💰Car dealerships make most of their profit from finance and insurance products.
🏦Dealerships become the bank by offering loans and making money from the interest.
💵Customers who finance give dealerships more room to negotiate on price.
📉Avoid telling car dealers you're paying cash to retain negotiating power.
🔒Check for early prepayment penalties before taking out a loan.
How do car dealers make money?
—Car dealerships make money from finance and insurance products, service fees, and parts.
Why should I pretend to finance instead of paying cash?
—Pretending to finance gives you more negotiating power on the price of the car.
What is an early prepayment penalty?
—An early prepayment penalty is a fee charged for paying off a loan early. It's important to check if your loan has this penalty.
Is it better to finance or pay cash for a car?
—The decision to finance or pay cash depends on personal circumstances. Financing can provide flexibility and allow for better money management.
How can I negotiate a better deal from a car dealer?
—Research the market value of the car, be prepared to walk away if the price is not right, and negotiate on other factors such as trade-in value and financing terms.
00:00Car dealerships make most of their profit from finance and insurance products.
02:56Dealerships become the bank by offering loans and making money from the interest.
05:30Customers who finance give dealerships more room to negotiate on price.
08:57Avoid telling car dealers you're paying cash to retain negotiating power.
10:32Check for early prepayment penalties before taking out a loan.
