Dealer Hold Backs

Buying a new car is not as easy as it seems if you want to be ensured of getting a good deal. Sure, you could simply pay the sticker price and be on your way in no time at all. But the fact of the matter is that you should not have to do this. If you want to get the best deal on a new car you need to make sure that you are aware of everything that is going on. One of the biggest areas of concern for car buyers is the dealer hold back. While you should not spend too much time dealing with this, the dealer hold back is something that you will want to become familiar with. The more that you know about the inner workings of a car deal the better off you will be in the long run.

What is a Dealer Hold Back?

Understanding dealer hold backs can be a bit difficult if you have never worked in the car industry. But with that being said, there is basic outline that can give you a better idea as to what a dealer hold back is all about. Generally speaking, a dealer has to pay the manufacturer when they buy cars from them, not when they move them in way of a sale. In most cases, dealers finance this through the manufacturer or a local lender; both ways are used time and time again. To help the dealer out, the manufacturer will give the dealer the interest that they have to pay for the first 3 months. This is known as a hold back check.

How a Dealer Hold back affects you

While a dealer hold back may not affect you too much, you should consider this when negotiating a deal for a new car. Generally speaking, since there is a dealer hold back the salesperson has much more room to negotiate than they want you to believe. In fact, this could be as much as several hundred dollars or more. For instance, even when a dealer sells a car at invoice they are making money because they are going to get a hold back payment from the manufacturer. So when a salesperson tells you that they cannot give you a deal at the invoice price, you know that they may not be telling you the entire truth.

ll in all, dealer hold backs are part of the car buying industry.