What IS a Used Car Sales Contract?

A Used Car Sales Contract is a document that contains the terms of the transaction between the seller of used cars or vehicles and the buyer. It outlines the agreement and the arrangement between the seller and the buyer. From the choice of a used vehicle, its design or model or type, to its price, to its warranties and after-sales support, to the payment method, to the mode of delivery and pick-up, all of it is outlined in the used car sales contract. A sales contract is often known as a sales agreement. As with any type of sales agreement, this piece of document seeks to protect the rights of both parties, the seller and the buyer and can be used eventually in court if there is a need to seek legal action if there are any infringements made with the terms indicated in the contract. Used car sales contracts, in essence, should be written as clearly as possible to avoid any misinterpretation or being misconstrued. 

How to Successfully Run a Used Car Business

More than just acquiring used, second-hand, or auctioned vehicles, running a used car business takes a lot of planning and strategizing. With the growing competition out there of businesses getting into used car trades, it takes a lot of efficient business planning to get and stay on top of the selling game. The used car industry has been growing over the years, considering the depreciating value of vehicles. As new models from car brands come out every year, so does the customer’s need for vehicles changes as well. A good marketing strategy can successfully create that need in the customer, making the customers feel like the new car’s features are what they want and need in their lifestyle, which makes this an opportunity for customers to let go of their old vehicles to make way to purchase newer vehicles. This is where used car businesses came in. Old vehicles are dropped off at used car dealerships or offered up at auction sites. So, are you planning to join the used car trade? Here are the things that you need to know.

Come up with a Business Plan: Just like any other business, a used car business also needs to have a well-drafted business plan. A business plan is a company’s tool, a guide that lays out in an organized manner what the actions need to be taken for the business to succeed in the market, or for the business to achieve its goals and objectives. Oftentimes, a used car business plan contains a mission and vision statement, the business’s products and services offered, the marketing and sales strategy, and the financial or budget planning. The mission statement of a used car business plan explains the purpose or the reason for having a used car business. It also touches on the culture and values of the company as a whole. The vision statement depicts what the used car business hopes to achieve in a period. It’s an action call, motivation, and inspiration for both the business employer and its employees to work together to accomplish the business’s goals.Be a Car Expert: Rule of the thumb: you cannot sell something that you are not knowledgeable about. The same goes for selling vehicles. As a used car owner, you need to be knowledgeable in the types, makes, brands, and models of all vehicles. This knowledge is useful when you’re acquiring vehicles for your business. You wanted to purchase used vehicles that are still worth using and selling. You wanted to distinguish the right kind of vehicles for the right kind of customers. You want to provide vehicles that fit into your customer’s requirement, whether it’s a lifestyle need, a budget needs, or simply a convenience need. This knowledge will also help you in estimating how much the cost of repair and maintenance a car needs, and how much profit you can be able to make off of it, less the costs and expenses. Aside from training yourself as the owner, you also need to make sure that your employees are knowledgeable as well, especially your salespeople since they’re the first ones who get to talk to the customers. Have a Good Marketing and Sales Strategy: A marketing strategy plans out the actions needed to position the used car business in the market. It’s all about identifying your target customer market, reaching out to them, and building a need within them to purchase a used car. A sales strategy is the actions to be taken to turn prospective customers into actual buying customers. Another way to differentiate between marketing and sales strategies is that marketing is about meeting the customers’ needs, while sales are meeting the company’s needs or goals. A good example of a used car business marketing strategy is building an online presence, either through website creation or creating a social media or social networking account. Creating a business website is the first good step to take. Utilizing search engine optimization (SEO) marketing is another good strategy. SEO marketing is making sure that your website stays relevant and on top of every keyword search over the internet for used cars. It is also good to be active as well on social media and social networking by frequently posting recently acquired used vehicles for sale. Having an influencer to help promote your business is also another good marketing strategy. For the sales strategy, making sure that your salespeople are on the move, on the field, and in the right strategic location to sell used cars is a good move. Another sales strategy, albeit a bit boldly, is to open up franchises to strategic locations near to your customers, or to partner up with some other business in terms of offering promotions and discounts. Like partnering up with retail stores by giving a discount to whoever purchases specific items in that retail store. Another sales strategy is offering value-added services, such as free pick-up or delivery, free car wash, free preventive maintenance, free change oil, and so forth.Good After-Sales Services: One of the convincing points in turning around people’s decisions and making them purchase is knowing that the company offers a good after-sales service program. After-sales services are the supports provided to the customer after they purchase the product. One way to have good after-sales service is by training the customer service team on knowing how to communicate with customers, and even train them to do first-hand resolutions. The customer service team should ultimately be knowledgeable and trained as well on used cars. After-sales also include warranties. Although there are used car businesses that do not offer warranties, still, warranties are a good selling point for used cars since it puts the customers minds’ at ease knowing that their vehicles can still be serviced after purchase.Financial Planning: Running a used car business involves having good financial planning. Financial planning is determining where the business is in its current financial condition and where it is projected to be heading. Oftentimes, a financial plan is also used to assess what are the action plans needed to be taken through the best use of the company’s resources to achieve the company’s goals and objectives. A financial plan includes listing the start-up capital and the costs or expenses for operating the used car business. Most businesses utilize a cash flow statement and a balance sheet as part of their financial planning. A cash flow statement depicts the cash coming into the business in the form of capital or investment funds, as well as the cash coming out in the form of expenditures. The expenses of the business usually include rental for the infrastructure or facility where the business is situated, purchasing of new cars via trade-ins, dealerships, and auctions, payment for technology, hardware, and software, payment employees’ salaries, payment for the repair and maintenance of the used vehicles, payment for utilities, and so on. On the other hand, a balance sheet shows a report of the company’s assets, liabilities, and shareholders’ equities.

How To Make a Used Car Sales Contract

A used car sales contract is more than just a legally binding document that holds all parties responsible for fulfilling the terms, conditions, and provisions that are stated in the contract. It is also a working document that guides your employees on what needs to be done or carried out once your customer makes that purchase. Used car sales contracts should be written clearly to avoid confusion or being misconstrued, because once the parties sign on those dotted lines, that means that they have clearly understood and agreed to whatever was listed and written on the contract. But, how to create one? How to create a used car sales contract that’s both acceptable in its format and effective once implemented for all parties involved?

  • 1. Identifying the Parties

    The first step in making a used car sales contract is to identify who the parties involved are. Mainly to identify who is the seller and who is the seller. The parties’ full names and contact information should be provided accurately. Contact information should contain the addresses and the phone numbers.

  • 2. Description of the Item Sold

    The next step, or the next paragraph, should contain an accurate description of the used car that was sold. The following details of the used car should be included (as appropriate): brand/manufacturer, model and year, type, body style, color, weight, size, series/ chassis number, height (if applicable), wheeler-type, quantity, vehicle identification number, license information, issuing state, mileage used, and/or any maintenance that was performed previously. This section should also state if there are warranties included along with the purchase of the vehicle, and should specify what are the after-sales services or value-added services that come along with the purchase.

  • 3. Terms and Conditions

    This section could be broken down into different sections, or it could all be included in just one section under terms and conditions. Terms and conditions included the payment terms and method, late payment or default in payment terms, delivery terms, and the terms related to exchange if there are any damages, et cetera. Payment terms and methods include how will the buyer be making payments, whether through installments or bulk payments, when the payments will be made, the timeline for the payments, and the acceptable payment method such as cash, bank transfer, over-the-counter payments, cheque deposits, or through a collection agency. Default or late payments are often written as a separate section in the contract. A default payment happens when a payment was not made within days after the agreed payment due date, which shall then be computed with usually a compounding interest rate. Delivery terms should include when and what time the delivery of the used car will be made, or if it’s done as a pick-up by the customer. If the company will handle the delivery, the delivery terms should include the cost of delivery, method of delivery, as well as a liability for failure to deliver or damages that were incurred during delivery.

  • 4. Miscellaneous Provisions

    This is the part where you include all applicable provisions, or laws, about the sale of a used car. The first provision is known as the severability clause, which provides that the other parts of the contract are still enforceable despite finding out later on that some parts are invalid. The next provision is the governing law, which outlines what state governs the enforcement and implementation of the contract are founded upon. Another provision is what is known as the breach of contract. The breach of contract provides what happens if one party violates the terms in the contract, in what circumstances can a contract be terminated, and what are the appropriate legal actions a party can take to recover their losses.

  • 5. Signatories

    What seals the deal of the whole contract is the signatories section. Both parties involved should sign with their names and signatures at the bottom part of the contract, including the date on which the contract was agreed upon. If there are co-makers to the transaction, co-makers should also sign their names, together with their contact information.


What are the different types of car dealerships?

Depending on the requirements you need in a vehicle, as well as your budget, of course, there are different types of car dealerships out there to go to that can cater to your specific needs when it comes to purchasing a car. Some types of car dealerships are: new car dealership, for those who wanted to purchase brand new vehicles; used car dealership, a shop that’s smaller in space, for those who are on a budget, but still have a requirement when it comes to looking for a car; and/or private seller or retailer.

What are some of the benefits when buying a used car?

The top benefit of buying a used car is that it saves you a lot of money. Considering that the depreciation on the car’s value has already occurred, you’ll be buying a car at a price that’s more or less half than its original price. Another benefit is that you get to enjoy the used car’s features as if it were still brand new. Most used car businesses tend to repair and refurbish old cars so that they’ll come out looking as if these were just recently released in the market. Warranty is also another benefit. Who would have thought second-hand cars are also covered by warranties? But yes, they do, just as if you were buying a new car.

What are other marketing strategies that can attract more customers to your business?

One way to attract new customers to your business is to hold contests, promotions, or discounts. People love getting value for their money, not to mention big, grandiose events also attract them, when they’re buying something. Having a contest or a promotion can attract customers, making them feel the need of joining as something that can greatly benefit them. Another strategy is through video marketing. In today’s terms, this is also known as a vlog. A vlog, or video blog or video log, is a series of videos created with specific content and posted online through social media platforms or social networking sites. Doing a vlog is a great way to showcase your available used cars for sales, and a great customer experience for people to see the car and its features, and to eventually make their decision without physically being in the actual store.

For companies like Lithia Motors, they need to include every essential detail in a sales contract once a transaction has been made between them and the customer to buy one of their used cars. This action not only protects the business owners’ rights but also ensures that the buyers get what they paid for and what they expected out of the purchase. Creating a used car sales contract can be a bit tricky, but once you know what are the important elements to include in the contract, then you’re ready to go! Download our used car sales contract templates, and start creating that transaction and relationship between you and your customer that will make your business successful!