Car Dealership Basics

Car dealerships play a vital role in the automotive industry. They provide consumers with an in-person purchasing experience and facilitate warranty service. They also provide jobs to the community and help customers with title, registration, and regulatory paperwork.

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Car dealers strive to attract new customers and keep existing ones coming back. They offer sales and service for both new and used cars, as well as parts and accessories.

Buying a Car

Car dealerships serve as middlemen between manufacturers and consumers, buying vehicles from the manufacturer and selling them at a markup. They also offer financing options and help buyers with the trade-in or sale of a current vehicle. Understanding how dealerships operate can make the car-buying process easier and more pleasant.

When you find a car you want to buy, get a quote from multiple dealerships. This will give you a good idea of the fair market price for that model. It will also let you know if the dealer has any additional fees such as destination or dealer preparation. These charges should be included in the car’s advertised price or listed as add-ons on your sales contract.

Once you agree on a purchase price, the dealership will take you to the finance and insurance office to complete the transaction. At this point, it’s a good idea to ask about any extra products they might try to sell you like paint protection, curbed wheel insurance or an extended warranty.

Once you’ve completed all of the car-buying paperwork, you will drive your new vehicle home or have it delivered to your doorstep. Be sure to pay attention during the delivery process. Dealerships often tack on extras or change the terms of your original agreement to their benefit. For example, they may charge higher interest rates on loan payments than you were expecting or renege on a deal after you’ve already signed the paperwork.

Financing a Car

A dealership is a retail outlet that sells cars, collects tax and license fees, acts as a conduit for financing entities and performs safety inspections. Car dealerships can either be owned by an auto manufacturer or be brand agnostic, and both types offer new and used vehicles. Dealerships are regulated by state governments, and some collect taxes on behalf of the government.

When buying a vehicle, it’s important to understand the dealer’s financing structure. Dealerships can arrange financing through their own captive finance company or by shopping your loan application to multiple lenders. This can be beneficial, as it could lead to a lower interest rate than you might get on your own. But, it’s also important to remember that the dealer will add on some costs (like a document fee, registration fees and sales tax), which can increase your overall cost.

Getting pre-approved for an auto loan before visiting the dealer can help you keep your focus on the car price and avoid getting sucked into a financing deal that doesn’t make sense for you. The key is to know your credit terms, including the annual percentage rate (APR), loan term and maximum amount financed. You can obtain these from a lender or credit union before you go to the dealer, as well as the estimated credit score you’re likely to receive based on limited personal and financial information.

Service & Repair

Getting service at the dealership is one of the best ways to ensure that your vehicle receives genuine OEM parts. These are the same parts that were installed in your car when it rolled off the assembly line and have passed quality tests by the manufacturer. In addition, dealership mechanics are likely to follow the manufacturer’s recommendations for maintaining or repairing your vehicle.

Unlike independent auto shops, which may have a wide range of mechanics, dealerships typically employ factory-trained technicians who have earned specific certification for your brand of car. They work on vehicles like yours every day and know how to get the job done right. In addition, dealership owners pay vehicle manufacturers to represent their brand in the market and must meet corporate standards on customer satisfaction.

While some consumers prefer the one-on-one relationship that can be developed with a local mechanic, they can also save time by taking their car to the dealer for maintenance and repairs. Many dealers will offer a free loaner car so you can still get to work or run errands while your vehicle is being repaired.

Regardless of which route you take, be sure to keep detailed records of all maintenance and repair work done on your vehicle. This documentation will help you if you need to dispute any charges from the dealership or file a lemon law claim.

Parts & Accessories

A dealership’s parts and accessories department is an opportunity to offer consumers additional products that will protect, improve or personalize their vehicles. While this isn’t as big a revenue generator as selling cars, it can help to increase customer satisfaction and loyalty.

Some dealers may sell a wide range of parts for various makes and models, while others specialize in a specific type of car or accessory. The latter is usually a more profitable proposition since the inventory is typically easier to manage.

As part of the sales process, the dealer will often include add-on accessories in the total cost of a vehicle. These might be things like an engine block heater, floor mats, cargo liners or mud flaps. Some of these may be difficult to negotiate away, but it is always worth a shot to ask for a price reduction.

It is important for car dealerships to do all they can to maximize revenues. This means offering finance deals, service contracts and a well-stocked parts and accessories department. It also helps to advertise to attract the right type of consumer.

Certain provisions of dealer franchise agreements and manufacturer policies may dictate that a car dealership not modify vehicles with non-OEM parts or accessories that could potentially cause mechanical problems. It is best to consult the relevant documentation before attempting any modification.