Selling cars on consignment: how the money works for a small lot
Consignment puts more cars on your lot without tying up your cash in them. Someone leaves their car with you, you sell it for them, keep a cut and pay them the rest. You never own the car. That's the appeal, and it's also why the money needs more care than on a car you bought: every dollar either belongs to you or to the owner, and they'll want to see which.
Here's how the numbers work, from the agreement to the owner's payout.
How consignment works
- The agreement. You and the owner sign before the car comes in: how long you'll have it, the asking price, the lowest price they'll accept, your cut, and what costs they'll pay for.
- In stock. The car sits on your lot like any other. You list it, show it and record what you spend on it.
- Sold. It sells in a normal sale. To the buyer, you're the dealer selling a car, with the same duties as always.
- The payout. You pay off any loan, take your cut and the costs the owner agreed to, and pay them the rest with a statement that shows every line.
If it doesn't sell, it goes back to the owner, or you buy it from them.
Three ways to set your cut
- A percentage of the sale price, say 10%. Simple, and you both want the highest price.
- A flat fee, say $1,500. The owner knows exactly what you'll take.
- A fixed amount to the owner, say $17,000, and you keep whatever the car sells for above it. You carry the risk and the upside.
Whichever you pick, write the minimum price into the agreement too. Selling below it should take the owner's signed OK first.
The payout, line by line
Owner's payout = Sale price − your cut − costs charged to the owner − loan payoff − agreed fees
The sale price is the car's price after any discount you gave. A trade-in doesn't change it: how the buyer pays is your business, not the owner's.
| Line item | Amount (USD) |
|---|---|
| Sale price | 20,000 |
| Your cut 10% of the sale price | −2,000 |
| Detailing within the allowance | −200 |
| Cleaning within the allowance | −150 |
| New tires took costs to $750, so the owner OK'd the extra $250 by email first | −400 |
| Loan payoff paid to the owner's lender | −8,000 |
| Owner's payout | 9,250 |
If the loan is bigger than what's left after your cut and the costs, the payout would go negative. Sort that out before you finalize the sale: the owner pays the gap, the lender takes less, or the price goes up. Don't find out after you've paid the lender.
Costs: agree a limit up front
Most consigned cars need something: a detail, an inspection, tires. Agree one total the owner will pay for, the cost allowance, and list the work it covers if you like.
When a job would take you over that total, ask the owner first, and keep their answer: a signed note, an email, or a phone call you write down at the time with the date, the work and the amount. If they say no and you do the work anyway, it's your cost, not theirs.
Write down who did each job, too: your own shop, or the outside shop by name. The owner will see each line on their statement.
Your profit is your cut
This is where consignment numbers usually go wrong. The car's sale price isn't your revenue, and you never paid a purchase price, so the usual sticker math doesn't apply.
Your profit = your cut + agreed fees − costs you paid yourself
In the example above, if you paid for a $120 inspection yourself, your profit is $2,000 − $120 = $1,880. The owner's detailing and tires pass through you: they're never your cost and never your profit.
When the car doesn't sell
When the agreement runs out, the car goes back, or the owner signs an extension. Agree up front whether the owner pays the costs charged to them on an unsold car (most agreements say yes), and give them a receipt to sign on the way out: each cost and fee, what they paid and anything still owed. If you'd rather keep the car, buy it from them like any private-party car, and the costs you'd charged them become yours.
State rules come first
Consignment is where state law gets specific. A few examples, as we read them:
- California sets the agreement's wording in law and gives you 20 days after the sale to pay the owner (Vehicle Code §11730).
- Washington gives you 10 days after delivery and requires a trust account for the owner's money (RCW 46.70.028).
- Wisconsin gives you 7 days (Trans 139.08).
- Rhode Island (280-RICR-30-20-1.6) and Kentucky (KY dealer handbook) don't allow dealer consignment, and Iowa allows it only for heavy trucks (Iowa Code 322).
That's our reading, checked in October 2026, not legal advice. Before you take in your first car, read your own state's dealer rules on consignment, or ask your dealer association.
How GARAGEBIRDS handles it
In GARAGEBIRDS a consignment starts with the agreement: the owners on the title, saved as contacts; the car and any loan; and the terms, with your cut as a percentage, a flat fee or a fixed amount to the owner. Where the state sets the agreement form, it's built in; everywhere else you use your own through Smart Print Forms. Both sides sign on paper, and the signed pages stay on the consignment.
Signing puts the car into inventory marked On consignment, with no purchase cost. Each cost is either charged to the owner or yours, with the allowance, your estimates and every extra OK kept on record. The car sells through an ordinary deal, and the payout is worked out from it line by line, with your state's due dates and a reminder before each one. The owner gets an itemized statement, or a return receipt if the car goes back.
GARAGEBIRDS records the payments and never moves money, and it never contacts the owner. Each state rule it applies is labelled as our reading of that state's law, linked to its source; following your state's law stays your responsibility. Starting a consignment is on Pro; here is how it works, with screenshots.
In GARAGEBIRDS: Consignment — sell a car for its owner, with the agreement, owner-approved costs, payout due dates and the owner’s statement (Pro plan).