Interest is due to the bank for the cars on the dealer's floor plan (cars that he has for sale).
As others have said timing, the dealer, and the car play a big part in negotiating. Dealers who specialize in credit situations may have some more mark up then others, this is why it's important to know the value of the car and not what they're asking. Most places have a very similar amount of money in a vehicle based on condition, however some cars move better then others and they'll expect to profit more on those. Bottom line is know what you want and what its worth and hunt for the right deal.
disclaimer: I know most of this stuff but I'm the worst at it, I will go in blind because I found something I liked and buy it. Don't do that.