What percentage profit do dealers make on used cars?
Asked by: Nakia Fisher | Last update: December 17, 2025Score: 4.4/5 (9 votes)
What is the average dealer profit on a used car?
According to the National Automobile Dealers Association (NADA), the average gross profit for a used car is $2,337.
How much do car salesmen make per used car?
They generally earn through commission rates which depending on the dealership company, can range between 20% to 40%. So how much money do car salesmen make per car? If you sell about 10 cars in a month and on average you make about $40k per year, you will be earning $330 per car. But, that's just a rough estimate.
Do dealerships make money on used cars?
The primary way used car dealers make money is by purchasing vehicles at a lower price and selling them at a markup. Dealers often acquire cars from auctions, trade-ins, or direct purchases from individuals.
How much does a dealer make when they sell a car?
How Much Do Dealerships Make On A Deal? Based on data from the National Automobile Dealers Association (NADA), the average gross profit margin on a new car sale for a dealership is around 3.9%.
Revealed! You won't believe how much Used Car Dealers make!
How much commission do dealers make on cars?
The commission structure for used car salesmen varies widely, but it's commonly a percentage of the vehicle's sale price. On average, commissions can range from 20% to 25% of the profit margin, with some variations based on dealership policies, the specific car sold, and the salesperson's experience.
How much are dealer fees on a used car?
You can expect to pay anywhere between 8 and 10 percent of the car's price in dealer fees. These fees sometimes include sales tax, doc fees, and registry fees. Some fees also depend on where you live and how much the dealership charges for state sales tax or title and registration fees.
What is the most profitable part of a car dealership?
Used Cars: Trade-Ins and Purchases
For a dealer, used cars are more profitable than new cars. And because dealerships tend to recondition vehicles in-house, the refurbishing needs also help bolster parts and service sales.
How do car dealerships make money on 0% financing?
An automaker makes money with a 0% deal in one simple way: It doesn't make money on financing but rather on the car itself. Dealers will try to sell you extras to make up the difference, including extended warranties for your vehicle. Also, the cost of financing gets built into the price of the car.
Who pays more for used cars?
Selling your car to an individual, also called a private-party sale, is typically where you can get the most money.
How much does a car salesman make on a $30k car?
If the invoice cost of a vehicle, for example, is $30,000, then the normal 5-percent profit would be $1,500 and the 25-percent sales commission on the sale would be $375. But if the dealer adds a $400 pack, the adjusted cost is $30,400 and assuming the sales price remains the same, the profit isn't $1,500, but $1,100.
Can you make good money selling used cars?
Yes, it can be profitable. The profit depends on the vehicle you buy, how much you pay to fix it and how much you manage to sell it for. If the car you're selling is in good condition and in demand, you'll surely drive home with a heavy wallet.
What is the average commission for a salesman?
What is the typical sales commission percentage? The industry average for sales commission typically falls between 20% and 30% of gross margins. At the low end, sales professionals may earn 5% of a sale, while straight commission structures allow a 100% commission.
What percentage of profit does a car salesman make?
The commission that car salesmen make typically ranges from 20% to 40% of the gross profit on each car sold. However, this can vary depending on the dealership's pay plan and the specific deal on the car. Additionally, some car salesmen also receive bonuses for hitting sales targets or selling specific models.
How does a dealer make a profit?
Dealerships typically buy vehicles from manufacturers at wholesale prices and sell them to consumers at a retail price, which includes a markup known as the dealer's profit margin. The profit margin varies depending on the brand, model, and market demand for the vehicle.
Why do car salesmen ask for money down?
A down payment may help you to more easily qualify for an auto loan, especially if you have lower credit scores. Without a down payment, the lender has more to lose if you don't repay the loan and they need to repossess and sell the car. Cars can begin losing value as soon as you drive off the lot.
What credit score do you need to get 0% interest on a car?
0% APR auto loans are reserved for "well-qualified" buyers.
In most cases, "well-qualified" refers to borrowers with a credit score of 740 or higher.
Do car salesmen get commission on financing?
Dealers mainly act as middlemen to connect their clients with banks and credit unions. In the process, they earn either a flat fee for every loan referral, a percentage of the loan amount, or a share of the interest. While some auto loans earn a dealer relatively little, most generate thousands of dollars in profit.
How much commission does a car salesman make on a used car?
Typically, commissions range from 15% to 40% of the front-end gross profit per sale. Some dealerships offer a flat 25% commission, regardless of the number of cars sold.
How much do used car dealers make per car?
Average profit per new or used car
On average, how much do dealers make on used cars? The National Automobile Dealers Association (NADA) reports that the average gross profit for a used car is $2,337. That same data set puts the average gross profit for new cars at $1,959.
What is the markup on a used car?
The markup on a used car is typically the difference between what the dealer paid for it and the price at which they sell it, with an average range of 10% to 35%.
Do dealerships charge more if you pay cash?
You'll pay far more for your car if you ask to pay for it all upfront with cash. That's because the dealership will not be willing to negotiate as much on the front-end of the car deal since you will not become a sales opportunity for the back-end of the deal (aka in the F&I office).
Are dealer admin fees negotiable?
While it's typically a flat fee, some dealerships may charge a percentage of the sale price. Moreover, this fee is generally non-negotiable, but some states regulate the maximum amount that can be charged. You'll want to review the documentation fee to check if it's reasonable.
What does "out the door price" mean?
The out the door price is the total amount of money you must pay when purchasing a new vehicle. It includes the MSRP of the vehicle, as well as additional fees that the dealership collects, such as: An extended warranty. Dealer service fees. Dealer handling fees.