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Why new car quotes can differ between car dealers

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You’ve done your research and found the perfect car to suit your needs. The right engine size, paint color and features. Of course multiple dealerships offer it — but at different price points.  

It’s not a scam. From manufacturer pricing to location, there are a number of factors that influence the price of a car beyond the make and model. 

Reasons car quotes may differ between car dealers 

Car prices are extremely flexible. Dealerships know how much they need to charge to turn a profit — and may even pad your interest rate if you opt for dealership financing. Since you’re expected to negotiate, there are a few main reasons the same car may cost more at one dealership than another. 

Manufacturer wholesale pricing isn’t set 

Manufacturers sell their vehicles at different price points to dealerships. While one dealership may receive a new car model at $40,000, another may receive it at $50,000. This is largely due to rebates and established relationships between the manufacturers and dealerships. 

This difference in wholesale value is passed on to the consumer. To improve profit margins, the dealership that bought the car at a higher price may charge you more even if the vehicles are exactly the same. 

Dealerships work with different lenders 

Dealerships act as a middleman for a lender when they offer you financing. And because each dealership works with different lenders, you may receive varying interest rates. This is further complicated by your credit score. Depending on the lender and the credit bureau it pulls from, your interest rate won’t be the same. 

If you haven’t applied for financing yet, the dealership may be quoting you an interest rate you don’t qualify for. All these factors will impact the total cost of the vehicle and the monthly payment you receive. 

Dealerships appraise trade-ins differently 

If you plan on trading in your old car, know that dealerships have different standards and will present you with different offers. And if this is worked into the sale price and monthly payment of your next vehicle, the monthly payments won’t match up. 

You can make the most of your trade-in by shopping it around. You aren’t obligated to buy from a dealership that accepts your trade-in. So, your best course of action will be to sell your current car at the best price then use it as a portion of your down payment. 

Dealership fees vary widely 

Dealerships charge fees for overhead, application processing and other parts of the car-buying process. Since these vary widely between dealerships and are worked into the overall cost of your vehicle, it may change the purchase price. 

Even if you negotiate the price of the vehicle down and secure financing from outside the dealership, you may not get the best deal. This is why it’s so important to shop around and get quotes from multiple sellers. A lower price may be overshadowed by higher fees, which increase the total cost. 

Location matters  

Dealerships may price the same vehicle differently because of location. Taxes — both local sales tax and taxes — will change the profit margin on a sale. And dealerships may charge more in locations that have higher incomes. 

How outside financing can level the playing field 

One of the biggest factors in monthly payment is your interest rate. Dealerships work with lenders to offer financing. But to make a profit, they often upcharge interest. If you qualify for an APR of 10 percent, you may be quoted 12 percent by the dealership. 

You can get around this by applying for financing with a bank, credit union or online lender. Since there’s no middleman, you’ll receive a more competitive interest rate. Not only does this mean a potentially lower monthly payment, but you’ll have more room to negotiate total vehicle cost with the dealership. If you only have $30,000 to spend, you can be firmer on the total purchase price, taxes and fees. 

The bottom line 

There are good reasons why the same car might cost you more at a different dealership. To get the best deal, do your research and walk in with financing. With the right negotiation, you could score a solid price. Just keep taxes and fees in mind when looking at the overall cost of your next ride.