Dealer Agent/Dealer Co-Op UPDATE

I just found out that the Dealer Co-Op deal is technically illegal.

It isn't illegal for the dealership to offer the services but it would be illegal for me to participate in showing and selling cars here in the state of Arizona while representing a dealership in California or Texas. You have to show the car/sell your car/complete the paperwork from your place of business in the state of AZ.

This is where people have gotten in trouble in the past. They show the car and barter the deal somewhere other then a dealer lot and it's then illegal. It wouldn't be an issue until someone got mad and went to the Dealer Complaints Department with the state...

It's my understanding that there are two important principles at play here.

1. Where is the car shown to the customers/ Where is the price negotiated?
2. Where is the paperwork completed?

The Co-Op that i was looking into took care of #2 by forcing all paperwork and titles to be done at the dealership. The hope is also that this shows the DMV that the customers were actually there. But at some time in the transaction the customer has to sign the papers and that needs to happen at the dealership or via mail correspondence. Not at the corner drug store. This is where Ebay and other online auctions get a pass. The car is presented and sold from the Dealer at their place of business. The pictures are often take of the car at the Dealership. The paperwork for licensing is completed and the car is shipped when funds are verified. The Dealers agent doesn't meet with the buyer at their home to complete the paperwork and doesn't drive the car across the state line to show the potential buyer.

This is all a grey area in the law but I've read about people getting sued and even spending time in jail over this. Now Tim says that these people broke the rules. Yeah they probably did but I would have no legal foot to stand on if I made a minor mistake either. All it would take to have a really bad day is to have one customer complain and then the state prosecutor would get involved.

So back to the drawing board.

I'm going to keep looking for ways to make getting a license and starting this business a little less expensive but for now this is getting pricy.

Did you know that Arizona is one of the most expensive places to get licensed?

We're one of the only states that require a $100,000 bond. Man did I pick the wrong place to do this...