You’ve likely heard of flipping houses, but did you know that some private vehicle sellers actually buy cars with the intention of reselling them immediately?
That’s right, car flipping exists — and there are potential profits to be made! However, in doing so, you could run the risk of violating your state’s laws if you’re not careful. Of course, each state has different regulations for non-dealers when it comes to selling cars.
So, let’s talk about the car-selling penalties in Pennsylvania for those thinking about getting into “the business” of reselling used cars.
What Exactly is Car Flipping?
Car flipping is exactly what it sounds like. It’s the process of buying a used car with the intention of reselling it quickly. Obviously, this practice is more common in vehicles bought privately than through a car dealership.
Now, you may have privately sold a car at some point and are thinking, what’s the big deal?
Well, there is quite a significant difference between simply reselling a car and attempting to flip cars for a profit. The motivation or intention is what makes the difference. Usually, when a person is selling their own used vehicle, it’s to make room for a new car or just to clear an unused vehicle out the garage.
The motivation for buying a car with the intention to resell it immediately is profit. In the case where a reseller does this more than four times per year, the State of Pennsylvania requires that seller to have a dealership license.
Essentially, flipping cars isn’t illegal — however, most states have limits on how many used cars may be resold without an official dealer’s license.
What Are the Penalties for Selling Too Many Cars in PA?
The legal limit for selling cars without a license in Pennsylvania is four or fewer vehicles within a 12-month period. Anything more than that requires an auto dealer license and legal business.
But what happens if you exceed the four-vehicle limit without a license? According to Pennsylvania laws, you’re looking at:
- A $250 fine for a first offense
- A $500 fine for a second offense within one year of the first offense
- A $1,000 fine for a third offense within one year of the second offense
- Another $1,000 fine for a fourth offense and any subsequent offenses within a year of any previous offense
This could also eventually lead to jail time and misdemeanor charges.
Be Cautious of Resellers Without a License
While it’s technically an illegal practice to resell more than four vehicles in a 12 month period, people still flip cars simply because it can generate profits. Of course, this means they do so illegally by evading tax records — and other documents — for car sales, which is referred to as “curbstoning”.
In a nutshell, curbstoning is the practice of selling a car in a private sale, many times without ever transferring the title from the previous owner, paying the appropriate sales tax or completing the proper documentation with the new owner. This practice has been dubbed curbstoning as these deals usually take place in parking lots or right at the curb of a private residence.
Unlicensed car flippers are one of the reasons why buyers are encouraged to obtain a Carfax history report and have a trusted mechanic inspect the car they’re thinking of buying — among other precautions. Of course, buying a used car with Motobyo and taking advantage of the built-in safety and security measures offered by the platform can help avoid running into issues like these altogether.
Learn more about buying cars safely with Motobyo today!
