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Hauling cars can be a cash cow because, because you’re getting paid per car [and per mile].
When hauling cars, you have a couple of options. You can transport the cars yourself. Or you can arrange for other carriers (or truck drivers) to transport cars as a freight broker.
If you’re still reading, I’m assuming you want to haul the cars yourself, which is what the rest of this blog post is about.
You should also be aware of one important thing before you get started. Technically, you don’t need a commercial driver’s license (CDL) to get started. So, you can hit the road…
If the combination of vehicles is less than 26,001 pounds, then you won’t need a CDL. So, the weight includes the weight of the commercial vehicle, trailer, and any cars being hauled.
However, as we discuss a little later, hauling vehicles without a CDL can be more hassle than it’s worth. So, with that in mind, let’s get started.
How to Start a Business Hauling Cars?
- Do the math.
Hauling cars can be very, very lucrative. However, it’s not a hobby. So, you’ll constantly be on the road with little downtime.
Also, your commercial vehicle will keep your pockets empty. It will eat tires, need frequent oil changes, and use lots of fuel.
To get started, you’ll need at least $2,000. However, this estimate doesn’t include the costs of your phone, laptop, commercial vehicle, and trailer. - Register your business.
If you’re using a DBA or a limited liability company (LLC) to start your car hauling business, then you’ll need to register your business.
Otherwise, you don’t need to register your business if you’re starting your car transport business as a sole proprietorship.
However, I strongly recommend that you use a LLC to start your business. Insurance limits can go only go so far. If your insurance limits are exceeded and you don’t register as a LLC (or corporation or limited partnership), you can have your personal property seized [if you’re sued].
Also, remember that you’ll need an Employer Identification Number (EIN) if your car hauling business decides to hire employees or your business is a corporation or partnership.
An EIN is free. Apply online and you’ll get an EIN immediately. - Get a USDOT number.
If you’re hauling cars interstate, then you need a USDOT with the FMCSA.
So, let’s break down that last sentence. The FMCSA (Federal Motor Carrier Safety Administration) is the agency that monitors the safety of all carriers for commercial purposes.
Companies that fall under the FMCSA’s rules must get a USDOT (U.S. Department of Transportation) number.
So, you’ll need a USDOT number if you’re hauling vehicles across state lines. But wait, there’s more.
If you live in any of these states, you’ll also need a USDOT number even if you never haul cars out of your state (intrastate carriers). These states are listed below:
Alabama
Alaska
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Indiana
Iowa
Kansas
Kentucky
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
New Jersey
New York
Nebraska
Nevada
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
South Carolina
Texas
Utah
Washington
West Virginia
Wisconsin
Wyoming - Get an Operating Authority.
An Operating Authority (MC number) is not the same thing as a USDOT number. So, you’ll also need a MC number if you transport cars across state lines (or within your state) for a fee (or other compensation).
Your MC number is based on the type of property you transport. So, you’ll need a MC number as a Motor Carrier of Property (except Household Goods).
Simply put, you don’t need more than one USDOT number. However, you may need multiple operating authorities (or MC Numbers) if you decide to become both a carrier and broker.
A MC number will cost $300. You can apply for a MC number online. - Get a surety bond.
Before your MC number can become active, you’ll need a surety bond.
The FMCSA requires a surety bond to ensure that carriers are following its rules and regulations. A claim can be made against your bond if you don’t follow the rules.
So, you’ll have to pay for any claims or amounts made against your bond. For example, if you decide to not pay a dispatcher, a claim can be made against your bond. A dispatcher is someone who can help you find [car-hauling] loads.
You can choose either a BMC-84 or a BMC-85 surety bond. Both surety bonds must have at least $75,000 in coverage.
The BMC-84 surety bond can be paid either as a yearly or monthly payment.
On the other hand, a BMC-85 surety bond requires that the $75,000 be paid upfront. The entire $75,000 will be deposited into a trust fund. You can’t access this trust fund, because any claims made against your bond will be paid out of this trust fund.
The price for a surety bond ranges from $750 to $9,000. The cost of your surety bond depends on your credit, your operating authority, and your surety company.
For example, you can find a surety bond provider on Suretybonds.com. You will have to renew your surety bond every year. - Get public liability insurance.
The most common types of insurance in the freight transportation industry are contingent cargo insurance and public liability insurance.
You’re not required to get contingent cargo insurance. However, you’ll be required to get public liability insurance.
Public liability insurance is supposed to cover any property loss or damage [to any loads]. So, you must have at least bodily injury and property damage (BI & PD) insurance.
You will not be able to get your operating authority until you get public liability insurance. - Get your BOC-3 filed.
You’re required to file a BOC-3 form if you haul cars out of state. This form will list your process agent, which is a company that will be contacted if your business is sued (or needs to accept legal paperwork).
You can pay a small fee [as low as $35] to use a process agent service. An approved list of process agents are listed on the FMCSA website. - Get a unified carrier registration.
If you’re hauling cars outside of your state, you’ll also need a UCR (Unified Carrier Registration). You can apply online. The fee is $41 if you own or operate less than 2 vehicles. This is an annual fee.
- Buy (or lease) all of your equipment.
There are at least 5 things you need to get started: 1) phone, 2) computer, 3) reliable internet, 4) commercial vehicle, and 5) trailer.
A Kaufman 3 car wedge trailer is popular for hauling cars and it doesn’t have an upper deck. You’ll also need a pickup truck to pull the 3 car hauler, e.g., Ford F-250, Ford F-350, etc.
Used 3 car haulers can range from $5,000 to $10,000. A new car hauler can set you back $10,000 to $16,000.
This setup of using a Ford F-350 and 3 car hauler doesn’t require a CDL. But remember that the truck, trailer, and all the vehicles [being hauled] must be under 26,001 pounds.
Even though you can load 3 cars, you may want to stick to a 2 car hauling business.
Doing the math, you’re pushing it at 2 cars and you’ll probably be overweight with 3 cars. USDOT officers love to pick on these types of carriers because they know they’re easy targets.
So, if you get caught being overweight, you’ll be put out of service, heavily fined, and it’s reported against your MC number. This can also lower your safety rating with the FMCSA.
Some carriers would say you’re asking for bankruptcy [or trouble] if you don’t get a CDL to haul cars. This 2 to 3 car setup makes it easy to get overweight. You’ll also limit the amount of money you make since you can only pull 2 to 3 cars at a time.
So, if you decide to start a non-CDL car hauling business, you should always make sure you’re hauling less than 26,001 pounds. - Sign up with a load board.
As a car hauler, you’ll need to find loads.
You have two options. You can hire dispatcher. A good dispatcher can find you loads quickly but you’ll have to pay them either a flat fee every week or a commission for each load.
The other option is to find your own loads. Most load boards include more than just car hauling loads, e.g., DAT, Truckstop, Convoy, 123loadboard, and Trucker Path.
A lot of load boards don’t cater to car hauls, and a lot of load boards require a subscription fee. So, you’ll have to filter out a lot of the results to find loads for hauling cars.
For some car hauling load boards—one in particular, which I won’t name—the loads are pure garbage. In my opinion, the loads listed on this platform weren’t profitable.
The best way for you to make lucrative money in the car hauling business is to: 1) use a flatbed that can carry multiple cars at once and 2) build direct relationships with brokers and shippers.
This will allow you to bypass the load boards altogether. But you have to start somewhere.
So, if you decide to use the load boards, you need to do the math—literally. Fuel is expensive, and you have to factor in these costs when choosing loads.
For example, for each load you should use this formula: cost per mile/rate per mile. At the bare minimum, your rate con should be double the mileage for there to be a profit. (A “rate con” is the rate confirmation, which includes the all of the details of the load, e.g., payment, shipper, etc.)
- Use an electronic logging device (ELD) (optional).
If you’re not a CDL, then you won’t need to install an ELD in your commercial vehicle.
An ELD is a piece of technology that a CDL is required to keep in their truck. The ELD will track hours of service (HOS), location, and driving activity.
Keep in mind, if you’re a CDL, then you may be exempt from using a ELD if you drive within a 150-mile radius. Otherwise, a CDL will need a ELD. - Get an accounting system (optional).
This is optional, but it will make your life a whole lot easier if you used an accounting system, e.g., Quickbooks to keep track of your expenses.
- Create a website.
You don’t need a website, but it will help your car hauling business appear professional. If you create your own website, it won’t be expensive.
You can use platforms such as Wix, Webflow, Squarespace, WordPress, etc. to create website. - Sign up with a factoring company (optional).
As a car hauler, you need to keep money coming in. This may surprise you, but most carriers don’t get paid the same day they complete the delivery.
The major exception is if you use a factoring company, which will pay you for each load. Once you get approved by a factoring company, you would transfer your invoices to that factoring company.
In exchange, the factoring company will pay you for your invoices directly for a commission or fee. Then, the factoring company would get paid by submitting these invoices to the brokers or shippers.
Without using a factoring company, it can take at least 30 days or more to get paid.
Wrapping It Up
Hauling cars can mean hauling loads of cash. But put your foot on the brakes before you haul ass(ets).
Think wisely about whether it’s worth becoming a CDL or freight broker. Or maybe you would like to to do something else altogether.
Whatever you decide, just make sure it’s legit.