Dealer Markup

There are many reasons as to why people have come to hate buying a car. Although this is supposed to be a fun experience, for a lot of people it is anything but that. One of the biggest reasons for this is that people worry about losing money, or not getting the deal that they could have. One of the biggest ways that people lose money when buying a car is with a dealer markup. The bad thing about a dealer markup is that it will be hard to see if you do not know what you are looking for. And even then, you can still have a tough time because this is usually hidden.

Financing

The most common type of dealer markup occurs when it comes to actually financing your car. If you can purchase your new car with cash this is not a problem, but for most people this is not an option. The way that a dealer markup works when it comes to financing is quite simple. When you have decided on a car, your salesman will get in touch with the finance manager and run some numbers. One of the first things that they will do is get your credit score, and then search around for lenders. This is when the dealer markup comes into play. For example, a lender may be willing to offer you an interest rate of 6 percent; which is pretty good by today's standards. But when the salesman comes back to talk with you, he or she will say that you only qualified for a rate of 10 percent. This means that the dealer and the lender can split the profits that are made by this difference in interest rates. As you can see, this type of dealer markup is hard to figure out.

Beating the Dealer Markup

here are two ways that you can beat the type of dealer markup listed above. First off, you can avoid financing altogether by paying cash for you car. While this may not be an option, you should at least consider it. This way you will be able to save yourself the hassle of finding a lender, etc. Your other option is to find a lender on your own. Instead of giving the dealer the chance to markup your car, you should simply get your own financing. This more or less takes the dealer markup out of the equation.