How do used cars traders make money?

How do used cars traders make money?

• Answer:

  Hi, like every other type of selling business they make money by buying at a low price and selling on at a higher price. They also make money on other ways...by getting commission from insurance companies for 'selling' you a policy when you buy a car. In addition they can, and do, make money by promoting 'service guarantees' i.e. You buy a car, they offer a guarantee which you pay for. Sometimes this is an 'in-house' guarantee which will mean that if you have any problems they will fix them for you in their service department. Sometimes the guarantee is a third party arrangement (basically another type of imsurance policy) and the insurance company will 'fix' your car, should it be necessary. Servicing is another way of generating extra income from their customers and most good sellers will have their own service department so they can prepare vehicles before sales and repair them afterwards. Yet another way for them to make money is to sell 'extras' (wheel trims/ radios/ CD players/ seat covers/ resprays and so on...) So...you takes your choice as to how they make most money. In the UK the 'average' mark-up on a used car is around £1000. Of course this goes down as the age of the car increases and the quality of the used car market dips. Hope that helps. BobSpain