Typically a new car dealer makes money 5 different ways when you buy a new car.

1. The new car itself
2. The money they make on the trade-in
3. The fee they get when you finance the new car through the dealer (the bank charges them one interest rate and they charge you a higher rate, keeping the spread as profit)
4. Added fees and accessories like rustproofing
5. Extended warranties

At SOME dealers when a customer concentrates on one part of the deal, say getting the lowest price on the car, the dealer will oblige by giving the customer a “great” deal but then make up the profit by offering less for the trade-in or offer a higher finance rate.

The trap I see some consumers falling into is that they become so concerned with getting the clunker rebate that they lose focus on the other aspects of the deal and not haggle for the lowest new car prices, best finance rate, etc.