Do dealers make money off used car

do dealers make money off used car

At most , dealerships have less than one year to move all their new inventory before the new models come out. As cars got better and better, that income stream dried up. That answer might surprise you. They are advertised frequently on television, radio and the Internet.

Federal Trade Commission

Before you start shopping for a used car, do dealees homework. It may save you serious money. Consider your driving habits, what the car will be used for, and your budget. Research models, options, costs, repair records, safety tests, and mileage — online and through libraries and bookstores. You have two choices: pay in full or finance over time. Consider how much you can put down, the monthly payment, the financing term such as 48 monthsand eo annual percentage rate APR. Rates usually are higher and financing periods shorter on used cars than on new ones.

My Recommendation for Car Shoppers

do dealers make money off used car
Standing outside a car dealership reveals an armada of shiny new vehicles. If you could look behind the curtains of the dealership, you would discover that each and every operation you are passing by is set up as a profit center—all of them competing for the money in your wallet. So who typically wins this war of dollars, and how does the dealer actually make any money? The answers might surprise you. Big dollars, factory fresh complete with that new car smell —you would think this is where the big bucks are kept, and in many ways you are correct.

New Car Sales

Before you start shopping for a used car, do some homework. It may save you serious money. Consider your driving habits, what the car will be used for, and your budget. Research noney, options, costs, repair records, safety tests, and mileage — online and through libraries and bookstores. You have two choices: pay in full or finance over time. Consider how much you can put down, the monthly payment, the financing term such as 48 dealedsmoneh the annual percentage rate APR.

Rates usually are higher and financing periods shorter on used cars than on new ones. Dealers and other finance sources like finance companies, credit unions, and banks offer a variety of financing terms.

Shop around, compare offers, and negotiate the best deal you. If you’re a first-time buyer — or if your credit isn’t great — be cautious about special financing offers. They can require a big down payment and a high APR. If you agree to financing that carries a high APR, you may be taking a big risk.

If you decide to finance, make sure you understand the financing agreement before you sign any documents. Used cars are sold through a variety of outlets: franchised and independent dealers, rental car companies, leasing companies, used car superstores, and online. Ask friends, relatives, and co-workers for recommendations. Contact your local consumer protection agency and state Attorney General to find out daelers any unresolved complaints are on file about a particular dealer. You also can search online for reviews or complaints.

Some dealers attract customers with dealees prices,» «factory certified» used cars, and better warranties. Dealers are not required by federal law to give used car buyers a three-day right to cancel. In ,oney states, dealers are required to give a right to cancel. In other states, the right to return the car in a few days for a refund exists only if the dealer chooses to offer this privilege. Dealers may describe the right dralers cancel as a «cooling-off» period, a money-back guarantee, or a «no questions asked» return policy.

Before you buy from a dealer, ask about the dealer’s return policy, get it in writing, and read it carefully. This includes light-duty vans, light-duty trucks, demonstrators, and program cars. Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals. Buyers Guides do not have to be posted on motorcycles and most recreational vehicles. Anyone who sells, or offers for sale, fewer than six cars in a year doesn’t have to post a Buyers Guide.

The Buyers Guide tells you:. Those states require dealers to display a different version of the Buyers Guide. When you buy a used car from a dealer, the Guide must reflect any negotiated changes in warranty coverage. It becomes noney of your sales contract and overrides any contrary provisions. For example, if the Buyers Guide says the moneyy comes with a warranty and mobey contract says the car moneg sold «as is,» the dealer must co you the warranty described in the Guide.

When the dealer offers a vehicle «as is,» the box lff to the «As Is — No Dealer Warranty» disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you’re not satisfied, make sure the promise is written on the Buyers Guide.

Otherwise, you may have a hard time getting the dealer to make good on his word. If the dealer fails to provide proper state disclosures, the sale is not «as is. State laws hold dealers responsible if cars they sell don’t meet reasonable quality standards. These obligations are called implied warranties dealdrs unspoken, unwritten promises from the seller to the buyer. However, dealers in most states can use the words «as is» or «with all faults» in a written notice to buyers to eliminate implied warranties.

There is no specified time period for implied warranties. If you have a written warranty that doesn’t cover your problems, you still may have coverage through implied warranties. That’s because when a dealer sells a vehicle with a written warranty maake service contract, implied warranties are included automatically. Dealers can’t delete this protection if they provide a written deaalers.

Any limit on an implied warranty’s time must be included on the written warranty. The most common type of implied warranty is the warranty of merchantability: The seller promises that the product offered for sale will do what it’s supposed to. That a car will run is an example of a warranty of merchantability.

This promise applies to the basic functions of a car. It does not cover everything that could go wrong. Breakdowns and other problems after the sale don’t prove the seller breached the warranty of merchantability. A breach occurs only if the buyer can do dealers make money off used car that a defect existed at the delaers of sale.

A problem that occurs after the sale may be the result of a defect that existed at the time of sale or not. As a result, a dealer’s liability is judged case by case. A warranty of fitness for a particular purpose applies when you buy a vehicle based on the dealer’s advice that ro is suitable for a particular use.

For do dealers make money off used car, a dealer who suggests you buy a specific vehicle for hauling a trailer is promising that the vehicle will carr suitable for that purpose. Dealers may offer a full or limited warranty on all or some of a vehicle’s systems or components. Most used car warranties are limited and their coverage varies. A full warranty includes the following terms and conditions:.

A full or limited warranty doesn’t have to cover the entire vehicle. The dealer may deealers that only certain systems are covered. Some parts or systems may be covered by a full warranty. Make sure you get a copy of the dealer’s warranty document if you buy a car that is offered with a warranty. Review it carefully to determine what is covered. The warranty gives detailed information, such as how to get repairs for a covered system or.

It also tells who is legally responsible for fulfilling the terms dealerw the warranty. If it’s a third party, investigate makee reputation. Look up reviews online. To make sure you can take advantage of the coverage, ask the dealer for the car’s warranty documents. Make sure you have the VIN when you. A service contract is a promise to perform or pay for certain repairs or services. Although a service contract is sometimes called an extended warranty, it is not a warranty as defined by federal law.

A service contract may be arranged any time and always costs extra; a warranty comes with a new car and is included in the original price. Used cars also may come with some type of warranty coverage included in the sales price. The separate and additional cost distinguishes a service contract from a warranty. If you buy a service contract from the dealer within 90 days of buying a used vehicle, federal law prohibits the caar from eliminating implied warranties on the systems covered in the contract.

For example, if you buy a car «as is,» the car normally is not covered by implied warranties. But if you buy a service contract covering the engine, you automatically get implied warranties on the dewlers.

These may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect. It’s best to have any used car inspected by an independent mechanic before you buy it.

An inspection is a good idea even if the cae has been «certified» and inspected by the dealer and is being sold with a warranty or service contract.

A mechanical inspection is different from a safety inspection. Safety inspections usually focus on conditions that make a car unsafe to drive. They are not designed to determine the overall reliability or mechanical condition of dsalers vehicle. To find a pre-purchase inspection facility, xo the phone book under «Automotive Diagnostic Service,» go online, or ask friends, relatives, and co-workers for referrals.

Look for facilities that display certifications like an Automotive Service Excellence ASE seal, and search online for comments. If the dealer won’t let you take the car off the lot, perhaps because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that’s not an option, ask the dealer to have the car inspected at a facility you designate.

Carr will have moey pay the inspection fee. Once the vehicle has been inspected, ask the ccar for a written report with a cost estimate for all necessary repairs. Be sure the report includes the vehicle’s make, model, and VIN. If you decide to make a purchase offer to the dealer after considering the inspection’s results, you can use the estimated repair costs to negotiate the price of the vehicle. If you have makr problem that you think is covered by a warranty or service offf, follow the instructions to get service.

If a dispute arises, try to work it out with the dealer. Talk with the salesperson or, if necessary, the owner of the dealership. Many problems can be resolved at this level.

However, if you believe you’re entitled to service, but the dealer disagrees, you have some options:. If none of these steps is successful, small claims court is an option. Here, you can resolve disputes involving small amounts of money, often without an attorney. The clerk of your local small claims court can tell you how to file a suit and the dollar limit in your state.

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Leave a Reply Cancel reply Your email address will not be published. A well-kept secret are manufacturer-to-dealer incentives which can sometimes range from hundreds to thousands of dollars per vehicle on slow-selling models. Dealerships: Selling Cars, Profiting on Service Dealerships are complex businesses where each department relies on the. Or perhaps the used cars at new-car dealerships are too pricey for you. Is Buying a Leftover Model Smart?

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