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Car Salesman makes $200,000 a year

In today's world the title of this post doesn't really happen anymore. The day's of car salesmen or women making big money are pretty much gone.

According to the Bureau of Labor the average car salesman makes $42,150 a year.

There is a trend in the car business to attempt to increase profit by lowering employee expenses (i.e. payroll). A lot of dealers are turning to a salary program. On this program sales people get paid a weekly salary and have to chase unit sales over profit. And, at the end of the month the salesperson will get paid a bonus on the number of units he/she sold.

Here is the good and bad of what we see in the industry at dealerships that utilize a salary program.

Good:
1) Dealer initially increases net profit

Bad:
1) After a few months the dealer's employee turn over rate goes up
2) Total profits go down
3) Unit sales go down (related to turn over)

That's right there is typically only 1 good factor for a dealer when utilizing a salary program for s…

There's more to buying a car than just price

In today's world there are sites all across the internet asking for you to visit them for the best price on a vehicle. And don't get me wrong, price is important, but there is more to buying a car then just price.
There are interest rates, term of the loan, is the car new or used, do you need extra coverage like GAP or an Extended Service Plan, is the Dealer reputable, even though the price is the lowest is it really a good deal, where are you going to get the vehicle serviced, and what are the cost of repairs going to be. Just to name a few other considerations you need to take into mind when you purchase a vehicle.
These are all things you need to understand before going to a Dealer to purchase your car. Without knowing this information you can feel like the Dealer is not helping you but just trying to get over on you.
Let's take a look at just one of the major components of buying a car. There are two types of car buyers; the one that pays cash and the one that is concerned about a payment. Cash buyer's buy what they want and most of the time paying cash verse financing is not the best option, but we are not going to visit that issue at this time.
Let's look at the buyer that is concerned about a payment. A payment is derived by three factors:
  • Amount financed
  • Term of the loan
  • Interest rate
Of course we know that a credit rating is going to effect the interest rate, but did you know that a credit score can also effect the term of the loan? Did you know that the finance amount verse the value of the vehicle can effect the term and rate of the loan? Did you know that the age of the vehicle can effect the term and rate of the loan?
All of this plays into the calculation of your loan payment. Just because a vehicle is $20,000 does not mean your payment is going to be $400 a month.