Dealer's Back End Profits

There are two types of profits that a car dealer tries to make when selling a car. They are front end and back end profits. Before you decide to buy a new car you will want to learn as much as you can about the dealer's back end profits. This is money that they try to make from you before you tie things up in a final contract. Even if you do a great job in making it past the front end stage, if you are not aware of the dealer's back end profits you may end up getting taken advantage of in the end.

What is it?

The dealer's back end profits are the profits made in a car deal that have nothing to do with the salesperson's commission. Many people think that the dealer's back end profits has everything to do with the person selling the car, but the fact of the matter is that nothing could be further from the truth.

Where Back End Profits are made

The dealer's back end profits can be made in a number of different ways. For instance, the finance department is usually the first person to get a crack at increasing the dealer's back end profits. They can do this by securing a lower rate of interest for you from the bank, but then charging you a markup on that. While this may not seem ethical to you, it is something that is done time and time again. The only way to avoid this is to get your own financing or to simply pay cash for your car. Another common way of making profits on the back end is by selling extended warranties and/or insurance. The person who tries to sell you this is usually the last one that you see. If you are not totally sure that you want to buy what they are offering you should simply pass on it. This is nothing more than a way for a dealer to increased back end profits. Sure, there is some value in what they have for sale, but nothing that you have to buy.

s you can see, the dealer's back end profits can go a long way in helping them to make a lot of money. So even after you have made it past the salesperson, you still have your hands full in getting the best possible deal.