaim does not. The result is the figure your retail price has to beat if the car is going to make a margin. A low hammer with a long list underneath can land higher than a private purchase that looked dearer at first glance. Write the lines down when you buy, not when you are trying to remember them at month end. If you do not know one of the lines yet, the landed cost is not finished, and the car is not priced.
The hidden costs of buying at auction →
M
Margin scheme
The margin scheme is the VAT arrangement most used-car dealers use. On a normal VAT sale you account for VAT on the full selling price. Under the margin scheme, VAT is due on the difference between what you paid and what you sold the car for, the margin, rather than on the whole price. That is why it fits second-hand cars that you bought without VAT to reclaim. It is not automatic, and it is not the right treatment for every car. A car bought on an invoice that shows VAT separately is a different case, and you and your accountant have to decide which rules apply before you advertise the price. Get the purchase invoice right at the time you buy. Reconstructing whether a car was in the scheme six months later, from memory, is how VAT returns go wrong. This is a description of the idea, not advice on your return.
How to become a car dealer →MOT advisory
An MOT advisory is a note of something the tester has seen that is not a fail today, but is on the way. It is not a quote for the repair, and it is not a clean bill of health. Brakes, tyres, corrosion and suspension advisories are the ones that turn into a bill before you can retail the car. Read the list against the car, not as a paragraph to ignore because it passed. The same advisory can be a cheap job or a reason to walk away, depending on how far it has gone and what the car is worth. When you are buying, turn the list into a number you will actually spend, and take that off the price. When you are selling, an advisory you have not mentioned is the thing a careful buyer will find and use to negotiate. The history also helps with mileage. A steady set of readings is part of the story. A jump is a question, not a footnote.
How to read an MOT history →Motor trade insurance
Motor trade insurance is the cover for driving cars in the course of the business. A private car policy is for the car and the use named on it. Collecting a purchase, delivering a sale, or taking a customer on a test drive is motor trade use, and it needs this policy. Brokers usually split it into road risks, which cover the driving, and a combined policy, which adds premises, tools, stock and liability when you have a site. It does not, by itself, replace employer's liability if you take on staff, and it does not cover a driver or a journey that the schedule excludes. Read who can drive, where the cars may be kept, and the most expensive vehicle on cover before you buy the first car. The premium depends on your facts. Anyone quoting a typical price without them is guessing.
Motor trade insurance →
N
Negative equity
Negative equity, on a part exchange, is the gap when the settlement figure is higher than the car is worth to you. The customer owes more than you can sensibly allow. The difference has to be paid by someone: the customer, in cash, or you, by inflating the allowance and quietly moving the pain onto the car you are selling. The second path feels like a way to save the deal. It is a way to buy a car for more than it is worth and hope the other car's margin covers it. Write the settlement, the trade value and the allowance in three lines. If the settlement is the biggest number, stop and say so. A monthly payment that still looks tidy is not evidence that the metal makes sense.
Negative equity on a part exchange →
O
Outstanding finance
Outstanding finance means a finance company still has an interest in the car. Until that interest is cleared, the company can take the car back, including from you if you have bought it from someone who did not have the right to sell it. A private seller can be honest and still be wrong about the amount. The figure that matters is the settlement the finance company will accept, not the balance the seller remembers from last month's statement. Get that figure before you pay, and pay it in a way the finance company will accept, not as cash into the seller's account with a promise to clear it later. In a hall, the catalogue may say the car is sold clear. Read it, and still run your own check when the car is coming from the public. A clean advertisement is not a clearance.
Buying cars direct from the public →Over-allowance
An over-allowance is the gap between what a part-exchange car is worth to you and the figure you have put on the deal to win it. It is not a kindness. It is money you have added to the price of the car you are selling, or taken out of its margin, so the customer's monthly payment looks right. Look at it on the metal, on its own. If you would not buy that car for that money from a stranger, you should not buy it from a customer either. A small over-allowance can be a choice you make with your eyes open, when the car you are selling still clears its number. A large one is a car you will regret, dressed up as a deal. Write both figures down before you agree.
Part-exchange over-allowance →
P
Part exchange
A part exchange is the car a customer offers you as part of the payment for the one they are buying. You are not doing them a favour. You are buying a car, and the allowance you give is the price you are paying for it. That price has to make sense against what you can sell it for, or what the trade will pay if you will not retail it yourself. The deal on the car you are selling can hide a weak allowance. Look at the metal on its own: grade, history, what it needs, and whether you actually want it in stock. If the allowance is more than the car is worth to you, the difference is money you have given away, even when the monthly payment on the new deal looks fine. Say no when the car does not fit. A part exchange you cannot sell is not a way to close a deal. It is stock you will regret.
How to value a part exchange →Prep costs
Prep costs are what you spend to turn a car you have bought into a car you can sell. That includes the valet, tyres, brakes, bulbs, and the advisories you have chosen to fix. It includes a smart repair if the panel needs it, and it includes the MOT if the current one will not last the sale. It does not include the buyer's fee or the transport. Those are buying costs. Prep is the work after the car is yours. Write the list before you bid, not after the car is on the ramp and the invoice is a surprise. A small job you expected is part of the price. A gearbox you did not expect is a different car. If you cannot name the prep, you do not yet know what the car costs, and you should not be telling a customer it is ready.
Used car margins →Provenance check
A provenance check is the history check you do before you pay for a car. At a minimum you want to know whether it is stolen, whether a finance company still has an interest, whether it has been written off, and whether the mileage record makes sense against the MOT history. It is not a mechanical inspection. A clean check does not mean the gearbox is sound, and a thick folder of stamps does not mean the identity is genuine. Do it before you hand over the money, not after the car is on the truck. On a private purchase the check is one of the few things standing between you and a car you cannot sell. In a hall, the auction's own catalogue is a start, not a finish. If the VIN, the logbook and the plates do not belong together, walk away. You are buying the car's identity as well as its metal.
Buying cars direct from the public →
R
Reserve price
The reserve price is the lowest bid the seller is willing to accept. If the bidding stops under it, the car is not sold, however keen the room looked. You do not always get to see the number. Online, a car can show as available, or as provisionally sold, while the reserve has not been met. A provisional bid is not a purchase. It is an offer the seller can still refuse, and it can tie up your attention while you wait. The screen price, the start price and the last bid are not the reserve. Bid to the number the car is worth to you. If that is under the reserve, you have not lost the car. You have declined to overpay for it.
Auction reserve prices →Retail-ready
Retail-ready means the car can be advertised to a customer without a list of jobs still hanging over it. The valet is done. The advisories you decided to fix are fixed. The tyres, brakes and lights are in a state you are happy to explain. The history, the mileage and any write-off marker are in the advert, not waiting to be discovered on a test drive. It does not mean the car is perfect, and it does not mean you have spent the maximum on it. It means you have decided what this car needs before a member of the public sits in it, and you have done that. A car that is cheap in the lane and not retail-ready is not cheap until you have priced the gap. If you are not going to close that gap, the car is trade stock, and it should be priced as trade stock.
S
Settlement figure
The settlement figure is the amount the finance company will accept, on a given day, to clear its interest in the car. It is not the balance on the customer's statement, and it is not a guess from the monthly payment. Interest, fees and the date you pay all move it. Ask the company, or have the customer ask, and get the figure in writing with the date it runs to. Until that money is paid in the way the company will accept, the company can still take the car. Paying the seller and trusting them to pass it on is how dealers buy a car they do not own. Use the figure before you agree a price, not after the car is on your pitch.
Car finance settlement →
T
Trade plates
Trade plates are the plates a motor trader uses to move untaxed stock on the road. They are not a substitute for insurance, an MOT, or the right to use the car however you like. They exist so a dealer can drive a car in the course of the business without taxing each one, on the journeys the rules allow. Display matters. A plate on the dash, or a journey that is not a trade journey, is how people get stopped. The insurance has to cover the drive as well. A motor trade policy that does not include the person at the wheel, or the use, does not become valid because the trade plate is on the car. If you are starting out, sort the insurance and the plates together, and read which journeys are in. Delivering a sold car, collecting a purchase and a test drive are not all treated the same by every insurer.
How to become a car dealer →Trade value
Trade value is what the trade would pay for the car. It is not the price on your website, and it is not the price a customer hopes to be given for a part exchange. It sits under the retail price because the next buyer in the trade still has to prep the car, stand it, and sell it on. A book price in clean condition is one version of a trade value. An auction result on the day is another. They will not match, and neither of them is a promise. When you are buying, trade value is the floor you can fall back to if you cannot retail the car yourself. When you are pricing a part exchange, it is the honest number if the car is not one you want on the pitch. Paying more than that, and calling it a favour, is how the metal stops making sense.
Trade, retail and part-exchange values →
V
V5C logbook
The V5C is the registration certificate, the document people still call the logbook. It shows the registered keeper. That is not the same thing as the legal owner. A finance company can own the car while the keeper's name is on the certificate, and a keeper can be named on a car they are not free to sell. Read the name, the address and the date the current keeper was entered. A certificate that has only just been issued, or that does not match the person standing in front of you, is a reason to slow down. The VIN on the car and the VIN on the certificate have to be the same. So do the plate and the colour. The V5C is one document in the provenance check. It does not replace a finance check, and a missing certificate is not a detail to sort out after you have paid.
Buying cars direct from the public →VAT qualifying car
A VAT qualifying car, in dealer speech, is one you bought in circumstances where VAT was charged and you can deal with it under the normal VAT rules rather than the margin scheme. HMRC's rule is the practical test: if the purchase invoice shows VAT separately, you cannot sell that vehicle under the margin scheme, whether or not you reclaim the VAT. The onward sale is then VAT on the full selling price. A car bought from a private seller, or from a dealer under the margin scheme, is the usual margin-scheme case, if the other conditions are met. The invoice decides it, not the advert and not your memory. Read it before you price the car. This is a description of the published rule, not advice on your return.
VAT qualifying cars and the margin scheme →
Ready to buy cheaper stock?
Tell us about your dealership. We'll check your area, walk you through it and set up your buying site with you.