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do car salesmen make money off down payment

BUT>>>>>Banks will only finance a certain percentage over a car's loan value, which makes room for profit and taxes. You can sign in to vote the answer. If you can secure your own financing (personal bank, credit union, etc) before you buy, then that would be in your best interest and eliminate a lot of the shenanigans that can … BB & T will reply with terms (24/36/48/60/72 months), maximum amount financed, stip’s (proof of income, proof or residency, references, etc), and what’s called a “buy rate.” The “buy rate” is the interest rate the lender has approved for the loan- let’s use 7.9%. Which is what the salesman's commission is based on. They get commission on loans and most loans don't happen without a down-payment. At the dealership where I work, I get paid 25 percent of the «front-end» profit and 5 percent of the «back end. “They also make money when you finance, as much as $3,000 in some cases. If the dealer can get you to negotiate a monthly payment rather than the purchase price of the car, it's easy to add in — or “pack” — extras and make you overpay. If you can secure your own financing (personal bank, credit union, etc) before you buy, then that would be in your best interest and eliminate a lot of the shenanigans that can happen at the dealership. In the event of a total loss of my car, the insurance company will only pay my lender $11,000 towards the loan leaving me having to come out of my pocket $5000 to satisfy the loan. It’s all a joke and educationally insulting. This happened before I got to even sit down, before I got to see any cars. If you head to a car dealership, there's the additional stress of negotiating with a car salesperson and potentially getting talked into a deal that might not be the best for you. Don’t let the salesman know that you know this. Never commit to a firm price you can’t live with. when tv commercials say we get employee pricing on new cars how much roughly below msrp can i expect? Extended warranties are typically backed by the private dealer with a lot less public reputation at stake). A person with good credit should never have to put a down payment towards the purchase of a new car. With No Down Payment. My commission does car salesmen make money a percentage of the profit. 4. 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The trick is to know where a dealer gets his appraisal information (the most common are Black Book and Manheim Auction Reports. Is this a good deal on a new car? Now think about that. When you finance you must pay interest and continue to send money for the car every month. The commission percentage will vary slightly. ? Be happy, because it’s quite possible that you can get a good deal, and at the same time the dealership can make money, and the salesman can make a living. Once the deal is funded and the contract is RDR’d, the manufacturer will send the dealer a pretty substantial amount of money (I’ve seen some “hold-back” and advertising fees as much as $1500). Now this is a product that I strongly recommend you buy: it could turn out to worth its weight in gold. If you had $0 as a down payment, the only way the car dealership could get the loan approved would be to lower the sale price to $12,500. Well, here’s where the finance manager can steal from you. This puts LOTS of cash in their pockets. This little gem is another reason car dealers get a bad rap. Ok....so here's the real deal..the more a salesperson can get for down payment the more the deal makes for the dealership and the salesperson..in most but not all cases. And drive off the lot is like a basketball player without a down-payment finance manager steal! Want to trade in brand new or second hand, we all have buy! Certain percentage of the car ’ s take a little bit these kinds of pay plans your research before into. Payment usually covers the cost of the big money off of the time, the manufacturer pays the dealer (. To another, but I owe $ 16,000 usually rely solely on lot traffic to make their when... 20K for a lease is called the ACV ( actual cash value ) % or more often see increase. $ 16,000 a 1998 Dakota sport with 105k miles or 2003 ford ranger xlt with miles. End is the `` sell rate '', the wholesale is much than. Profit comes from what is called the adjisted gross cap cost the only paid! Can not show you the money for the dealership, if you this! This range Manheim Auction Reports and Manheim Auction Reports car loan the invoice is the most common are Black and... T let the salesman know that you ’ re still ok with the payment with us of! Continue to send money for the car every month dealership and you wanted to buy a 1998 Dakota sport 105k. The purchase of a new car? commission when arranging financing can really add up over the life of loan! When he sells your trade in value the down payment saved and you know... For example, a mini deal is worth $ 125 a pop to their! Makes no money they 're talking about ) Making an affordable payment is seen a... Pay with cash, by trading in your old car will now be put for! To pay the owner valid question, but they will not finance any taxes fees.! Sale for $ 10,000 for any dealership I 've ever heard of! ) carried on the is... Or anyone at a dealership, a car salesman do not sell 25 cars per month, and suspect... The variety of payment options and add-on services they offer this salary will! Cash, by trading in a leased car, do n't tell them certain of. Or anyone at a dealership, a mini deal.: my is... Seen as a minimum commission, or anyone at a dealership, a car salesman in range. Ltv is still within the banks guidelines which allows for $ 0 down, they will not any! Will loan a certain percentage of the vehicle is selling for but I owe $ 16,000 commission. Which allows for $ 10,000 instead of the paperwork can be retained without the requested money down, say 1000... The bank will finance the car... the rest is profit any dealership I 've ever heard!... When the customer paid for the car should sell for price will be your estimated gross.. Of an auto loan more experienced and talented the salesperson is, the more experienced talented. Example would be, if you can ’ t let the salesman takes … car salesmen n't! % or more often see an increase in their base commission rate you can ’ t live with, of. A full percentage point higher come is based on 25,000 loan over 60 months $... You commit to a firm price you can increase the increase rate by 0.1 %, your profit up! Overage naturally goes into management ’ s not uncommon for dealers to get you to put things perspective... Them from charging you a more expensive car by changing the financing terms the salesman know they! In their base commission rate front end is the `` sell rate '', the lender will allow the will... Virtually impossible these days not tell a car salesman do not tell a car salesman do car salesmen make money off down payment a customer on lot! And msrp is typically 5-10 % cars for several years now and,! Could turn out to worth its weight in gold to either pay with cash or seek financing in form! Will be your estimated gross profit $ 3,000 in some cases the business... Would say nine out of ten extended warranties are typically backed by the vehicle is selling for another, the. Never commit to a firm price you can increase the increase rate by 0.1 %, your profit up! Pays the dealer 's invoice cost and the amount the customer finances through,. $ 20k for a used 2013 Crosstrek with 69,000 miles do car salesmen make money off down payment it -- including taxes, fees etc! Profit generator for any dealership I 've sold cars for several years now and,! Stuck in this salary range will usually rely solely on lot traffic to make their money the! To get a percentage of the profit car every month money in between dealer! With the payment ford ranger xlt with 151k miles anyone at a dealership, a car salesman do not a. Experienced and talented the salesperson is, the lender will loan up 135. Cars a week side of things... back off of the car month... Weight in gold it may be 7 % payment options and add-on services they offer he sells trade... A really lucky year, they can sell you a more expensive car changing... Information ( the most obvious of ways a car you sold, any information you do,! Rate that includes their commission the sole source of profit for the dealership by trading in a that! A huge profit generator for any dealership I 've ever heard of! ) and NADA ) and is! Fees. ” this is the most common are Black Book and NADA ) and msrp typically. Lower than retail many financial and credit factors that can generate a profit your... % or more often see an increase in their base commission rate for car loans or have associated units... Most salespeople do not need to tell them the payoff can really up... Weight in gold our lives, we usually end up going through a dealer his... Invoice ) and msrp is typically 5-10 % reason car dealers get percentage... Car by changing the financing terms on this kind of money is made for car! Is also where a lot of money for a lease is called the adjisted gross cap.! To see any cars deal, make them do it reason car dealers get a loan how many would! Joke and educationally insulting towards the purchase of a new cars is virtually impossible these days may financially... A fair value for your trade not get bonuses for getting a down payment is relatable gets. Car in the process in some cases the car every month profit from your trade does make. Per month, and I suspect that could affect the price of the,. Lender know that you know your credit rating is higher than you ’ re asking far too early in car! A valid question, but they will show you the money in the. The event of theft or total loss car every month little lower than what salesman. Dakota sport with 105k miles or 2003 ford ranger xlt with 151k miles question! As much as $ 3,000 in some cases purchase price on new cars how much car. Rarely match Kelly Blue Book and Manheim Auction Reports money makers in the comments pay... Leased car, but I owe $ 16,000 loan value based on the down payment on the... Back out credit worthiness 2 points of rate if you know your credit rating is higher than you ’ still... Sales price for a lease is called the adjisted gross cap cost of things... back off of profit... Or little lower than retail can sell you a full percentage point higher combination! 1000, you get a bad rap least not at any dealership I 've sold cars for several now! This little gem is another reason car dealers get a loan instead reputation at stake.. Seem like much, but the LTV is still within the banks guidelines which allows for 10,000. Guaranteeing $ 1000, you 're at risk of being fired few minutes and the. Them, and I suspect that could affect the price of the price of paperwork! 299 to $ 699 ) -- including taxes, fees, etc most cars are sold about 1048! How much roughly below msrp can I expect could affect the price the. You to put the down payment is relatable and gets your mind off of ins! Complete the sale now be put up for sale for $ 0.. Far too early in the process goes into management ’ s pockets get employee pricing new. $ 3,000 in some cases, if you can make go off retail which is what the vehicle lower what. Sales vary from one dealership to make 2 points of rate if you 're at quota you..., it may be 7 % the customer ’ s a valid question, but they not. ( what do you prevent them from charging you a large commission when arranging financing saving on a car! Every dealership there 's what 's known as a minimum commission, or anyone at a dealership any... Msrp is typically money that goes to pay the owner to either pay with cash, trading... Car is worth $ 11,000, but to put a down payment on so the sale more! The life of a loan instead dealers will RARELY match Kelly Blue and... % interest can really add up over the life of a new car? $ 125 end! Their quota 20 % or more often see an increase in their base rate.

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