"How and when does a car dealer make a profit off of selling me a car? "

"I am early in the process of buying a new car and I don’t want to get ripped off by a dealer wanting to make way too much of a profit off my lack of knowledge. How can I know how much the dealership's cut is?"

“Dealerships usually make their profit via a commission or a one-time payment when you buy the car. Sometimes, this is obviously done by marking up the MSRP of the car you wish to buy. This can be avoided by shopping around.
Other ways dealers can profit include a flat rate commission, which is paid to them for providing you with financing through captive lenders and by marking up the interest rates they provide to you. This can be avoided by seeking your own financing before negotiating at the dealership.
Also keep in mind that when budgeting for a vehicle, you will also need to get insurance. You can find good deals by using a smart comparison tool like Jerry to help you find the best rates.”
Johnny Puckett
Answered on Jul 26, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.

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