One of my readers sent me an email to share how he started his own used car lot with 0% interest money.

His name is Ryan Rose, and Ryan is an all-around good guy who has generously shared some of his car deals and what he learned from my book, The Lazy Way To Buy And Sell Cars For Profit, in these blog posts, here, here, here, and here.

I’m sure after reading this you will agree that Ryan is a smart guy that’s done everything right. And by “everything right” I mean that instead of reading my stuff and putting it aside – Ryan had the balls to take action and get out there and do a bunch of car deals.

And Ryans car deals lead to him…

• Learning the fundamentals of buying and selling cars by actually doing. (Imagine that?!)
• Making a bunch of money. In fact, Ryan reported in this blog post that  the money he made in his spare time in one month ($5700.00 in profits) from buying and selling used cars eclipsed the monthly take home pay of his full-time job by a whopping 250%.
• Gaining confidence with each successful car deal, which convinced him this is a viable business, which ultimately lead him to take the very well thought out and executed plan of…
• Starting his own used car lot.

Here is Ryan’s plan of world domination in his own words…

So Steve, you know I’ve been talking about starting my own “REAL” Car Dealership for a few years now. Well, I finally got the gumption and went ahead and did it!

There’s plenty to tell you about the location of my used car lot…

• Small building with 19,000 vehicles passing by daily.
• Rent: $300 a month w/ office furniture and water included.
• Land Lord: Great guy and a wholesale car dealer who will be a huge resource for me.
• Bond: $100 a year.
• Insurance: $100 per month.
• License application took 3 weeks over the holidays and cost about $300 and the inspection went smooth. There were other fees and paper work that totaled about $150.

The total cost to open my own car lot and get licensed was only $750 plus $300 for first month’s rent.

But what I really wanted to tell you was how I secured $11,500 in start-up funds to buy inventory for next to nothing…

I put my business plan together (A great resource for writing a business plan quickly is here.)  and figured that I wanted to start with somewhere in the ballpark of $20,000 – $25,000 in “Car Buying” capital. Between the vehicles I already was looking to sell and some “Car Cash” I had in hand, I had roughly $13,500.00 in cash and equity, this meant I needed to raise some “dough” to get where I wanted to be!

Side note…

I aim to start out with 10 cars on my lot (up to 7 with $7,000 in cash left) and primarily sell cars under the $4,000.00 price tag, anything under $4k where I live doesn’t require the buyer to pay a 6% sales tax and buyers like avoiding that when they can. So I’m shooting for my average car to cost me $2,500.00. That’s an average. I bought one van for $500.00 this week and another for $1000.00 tonight, so prices vary.

Okay, back to financing…

I began to explore options. I looked at traditional ways, like lines of credit, floor plans (common line of credit option for car dealerships), small business loans, and a couple of web based services. None of the aforementioned options would provide me with what I was looking for. Most of those required a proof of business income and had a substantial monthly payment with an interest % attached.

I did not want to take on debt and pay fees and interest so I could avoid having TOO MUCH OVERHEAD, which is the death of most  small businesses!

So I did some more research and creative thinking…

I knew there were handfuls of credit cards out there that offered 12 to 18 month periods of 0% interest and I figured I could get a decent limit which would be helpful in a pinch to pay business bills, personal expenses, and emergency repairs if needed when cash was tight. But that wouldn’t really help me buy cars for individual sellers, “Hi, I see you are selling your Ford Taurus for $2,500, do you take plastic?” Ain’t gonna happen.

I knew I didn’t want to take cash advances off the card as those are costly 3% or so each time and cash advances are almost never available to the 0% interest intro offer. Screwed again.

But then I had an idea…

Some cards periodically send out “Convenience Checks.” I know your first thought is, “Why would convenience checks be of any benefit because someone selling a car wants cash, not a check?”

I’m glad you asked that…

The convenience check is your golden ticket to start-up CASH. I promise. Hang in there, and I’ll go into the details in a minute. But essentially, with a convenience check, you can write a check out to yourself and deposit it in your own bank account. So from your credit card account you use a “convenience check” to write yourself a check for the limit on your card and voila you now have cash in your bank to withdraw and buy cars with, office supplies, pay bills etc.

Back to the details…

I wondered if those “convenience checks” would fall under the 0% interest offer? Interestingly enough, some offers will include those checks and some will not. The downside is that most of the cards I was looking at only send the convenience checks out as a promotional offer at random times and they couldn’t tell me when the next batch was going to go out. And even then, some have a 3% fee attached with the 0% interest applying to the principle, the money I was actually borrowing.

So I decided to continue to look and do more research because the more you look for a good deal, the more likely you are to find it.

I decided to call my personal bank, USAA, and ask about their credit card offers. They had dozens of credit cards, none of which had any kind of a promotional window of 0% interest. Lame. But I had done some research which said that I needed to specifically ask if they had any “special offer” cards. So I asked, to which the rep on the other end of the phone said, “I’m glad you asked that, we have some good partner offers I’d like to share with you, and I’m not allowed to talk about them unless you ask first!”

Smooth move on my part. It never hurts to ask!

So as the rep goes into details on the cards again, I’m hit with a joy killer, no intro 0% periods of time on any of those cards either. Even lamer. So I ask, “Where are the special offers with these cards?” The rep responds, “I’m glad that you asked that, these cards offer a 0% interest rate for balance transfers and convenience checks used within the first 90 days of opening the card.”

So to clarify, any balance transfers or convenience checks used in the first 90 days of the account are given a 0% interest rate for a 12 to 16 month period of time. The number of months depended on the offer! This was good news and became even better news when they said they would send a batch of convenience checks with the credit card in the mail! Thank you USAA!

In addition to the 0% interest promo on the convenience checks, they don’t do the standard 3% fee either. Instead, they max your fee out at $200 per check. I applied for the card, they approved me for $11,500.00 which was GREAT! Good credit helps to get approved and credit in addition to a low debt to income ratio helps get you a higher card limit.

So in order to only pay the check fee one time, I wrote myself a check for the full amount of my limit minus the $200 fee. That means I wrote a check for $11,300.00 and deposited it into my bank account. Some banks have deposit limits, but if you call and ask, they will temporarily raise it.

For you USAA members out there, UPS stores can do deposits for you on amounts up to like $199,999.00.

The funds were immediately available in my bank account. I made double sure I knew all the facts buy calling and discussing the terms on the card and the promotions with two separate representatives. Better safe than sorry!

So let us review…

12 to 16 month window with a 0% interest loan to yourself with a credit card. Minimal fee of $200 or so depending on the bank and card you get. Using convenience checks allows you to circumvent nasty fees attached to Cash Advances. No monthly fees, no interest, no hassle.

If you don’t have USAA, I’m sure that’s okay because there are other banks and other credit card offers out there waiting for you to use and abuse to make your dreams come true (hopefully Buying and Selling Cars for Profit).

So folks, that’s how you cheat the system, circumvent interest rates and most fees to give yourself a nice, very inexpensive, and mostly hassle free business loan to cover some of your start-up costs to start your own used car dealership or other awesome business ventures!

I invested personally about 60% of what I wanted for start-up money, but it’s totally feasible to start with only the money from an offer like the one I got.

You just need to make sure you have an “all in” mentality and don’t go in all cavalier with guns blazing and be completely clueless about what you are doing.

To clarify…

I only advise taking this route to acquire funds for a business you are planning to fully invest yourself into and only after you’ve put a lot of time, effort thought, and consideration into it.

I would only suggest using the bulk of these funds on inventory you feel confident in selling and will be able to reacquire the initial funds in order to pay the debt back on your card before the end of the 0% interest promotional time period.

Debt sucks and interest rates suck more!

Happy hunting!