As a Finance Manager for 10 years I worked for many different auto dealers. I made a lot of money, a ton of money, working mostly for large auto dealerships.
A majority of the profit is made on the "back end" after the deal was made (monthly payment & down payment agreed upon). The "back end" is the money the dealership makes on warranty alarm systems, paint & fabric protection (we like to call it Mop & Slop), and points on over-charged interest rates.
Every dealership I have worked for puts pressure on the Finance Managers to hold at least a $1500.00 per copy back end. Most of the time the accrual cost of these items was 75% less then the selling price; that is a huge profit margin.
Mostly dealerships have changed their polices to the non-gouge methods ( A set profit on back end products) between $200 and $500 profit per warranties set by the auto maker. But even though the auto market has changed for the good of the consumer, as a buyer you have to ask a lot of questions, do a lot of research, shop around, and please I say please don’t buy the same day you shop.
By Roger Falls, owner of BuyPals.net
