this is like a super sensitive

subject that I've got to talk about

because people bring it up and they

bring it up all the time and even like

even your friend that works at the

dealership you're sort of thinking in

the back of your mind how much is this

guy actually making off me right now

let's dive right in huh

car salespeople have multiple avenues of

making money whether or not they choose

to explore those avenues is completely

up to them now we've got making profit

in the sale of the car you got profit in

giving you less for your trade-in we've

got profit in selling you stuff when you

go into the finance department whether

it be wheel and tire insurance

warranties you know jacking up your

interest rate there's all sorts of ways

where they could make money the sale of

a new car is where people are mistaken

when they think to themselves all car

sales people are making a killing off of

customers when it comes to new cars

they're generally not my experience is

from a BMW dealership that I used to

work at and we were given a 15%

Commission on the gross profit of a car

so if we owned the car for let's say I'm

just going to give an arbitrary number

$40,000 and the car's sticker price the

MSRP was $45,000 and we were able to

sell it for 40 as in what we own the car

for and that means that there was no

actual gross profit to be made in those

situations the car sales person didn't

make anything but a flat Commission

often referred to as a mini now if let's

say we sold that same car for $45,000

then I would have made fifteen percent

on that $5,000 so if

he had a $5,000 gross profit minus a

couple administration fees let's just

call it $5,000 in gross profit though I

had the potential of making 750 dollars

as a salesperson in that sale with the

gross profit of $5,000 and whatever was

left went to the dealership what to do

now that's not always the case

especially with the last like 15 20

years where consumers know the price of

a car they're able to log on online and

figure it out usually they'll sell a car

for even under what they own it for

because they know you know they can make

it up as they go and they'll jack up the

interest rate if your credit isn't you

know Tier one they may be able to sell

you a warranty maybe they're trying to

hit a performance quota there's all

sorts of factors involved when they're

quote-unquote losing money on a car

however if they're selling you a car

that's very hard to get then they're

making a hefty profit on that car

if you're leasing out a car and they're

showing you a discount and they're

marking up your interest rate on the

other end at that point the salesperson

isn't making money on that car because

technically the dealerships discounted

that car the finance manager and the

dealership are making money on that sale

because technically speaking the

salesperson is also the consumer in this

end because he only was able to show you

a $5,000 or whatever X is as the

discount the finance manager controls

the profit on the APR let's dive into a

little bit on used cars now this is how

sales people generally make their profit

people absolutely go crazy when they see

their trade-in value at the dealership

and this is for the right reason you

should go crazy because this is how car

sales people and in general dealerships

profit now when you're trading in your

car let's say you know the car is

actually worth to the dealership $20,000

and they're they're planning on selling

4:25 and they convinced you that they're

gonna give you 18 they just made in Iran

in hopes to make $7,000 on the sale of

your car when I was selling cars we were

able to get 20% of that profit as the

Commission now if you were to do the

math that's 1,400 dollars in commission

as a salesperson let alone the

dealership on that used car let me give

you another example of how car sales

people make money now let's say my

manager told me salesperson go and tell

that customer that his car is worth

$20,000 I as a salesperson go and tell

the customer sir your car is worth

$18,000 that $2,000 that I just deflated

your trade-in value I also make

Commission on even if I'm not selling

that used car that $2,000 I was entitled

to a percentage which was 15% of that

2,000 and that amount got added to the

commission of whatever I was trying to

sell you when you were trading that used

car so if you were buying a brand new

car and we were able to make a gross

profit of $5,000 on the new car so I

made 15% on the new cars gross profit

and I made fifteen percent on your

trade-in value now let's dive a little

bit into back-end profits as in

warranties etc so car sales people in

general don't actually see the profit

when you buy a warranty or when you buy

wheel and tire

however the finance managers are in

agreement with the dealership that they

will give the salesperson a little bit

of money from that profit just as you

know as a courtesy okay we sold this

customer and warranty here's a $50

Commission or hey we sold a real entire

insurance here's a $50 Commission so it

starts to add up in that sales persons

paycheck another way a sales person

makes money on a car is by hitting

and this is very very important

especially if that sales person isn't

actually making any gross profit on his

new cars as in every single car every

single car that he sold is a new car and

they're not really making a ton of

Commission on this is generally how that

sales person is actually earning a

living and please please pay some close

attention to this the next time that you

buy a new car and you like your

salesperson generally speaking a

salesperson has what is called a

customer satisfaction index so if you as

a customer are satisfied with the

performance of your salesperson you

generally sent a survey by the

manufacturer and in that survey if the

sales person receives anything anything

lower than like let's say a 95 percent

he won't get a satisfactory score and

generally speaking the dealership needs

to see a satisfactory score in order for

him to get paid a bonus on each of his

sales generally speaking if you got 10

cars if you sold 10 cars and and your

customer satisfaction index was above a

satisfactory score which is very very

tight it's usually a 95 percent if you

meet both of these criteria then you get

your bonus if you don't you lose that

that bonus because you weren't able to

meet that customer satisfaction index

score and that's how that's generally

how honest sales people lose their

profit or lose their paycheck at the end

of the month because of that factor and

this is quite frankly the most important

factor on how sales people get paid you

know big bucks by meeting that goal

there will be a completely other video

about how dealerships in general make

their profits however this was focused

specifically on car sales people and to

sort of give you some sort of insight as

to where and how they're actually making

their money that new car that you're

buying from that salesperson he may not

actually be making the same profit that

you have in your mind however you know

they have ways of going about getting

profit from the overall picture I hope

this video helps if it did help please

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of the screen thank you so much for

watching guys we'll see you next time

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