How long is too long for a used car to sit on a lot?

The longer a car sits, the larger the interest cost grows. Dealers typically don’t mind paying interest for 30 or even 60 days, but when the car has been sitting on the lot for 3 months, that’s when they really start getting nervous. They start worrying about losing money on the car if they don’t sell it soon.

What should you not say to a used car dealer?

“That’s Negotiating 101.” Before you go to the dealership, research the trade-in value of your car using an online pricing guide like Edmunds, Kelley Blue Book or TrueCar. These are only estimates — every car lot’s trade-in prices vary based on local tastes and demand — but you’ll have an acceptable figure in mind.

How much do dealers usually markup used cars?

When it comes to just how much a Car Dealer will markup a Used Car, the short answer is: Around 10 to 15 percent, or anywhere from $1,500 to $3,500 for your “Average” used car.

Why do dealers send cars to auctions?

Some car dealerships want to get rid of their cars taking up lot space for some time. Dealerships sell these cars to auctions to make room for newer cars and have a bit of a return to their investment. Some owners trade their Cars to banks and insurance so that they can get a newer one.

How much profit should a dealer make on a used car?

The average amount of money that a car dealer makes per used car today is between $500 to $3,000 per car, with your typical run of the mill used cars selling for about $2,500 to $5,000.

How do dealers set used car prices?

Car dealers use the Kelley Blue Book to set their retail prices. Edmunds also has a free car appraisal tool that helps you calculate what the retail price for a used vehicle should be. And there are even more guides: Dealers also use NADAguides and the Black Book to evaluate used cars and potential trade-ins.

What happens to used cars that don’t sell?

There are a few options for the dealership when their cars don’t sell. They can ship the unsold cars to a different market where the specific model might be in demand. Another option is that the cars can be used as a loaner car when people bring theirs in for service. The final option is to price the cars to sell.

How often do dealers lower the price of a used car?

The price gets reduced closer to the market average around weeks 3 and 4 and stays in that range until it hits the 60 day mark. Some dealers reduce the price once more at this point. However, the biggest reductions usually occur once the car has been on the lot for 90 days.

Why do car dealerships sell cars so quickly?

Aged inventory takes up valuable lot space while interest adds up every day motivating most dealers to drop the price to sell it quickly. Most cars arrive on a dealer lot arrive from wholesale auctions or customer trade-in and are paid out from dealer funds or by a loan through floorplan financing.

How long does it take for a car to be reduced?

However, the biggest reductions usually occur once the car has been on the lot for 90 days. Generally the vehicle gets reduced very close to cost once it hits the 90 day mark in the hope that it will sell without having to go to wholesale auction.

When is the best time to buy a used car?

Some dealers will send cars to auction on the first available date once they pass the 90 day threshold, but others may wait 120 or 150 days and try their chances to break even. This is the best period to buy the car as most dealers will be willing to sell it between the auction value and their cost so they can at least save on the auction fees.