How do car dealerships work?
26 March 2023
By Joy Pearson
I think we can all agree that there's a lot that goes into selling a car, and it's not always as straightforward as it may seem.
Firstly, it's important to understand that car dealerships are businesses, and their primary goal is to make a profit. This means that they'll often try to negotiate for the highest possible price possible when selling a car, while also trying to keep their costs as low as possible.
One of the ways that dealerships keep their costs down is by buying cars in bulk from manufacturers, which allows them to get a better price per unit. They'll also often have relationships with financing companies and insurance providers, which can give them additional revenue streams.
When you visit a dealership, you'll typically be greeted by a salesperson who will try to help you find a car that meets your needs and budget. They'll often ask questions about your lifestyle and driving habits to get a better sense of what you're looking for. They'll also try to upsell you on additional features or services, such as extended warranties or maintenance packages.
Once you've chosen a car, you'll typically negotiate with a salesperson over the price. This can be a tricky process, as the sales person will try to get as much money out of you as possible while you'll be trying to get the best deal possible. It's important to remember that you have the power to walk away at any time, and that there are often other dealerships or private sellers who may be able to offer a price that is better suited to your needs.
After you have agreed on a price, you'll typically work with the dealerships financing department to secure a loan or lease for the car. This is where the dealership can make additional money, as they'll often add on interest rates or fees to the financing deal. It's important to read the fine print carefully and make sure you understand all the terms and conditions before signing on the dotted line.
In my opinion, buying a car from a dealership can be a good option for people who want a wide selection of vehicles and the convenience of financing and insurance options. However, it's important to be aware of the dealership's profit motive and to negotiate for the best possible deal. It's also a good idea to do your research ahead of time, so you have a good idea of what you're looking for and what a fair price would be.