How does a car dealership make most of its money?

Like any retailer, car dealerships have more than one way to make money. How does a car dealership make most of its money?

Answer
“Contrary to popular belief, car dealers don’t make all that much when they sell a new or used car.
They make more money on other products, including:
  • Insurance, such as gap insurance
  • Added modifications
  • Extended warranties
  • Low-balling on trade-in values
  • Securing loans through other lenders
  • Rebates and other incentives paid through the automaker
Add these all up and car dealerships can make millions a year through these processes.
There are a lot of ways to save money when buying a car from a dealership. One way is to make sure you shop for insurance before driving off the lot with your car. Dealership insurance is often more expensive than what you can find on your own.
If you want help looking for insurance, try using the free Jerry app. Jerry compares rates from the top providers and delivers the best deals to your phone in minutes.”
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Eric Schad
Answered on Aug 23, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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