How do car dealerships make their money?

Are you wanting to buy a car? If the answer is yes, then congratulations - buying a new or pre-loved vehicle is an exciting process.

Are you wanting to buy a car?

If the answer is yes, then congratulations - buying a new or pre-loved vehicle is an exciting process.

If you're looking to purchase your next vehicle from a car dealership, you may be wondering how these companies make their money. Do they make their profit from the sale of the vehicle, from financing the vehicle, or from all the added extras they can sell?

Well, you may be surprised to know that dealerships actually make very little profit from the sale of a new car. Their profits generally come from the sale of add-ons and vehicle trade-ins.

Interestingly, a dealer makes more profit from the sale of a pre-loved car than they do from selling new models. This is because the profit margins on a used car are much higher than on newer vehicles.

They also generate a lot of their profits from insurance, extended warranties, the sale of parts and servicing fees, as well as vehicle financing.

When it comes to financing your vehicle, you don't have to go through your car dealership. There are a number of ways a customer can arrange finance for a vehicle purchase.

For example, your local broker can search through hundreds of products to find you the right car financing solution for your needs. So, if you're wary about feeding into the profits of your car dealership, why not go through your broker to finance your next vehicle purchase.

Of course, your broker can do so much more than find you the right financing solution. And if you don't like the prospect of haggling with your car dealership for a discount, why not leave that to your broker as well?

At Mortgage Choice, we offer a new car buying service where we happily do the haggling on your behalf. All you need to do is tell us the make and model vehicle you're after and we'll handle the rest. We scour the country to find your chosen vehicle for the best possible price.

We'll then deliver the car, with a full tank of petrol, to your front door. What could be better than that?

We've helped thousands of customers across Australia with their asset finance needs. Not only are our brokers experts in helping you find the ideal home loan, we're also experts at arranging your car finance. We have access to a panel of lenders so we can get you the best deal on the market. The lenders pay us so you don't have to. So, the only thing you need to worry about is which vehicle you would like to buy!

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Posted in: Asset finance