CHAPTER 5 - DEALER PROFIT AND HOW TO MINIMIZE IT

ealer profit comes from several sources. Most obvious is thegross profit built into the sale price of the car—new or used. But (^)
this actually may be one of their smaller profit centers. Somecomes from the service and parts departments, if the dealer has (^)
them. Profit can also be made on any trade-in. Other ways for of makingmoney include the sale of products such as service contracts and interest-
rate markup that happens in the finance office. I’ll go into detail about eachof these in the appropriate section, with tips on how you can dramatically
reduce the amount the dealer makes. First, let’s cover some general dealerbackground information.

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It is important to understand that you and the dealer have fundamentallyopposed goals. Yours is to get the best vehicle to meet your needs at the (^)
lowest price possible. If you’re financing, you want the best interest rate inorder to obtain the lowest payment possible, and if you have a trade-in, you (^)
want to get the most you can for it. A dealership, being a profit-drivenenterprise, seeks to make the most gross profit possible on the sale or (^)
lease of a new or used car, take any trade-in for the lowest price possible(so they can maximize gross on it when they sell it) and mark up any
interest rates.
And, it doesn’t stop there. As we’ll discuss, they also make a largepercentage of their money selling you various products in the finance office. (^)
Each of the areas of the dealership are run by different people, each ofwhom has to maximize his or her department’s profits—meaning you’re (^)
facing off against not just one person whose needs don’t align with yours,but several.