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Assuming this is legal (California, US), can I resell a vehicle which was purchased for me with a 25% off employee discount with my money by a friend. The friend has the 25% employee discount, and is purchasing on my behalf. Once I have it, can I transfer ownership to myself and sell at a higher price? Legally...

I want to purchase another vehicle with the <25% profit from the resell.

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Check the employee-friends-and-family sales contract, which your friend should be able to get quite easily. There is almost always a minimum holding period before resale clause, specifically to prevent this kind of scenario. Without that clause, the dealers tend to riot...

Also, remember that a car loses a huge percentage of its value the moment it leaves the lot. Odds are that you'd be doing well to find someone willing to buy it from you at the discounted price.

If you don't want this car, ask your friend not to buy it and get one you do want. Seriously.

  • By the way, you can't "transfer ownership to yourself." The owner would have to do that, if they're going to. – keshlam Nov 3 '15 at 2:55
  • Oh, I know. That is what I meant. – Yarlo Nov 3 '15 at 3:11
  • Do you know where I could estimate the depreciation? – Yarlo Nov 3 '15 at 3:14
  • Search on a couple of big car-selling websites for car prices for <5k miles and current model year? – Joe Nov 3 '15 at 5:24
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    In the UK, it's reckoned a car loses a third of its value as soon as you drive it away. (That is, a £15k car could only fetch £10k once your name is on its documents.) At the very least, you will never regain the 25% saving -- which is why the dealership offers it to staff. – Andrew Leach Nov 3 '15 at 9:38
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Even if you avoid the issue of the auto dealer wanting to limit the abuse of their policy, you have to realize that the discount they give is 25% off of some stated price. It might be 25% off the sticker. They don't want to lose money, the 25% represents the haggling they avoid by selling to the employee. This means the discount might not be as large as you imagine, because you wouldn't have paid sticker if you had purchased the vehicle on your own.

The other issue you will have to deal with is taxes and registration. When your friend drives the car off the lot, the car will have to be registered with the state. Then they will have to sell the car to you, and that transaction will have to be done though the state, for a price. Then you will sell it to somebody else. These transaction fees will cut into your profits.

It is likely that when the potential purchaser runs a VIN check through a service it will show multiple owners, which can cut the estimated resale value.

The manufacturer will also have to be notified so that all the relevant warranty coverage is still intact.

The question is for that final sale: can you offer enough discount compared to the new car dealer? and still make enough profit to be worth the hassle?

  • I'd like to request a private chat. – Yarlo Nov 11 '15 at 0:08
  • Say the MSRP on the car manufacturer's website is 100,000 USD. That would be 75,000 USD (discount) + ~5,000 USD (registration fee) + ~1,000 USD (licensing fee) + ~1,000 (dealer commission). That's ~82,000 USD bought new. There is at least 18,000 USD of wiggle room. – Yarlo Nov 11 '15 at 1:40
  • Most cars in the US are nowhere near $100K. – mhoran_psprep Nov 11 '15 at 5:05
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Most companies that have employee discounts have policies to prevent exactly this.

Sometimes they will say that you can only use the company discount for products that you intend to use yourself, they'll specifically ban buying things for friends. Of course enforcing such a rule can be difficult, but a car is a big enough purchase that if they have such a rule, they're likely to pay attention. Other times they try to discourage letting friends use your discount by having rules that make it awkward. Like I used to work for a furniture company that said you had to pick up the furniture personally at the office where you worked. So if you wanted to buy a sofa for your brother who lived in another state, you'd have to pay to ship it, and probably wipe out most of the savings from the employee discount. My daughter's employer says you have to show your employee ID when you make the purchase and then they deduct it from your next paycheck. So you'd have to get your friend to pay you back, maybe loan them your ID if they want to pick it out, which would get awkward. Etc.

Assuming the company doesn't care if you buy with an employee discount and re-sell, or their rules are lax enough that you can get away with it, I'm not aware of any law that would stop you. In general there aren't any laws against you re-selling things you've bought. People have garage sales and sell used cars and the like all the time. (There are specific exceptions. Like you can't re-sell prescription drugs.)

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