Used Car Dealerships: Biggest Myths

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used car dealerships

Having worked in this industry for a couple of years, it is no longer unusual for us to hear some common misconceptions about used car dealerships. Nonetheless, I don’t think that they are as bad as what other consumers think. They are not perfect, and some may have been implementing policies that are below the business standards. However, most of them are as ethical as others that are in the retail industry.

Contents hide
1 They Make Lots of Money
2 Used Car Dealership Are Scammers
3 The Industry Would Be Better Without the Used Car Dealership
3.1 Used Car Dealerships offer Benefits that Consumers Won’t Find on Car Manufacturers
3.2 They Can Create a Lively Market for Second-hand Cars
3.3 Dealers are Essential
4 Used Car Dealerships are Manipulators
5 It is Best to Purchase Car at the End of the Month
6 You Should Look for Bank Loans
7 Used Car Dealerships Come with Hidden Fees
8 Purchasing Cars in Dealership Comes with an Insanely Mark-up Rates
9 Used Car Dealership Will Sell You Lemon Cars
10 Used Car Dealerships Will Not Offer Safety Features

Common Misconception about Used Car Dealerships

car dealerships

Time has changed everything. The things that caused stress and anxieties on us ten years ago may no longer exist. Perhaps this is due to the innovation introduced in the industry. Nonetheless, no matter how long time passes by, there are still some persistent myths and misconceptions even on the best Used Car Dealerships.

They Make Lots of Money

used car dealerships near me

Some people believe that all dealerships are lying on a bed of cash; how we wish this is true. All businesses want to be successful. However, you will be surprised that car dealers will only earn a tiny part of the net margin, around 1-2%. The amount could depend upon different factors. Understand that this market could be seasonal. So, let’s do the math and find out if the used car dealerships near me are really making loads of cash. Supposed that they could sell a vehicle that amounts to $25,000, their profit could be around $250-$500. With that being said, used car dealers may be making more money compared to new car dealers. When you compare this to other industries, like IT and technology, Microsoft, Apple, and Google earn a net margin of 20%.  Exxon-Mobil makes at least 8% and Comcast at 12%.

Used Car Dealership Are Scammers

car dealers

It is one of the persistent myths that most consumers believe. However, there is no existing fact or numbers to support this. Sure, there may be some people who will screw you and rob you of your hard-earned money, but that also applies to some of the businesses in this retail industry. Think of it this way, why would this industry still exist if they are just here to scam people? Moreover, there are many review sites like Auto Sales Reviews where the consumers can share their disappointment with the used car dealership around me. The bad reviews that they are receiving can harm their business. Therefore, they will be trying to fix them and satisfy their clients.

Tricking the customers or providing bad service is too detrimental for business. Since dealerships are not really making huge cash, they do not want to lose their customers. Furthermore, the money they could gain when they trick their customers can easily disappear due to lawsuits and regulatory actions. While salespeople can force a bad deal and act unethically, the risk it puts to the business is not worthy.

The Industry Would Be Better Without the Used Car Dealership

shake hands

Since the information are now available on the internet, people believe that there’s just no reason for the existence of a dealership. However, this market is more than just putting cars on display for everyone to see. It offers things that the internet can’t provide. For instance, the dealership can provide you with expert guidance. Car reviews, primarily if they are affiliated with the manufacturer, will be biased in giving information. You can look at used car dealerships near me as independent businesses that compete with one another. It is for this reason that they only earn a small net margin. If the manufacturers settle for the corporate-owned stores, they will most likely not settle for that small margin. Therefore, you should also expect a dramatic increase in the cost of cars. Here are more reasons why car dealerships are still existing.

Used Car Dealerships offer Benefits that Consumers Won’t Find on Car Manufacturers

Mos used car dealerships around me are excellent when it comes to negotiation. The dealers can opt not to buy a particular model, which will force the carmaker to offer some incentives and discounts. They have a dedicated service center, and they can perform repairs free from charges and complicated processes. They can then demand these manufacturers to pay for the service that is still under warranty. It is also not uncommon to hear dealers suing car makers. They will do so to fight restrictions and rules that control the competition and increase the cost. It is also more likely for the automakers to listen to the dealership than to a consumer.

They Can Create a Lively Market for Second-hand Cars

Dealers have become an important reason why there is a market for used cars. Dealers will need to sell the vehicle to generate cash and keep their business afloat. Therefore, they will be buying cars at consumer trade-in, dealer trades, and car auctions. The vibrant market of used vehicles ensures car buyers can easily trade or sell their old cars. They can also look for an affordable replacement or upgrade. If you remove the dealers in the market, the access and trade of second-hand vehicles will be restricted. It would definitely increase the cost of used cars.

Dealers are Essential

Even in the existence of the internet and the different advancements in the industry, the best used car dealerships can still offer something that these latest technologies can’t. It would be practically impossible to market, sell, and service millions of cars without the help of dealerships.

Used Car Dealerships are Manipulators

signing financing option

Tell you frankly, most people working in the car dealership market would think that they are excellent when closing the deal. However, remember that they cannot force the consumers to sign an agreement. The used car dealerships cannot force them to purchase a car that is not to their liking. Some consumers will think that they have been convinced or pressured by the salesperson to do things that they do not want. However, remember the time when you are affixing your signature on the document. Most of the time, you will do this with a smiling face. To tell that they are masters in closing the deal is an overstatement. Understand that employee retention in this industry is significantly low. Therefore, it will take time for the dealership to train managers and create the most formidable staff.

It is Best to Purchase Car at the End of the Month

used car dealerships

Compared to the other myths mentioned here, this statement can be slightly true. Again, we would like to remind you that the car market is seasonal, so it will largely depend upon the situation. Dealers will need to reach a sales quota at the end of the month. Moreover, they can receive a bonus for their monthly sales. Therefore, you can strike a better deal at the end of the month since most used car dealership wants to meet their quota.  Nevertheless, other dealerships will tell you that this happens during the middle of the month since they are already anticipating the sales increase at the end of the month. Pay attention to the low season and dry days of the dealership since that could be the optimal time to purchase your car.

You Should Look for Bank Loans

auto loans

It is the responsibility of the car buyers to determine the best deal for them. They need to know whether it is more beneficial to go straight to the car dealership or apply for a bank loan. Most experts will advise you to head straight to the dealership since they offer better rates and financing terms. The dealership also provides a less complicated process. They will handle the documentation instead of the paperwork you need to complete an interview that you must go through when applying for a bank loan. The dealership could be the better one who can arrange you with a win-win financing option.

Used Car Dealerships Come with Hidden Fees

hidden fees

Mystery fees have been masked under a variety of names. In the dealership industry, some may find these terms confusing. Security Fee, Preparation Charges, Package Fee, etc., may appear to be hidden charges, but in reality, they are not. If you want, the dealer can explain everything to you. Nonetheless, professional used car dealerships near me should not wait for the client to ask for it. They should’ve explained these things beforehand. If items are marked as optional fees, you can opt-out of them so they will not increase your expenses.

Purchasing Cars in Dealership Comes with an Insanely Mark-up Rates

Used car dealerships near me

This persistent myth is similar to the misconception that dealerships are scammers. When visiting the car lot, most consumers will have their guards up, thinking that the dealer will offer them a car with absurdly increased rates. As we mentioned above, the car market is a competitive industry, and you will need to stand out from thousands of dealerships. In addition, the commission rate for every successfully sold car is too low. Therefore, most used car dealerships around me will hesitate to do this since they are afraid their prospects will choose their competitors.

Used Car Dealership Will Sell You Lemon Cars

lemon car

Most car buyers will be hesitant to do business with used car dealerships, thinking they will get a lemon car. A lemon car is a vehicle that comes with a couple of manufacturing defects that significantly affects its utility, market value, and safety. These cars would continue to experience the same weakness even if they went through several repairs. However, there are different ways on how you can protect yourself from this. First, you should ask the dealership to present you with the complete service history of the car. If they can’t produce this document, avoid buying that car.

This record shows you the complete information about the vehicle. It tells you the number of times the car changed hands and the different repairs and maintenance performed. Also, there is a new law called Lemon Laws. Under this legislation, it protects the consumers against malfunctioning new cars. Nevertheless, some states protect used car owners as long as they qualify within the specific mileage.

Used Car Dealerships Will Not Offer Safety Features

car safety feature

Unless you choose a vintage car older than your gramps, most used cars for sale come with complete safety features like modern vehicles. It comes with an anti-lock system, airbag, stability control system, high-strength and laminated glass, and speed warning system. Those who want to check the safety features of their used cars should check the website of IIHS (Insurance Institute for Highway Safety) and check for the crash avoidance, mitigation, and worthiness of their preferred model.

Now that we have cleared all those persistent myths and misconceptions about used car dealerships, we hope people will start seeing them in a new light. Like all the retail industry businesses, car dealerships will have to pay several things like maintenance, electricity, insurance, wages, tax, rent, etc. They don’t earn money from scamming consumers since the existing numbers do not support this notion.

166 Replies to “Used Car Dealerships: Biggest Myths”

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