Getting the Best Deal: Purchase Price and Trade-Ins
The key to getting the best deal is to understand where dealerships reap their profits and where they serve as middlemen. A car dealer's main sources of profit, in no particular order, are: the new vehicle's purchase price; trade-ins and resulting used-car sales; financing and insurance; "back-end" products and services, such as rustproofing and service contracts; and vehicle service (repair and maintenance).
On this page, we'll deal with the first two of those factors: the new car's purchase price and your old car's trade-in value.
Purchase Price
The price you pay for a new car hinges on a number of variables. They include but aren't limited to:
>the invoice price;
>dealer holdback;
>customer incentives;
>factory-to-dealer incentives;
>supply and demand;
>and your car's trade-in value (in some states).
Trade Ins:
The car you currently own probably represents profit. The question is, whose profit will it be? With few exceptions, you'll get the most money for your used car by selling it privately. That's because dealers pay wholesale prices — not retail prices — for used cars. They sell them at retail, and the difference between the two is the only reason they bother. A used car's profit margin, though based on a lower selling price, is much greater than that of a new car. Don't underestimate your car's value to a dealer.
Source:
Yahoo Autos
