How to Calculate Real Profit on a Used Car Before You Buy
Most bad stock decisions do not fail because the sale price was impossible. They fail because the buying calculation was too optimistic. A proper profit check starts before you bid, before you collect and before you promise yourself the prep will be cheap.
Start with landed cost, not hammer price
The purchase price is only the first line. For auction stock, landed cost should include hammer price, buyer fees, online fees, storage or retrieval costs where relevant, VAT treatment, and transport. For direct stock, landed cost should still include collection, payment fees and any immediate appraisal costs.
A simple rule: if the cost has to happen before the car is saleable, it belongs in the deal calculation. Do not leave it in your head.
Separate known costs from likely costs
Known costs are already committed: purchase, transport, paid parts, paid labour, MOT fee and valet. Likely costs are not paid yet, but should still sit in your projection: tyres close to the limit, warning-light diagnostics, paint correction, service items, second key, trim pieces and advertising.
Good traders track both numbers. Cashflow cares about paid costs. Buying discipline cares about paid plus likely costs.
Use a risk buffer before you call it profit
A stock car that looks profitable by £300 before diagnostics is usually not profitable enough. Build a buffer for unknowns, especially on salvage, high-mileage stock, auction stock and anything with limited history.
The buffer is not pessimism. It is a way to stop one hidden fault from eating the whole deal.
Check public records before pricing
Use the official MOT history to review mileage, advisories and repeat failures. A car with recurring tyre, suspension or emissions advisories may need more prep than the advert suggests.
If London buyers are part of your market, check ULEZ status before leaning on it in the advert. Emissions desirability can affect speed of sale.