Why a New Car Quote May Vary by Dealer

You’ve done your research and found the perfect car to meet your needs. The right engine size, paint color and specs. Of course, several dealers offer it, but at different prices.

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

Reasons Why Car Quotes May Differ Between Car Dealerships

Car prices are extremely flexible. Dealers know how much they need to charge to make a profit – and may even increase your interest rate if you opt for dealer financing. Since you are expected to negotiatethere are several main reasons why the same car may cost more at one dealership than at another.

Manufacturer’s wholesale prices are not defined

Manufacturers sell their vehicles at different prices to dealers. While one dealer may receive a new model car for $40,000, another may receive it for $50,000. This is largely due to discounts and established relationships between manufacturers and dealers.

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

Dealers work with different lenders

Dealerships act as intermediaries 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 reporting agency, your interest rate will not be the same.

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

Dealerships rate trade-ins differently

If you plan trade in your old car, be aware that dealers have different standards and will present you with different offers. And if that’s built into the sale price and monthly payment for your next vehicle, the monthly payments won’t match.

You can get the most out of your trade-in by shopping around. You don’t have to buy from a dealership that accepts your trade-in. So your best course of action will be to sell your current car for the best price and then use it as part of your down payment.

Concession fees vary widely

Dealerships charge fees for overhead, claims processing, and other parts of the car buying process. Since these vary widely from dealer to dealer and are built into the overall cost of your vehicle, this can affect the purchase price.

Even if you negotiate the vehicle price down and obtain financing from outside the dealership, you may not get the best deal. That’s why it’s so important to shop around and get quotes from multiple sellers. A lower price can be overshadowed by higher feeswhich increases the total cost.

Location matters

Dealerships may price the same vehicle differently due to location. Taxes – both local sales tax and taxes – will change the profit margin on a sale. And dealers can charge more in places that have higher incomes.

How external financing can level the playing field

One of the most important factors in the monthly payment is your interest rate. Dealerships work with lenders to provide financing. But to make a profit, they often charge interest. If you qualify for a 10% APR, you may be quoted 12% by the dealership.

You can circumvent this by applying for financing from a bank, box or online lender. Since there is no middleman, you will benefit from a more competitive interest rate. Not only does this mean a potentially lower monthly payment, but you’ll have more leeway to negotiate the total cost of the vehicle 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 may cost you more at another dealership. To get the best deal, do your research and enter with funding. With the right negotiation, you could get a solid price. Just keep taxes and fees in mind when looking at the overall cost of your next ride.