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Warranties can come from the manufacturer, meaning Ford , Chevrolet , Chrysler, Toyota or any other carmaker. You can also buy an extended warranty through the dealer or a third party. If the cost of the extended warranty is higher than any repairs the manufacturer, dealer, or third party make money. The dealer may also offer to sell you a service contract that works very similar to an extended warranty. Service contracts typically cover normal maintenance like oil changes. Figuring out how used car dealerships make money can help you find a used car dealership that is trustworthy.

Whether your next car is a Lincoln, Buick or Subaru, the bottom line is used car dealerships make money using many of the same methods used by new car dealers. The best way to deal with used car dealerships is to do your homework about the car you want to buy. You should know the approximate market value of the car you want to buy and what similar models sell for.

It may help to start things off with a phone call to see how you are treated. You can also drive by the lot for a grand view of the sales center. You can find this out online by doing an internet search on the year, make, and model of the car you may be trading in. You usually do better selling the car on your own. You will typically see a set of numbers showing a wholesale price range and a retail price range for the car. A dealer will offer you something in the wholesale range, depending on condition.

The dealer will then try to resell the car for somewhere in the retail range. You can also talk to your bank or credit union before you visit the dealer and find out if they offer loans on used cars. Find out what rate they charge, how long the loan lasts and if they require an inspection of the car. The dealer may also offer loans on used cars so you should have something to compare it to. Used car dealers have a limited inventory.

How to Get a Good Deal on a Used Car

They have to sell what is on the lot. They want to sell you what they have on the lot today. You should have a basic idea of what kind of a car you want to buy when you visit the used car dealership. Are you looking at cars or trucks? Do you want an SUV, sedan, crossover, compact, sub compact, coupe, luxury or a sports car? Do you want to be a domestic car or something imported? How about fuel? Are you interested in gasoline, diesel, electric, or a hybrid? Before you start shopping decide if the color of the car and body style are important.

Are you looking for something with low mileage? Do you need easy credit terms? What kind of a payment are you comfortable making? These are important questions because the dealer is going to try and talk you into buying a car they have in stock. Be prepared to walk away if you are feeling uncomfortable.

Here are some other things to check out when trying to find used car dealerships that are trustworthy. Used car dealerships buy their cars from car auctions, wholesalers, other dealers and by taking cars that are traded in.

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  • 2. Type of dealership!

Some auto auctions are only for car dealers but others are open to the public. Car wholesalers buy cars at auctions and from dealers and then resell them to other dealers, or resell them at auctions. Cars get traded in to used car dealerships by customers looking for something newer with less mileage or for a model that fits their needs better. When thinking about where used car dealerships buy their cars, keep in mind that none of the cars are in perfect condition.

They have all been sold or traded by somebody else. They may be old, prone to problems of have high mileage on them, which makes them more likely to break down. Fees that a used car dealership charge may include title, registration, and sales tax. The dealer may also want to charge you fees for documentation and GAP insurance if the vehicle is leased.

Watch out for extra fees like destination charges, delivery fees, advertising charges, and extended warranties. Fees like title, tax, and registration are required by the state. There is no way around them but other fees can be negotiated. Understanding what fees are charged by used car dealerships can help you find a used car dealership that is trustworthy.

To find the most honest used car dealerships you should do some research by looking online and by talking to other people who have bought used cars. Do a search on AutoGravity based on where you live and what kind of car you are looking for. Most new car dealerships also sell used cars. A new car dealership has better access to newer used cars that are being traded in. They also have their own shops, finance people, and a staff of mechanics. Scott Sowers is a writer based in Washington, D. She made more than I did just in flush commissions, but had the worst customer satisfaction surveys. I have always stuck to the manufacturer recommendations, and my Escape has over , miles on it.

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Less than five percent of drivers operate their cars under conditions that would be deemed "severe. A dealer won't come right out and say it, but if you have your regular service work done at the dealer Here's an example: Suppose your vehicle goes out of warranty and a week later you have a catastrophic failure.

If you have shown loyalty to the dealership by using them for regular service work, they will be more inclined to help youas opposed to the person who buys a car there and takes it somewhere else for regular service, and only brings it in for warranty work. You need to know that dealers make very little on car sales. And warranty service doesn't pay as much as regular maintenance. But if they see that record that you've been loyal to them, they'll likely be loyal to you.

10 signs you’re at a dodgy car dealer

Constant turnover at the service desk. You should get the name of the person at the desk. You should ask for him or her. If that person's different every time, it's not a good sign. Good auto service work starts with a relationship between the advisor and the customer, and that cannot be obtained when the customer sees a new advisor every time he comes in. I always knew the person's car, I pulled up its history, and that's something people appreciate.

But if that person is new or is always changing, they don't know you or your car stuff gets missed, and that's typically not good for you or your car. It's one of the hang-ups I've always had about domestic automakers. You can often buy their parts cheaper at the auto parts store than you can at the dealership parts counter. And the dealer knows this, but he can't do anything about it. The problem is that even though that's true, the dealer doesn't want to install a part that he didn't source, because if it fails, how does he warranty it?

There's not a lot you can do. They can install the part if you went out and bought it, but most won't. Check Engine lights are big moneymakers for dealers and also the bane of a service manager's existence. Anyone can use a code reader. But what does the code mean? For every code there need to be additional diagnostics. I've had customers come in and tell me to swap some part, because they're sure it's the problem.

But all that is is a really expensive guess. They might be right 10 to 20 percent of the time, close 20 percent of the time, and dead wrong 60 percent of the time. I had a customer go through six oxygen sensors when all it was was a shorted wire. A brand-name extended service contract. So if you're buying a Ford, get a Ford contract. If it's a Toyota, buy the Toyota contract. The opposite is also true. Never buy the extended service contract that's generically offered through the dealer but isn't backed by the brand of car they sell.

Because the people who fulfill the generic contracts are paid by how little service they have to do. So they fight the dealer on every penny.

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They'll want to see the entire labor record on the car. They won't want to pay for parts.