by Gabrielle DeSantis

Thanks to film and TV, we’re all familiar with the stereotype of the sleazy, only-out-for-a-buck car salesman. They’re often depicted as harassing customers to buy overpriced lemons, only for those cars to break down minutes after leaving the dealership lot. But that’s far from the truth.

To break the spell, here are five ways dealerships make car sales without taking advantage of customers. So the next time you go car shopping, you’ll feel more comfortable.

Dealer cash and dealer holdback 

The nitty-gritty of car pricing can be confusing. When it comes to new cars, dealerships and car manufacturers work together to move cars off the lot and keep the dealership profitable. They do this in two ways: dealer cash and dealer holdbacks. 

Dealer cash is a bonus paid to dealerships by the manufacturers under certain conditions. For instance, if the dealer buys or sells a particular model, the car company adds a cash incentive that can increase with volume. Dealerships can keep this money or pass it on as a discount to customers.

Dealer holdbacks are also payments the manufacturer makes to the dealership. However, this works as a percentage of the invoice price, typically 2% to 3%. As with dealer cash, dealers won’t get the money until after the sale.

Trade-ins and used cars

Another avenue for revenue: used cars from trade-ins. Used cars bring the dealership more profit than new ones. Plus, it’s easy for them to turn down offers that don’t work in their favor. And they can handle the repairs and refurbishment in-house, letting them keep more of the profit for themselves versus using a third-party repair center.

Even if the car is a clunker, they can use the parts in their service departments. 

Dealer financing

Another slice of the profit pie for dealerships comes from financing. Most people can’t afford to pay for a car in full upfront, so they take out an auto loan and pay interest to the lender. According to Edmunds, consumers finance some 90% of new cars and 73% of used cars.

Dealerships also get paid through something called a “finance reserve.” This is a few percentage points (1% to 3%) added on top of the consumer’s loan interest rate that’s given to the dealership. For example, if the dealer can get you a 3% interest rate through its finance department, they can quote you at 5%. That difference of 2% will go to the dealership when you make your payments.

Car dealership service departments

When car sales are slow, service departments can be a lifeline for dealerships. Cars need regular maintenance, and dealers are in a great position to provide that service. That’s why they offer perks like free oil changes or tune-ups. So when it’s time for the more expensive repairs, they’ve already built a relationship with you. Service departments are the big moneymakers for dealerships.

Sales commissions

Dealerships pay salespeople a percentage based on the car’s price. This is called a commission. The structure varies from dealership to dealership, but it’s typically around 20% of the sale price. That means it can be a pretty paycheck sometimes.

Unfortunately, this is where those negative stereotypes come from. Though it’s part of salespeople’s tactics not to take “no” for an answer, they’re just trying to make a living and provide for themselves and their families. However, to help weed out some unscrupulous salespeople, some dealerships offer them a bonus for customer satisfaction. 

If you factor in things like GAP insurance and warranties, dealerships can make a lot of money without nickel-and-diming their customers. Now that you understand these five ways they make their cash, you can choose a reputable place to do business the next time you go car buying.

RELATED: Never Let a Car Salesman Talk You Into a Worse Deal After the Sale

The post Here Are 5 Ways Car Dealerships Make Their Money appeared first on MotorBiscuit.

by Gabrielle DeSantis

The Toyota Camry is one of the best-selling sedans on the market today. This high-quality favorite is not only reliable but also affordable, with a solid resale value. But not all Camrys are created equal, especially older models. In fact, there’s one Camry model year you should avoid at all costs.

The worst Toyota Camry model year you should never buy

The 2007 Toyota Camry is universally understood as one of the worst models to buy.

Torque News suggests avoiding this vehicle because of a “known engine defect.” Excessive oil consumption is a significant problem that could lead to engine failure.

Though Toyota and many mechanics claim that burning oil is not troublesome, this issue is more complex, and the 2007 model year is known for its ongoing problems.

CarComplaints.com advises consumers to avoid this Camry model “like the plague” because of the number of owners reporting engine issues. The 2007 Toyota Camry has received a Beware of the Clunker award for multiple complaints regarding burning oil, engine knock, unintended acceleration, and oil line leaks. There have even been numerous reports of the engine blowing up, resulting in costly repairs exceeding $5,000.

The most common complaint is excessive oil consumption that starts to appear around 97,500 miles. The average repair cost is $2,420, making a used 2007 Toyota Camry a vehicle not worth buying.

Avoid these model years too

The 2009 Toyota Camry also has an alarming number of complaints, again related to engine troubles. CarComplaints.com says that although the 2007 model year has more overall complaints, 2009 owners report higher repair costs and serious problems occurring at lower mileage.

If you have your heart set on a used Toyota Camry, be sure to avoid the above models, along with the 2008, 2013, 2014, and 2015. They have known problems that are not worth dealing with.

This is the best used Toyota Camry model year

Consumer Reports recommends the 2010 Toyota Camry. Due to a refresh for this model year, the car is more reliable and has less frequently reported issues. CR’s testers found the handling “sound and secure.” The vehicle gets a 5 out of 5 reliability score and 4 out of 5 for owner satisfaction.

The 2.5-liter four-cylinder engine gets above-average fuel economy and produces 169 hp. There is also a 3.5-liter V6 variant that puts out 268 hp and a four-cylinder hybrid that churns out 187 hp.

The cabin is comfortable, and the storage space is generous. The average price for a used 2010 Toyota Camry in good condition ranges from $7,900 to $8,725.

The 2012 Camry is also a solid choice. U.S. News ranks it number one in 2012 for affordable midsize cars. Although the price is higher, between $11,500 and $12,900, the complete redesign makes this model attractive.

With a nicer interior than ever before, U.S. News says that the “redesigned 2012 Toyota Camry’s great reliability rating, comfortable ride, and roomy interior contribute to its high position in our midsize rankings.”

If you aren’t opposed to spending more money, Consumer Reports ranks the 2016 and 2017 Toyota Camry model years on its list “Best Used Cars and SUVs for $15,000 to $20,000.”

Improved technology, better fuel economy, and good crash test ratings make these newer Camry sedans worth checking out. It also might be worth spending a little more on the purchase price to avoid the headaches of a 2007 Toyota Camry.

RELATED: Is This Really the Toyota Camry’s Answer to Crossover SUVs?

The post Avoid This Toyota Camry Model Year at All Costs appeared first on MotorBiscuit.