Car dealers make money by selling vehicles, financing them and then profiting from add-on products like extended warranties and tire protection plans. They also earn revenue from vehicle rentals and collision parts and service. They may even sell maintenance and repair services for a manufacturer’s brand of vehicles, if they’re franchised by the manufacturer.
Dealerships are largely regulated by state Departments of Motor Vehicles. They are also allowed to charge fees, such as document and sales tax, inspection and emission fees in some states and insurance policies for buyers of new cars.
In some cases, however, car dealers may yo-yo customers by canceling the original deal and then trying to make a new one. This practice is known as a “yo-yo sale” and it’s something consumers need to be aware of. NPR’s investigation has found that it happens regularly around the country and can be costly for consumers.
It’s important for consumers to know what they want in a car before they go to a dealership. Researching the market value of the vehicle they’re interested in and knowing their budget can help them avoid the temptation to buy a car they can’t afford. It’s also helpful to shop around and visit multiple dealerships before committing to a purchase. Defining their wants and needs in advance can help make the car-buying process smoother for consumers and may deter a pushy salesperson. Moreover, savvy car buyers should be prepared to negotiate and take the time to find the best price on their vehicle. car dealers