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Services Offered by Car Dealerships in the United States, Including Audi Oakland

Oct 11, 2007
Automobile dealerships in the U.S., including Audi Oakland, offer various services, such as the selling of automobiles and the provision of a variety of financing and insurance options.

Most automobile dealerships, such as Audi Oakland, exhibit their inventory in a car lot or a show room. All new cars are required by federal law to have a sticker indicating the offering price and a summary of the car's features.

Salespersons who are working on commission are often present to negotiate with possible buyers to come up with a final price. Profit margins on automobile sales are quite low, with a new automobile dealer accepting a mark up of less than two percent over the manufacturer's invoice cost. It is common for the dealer to borrow from the manufacturer for inventory and to pay interest. To improve the financial stability of car dealers, some manufacturers pay a hold-back, which is designed to offset the expenses incurred by the new automobile dealer in paying interest on the money that he or she is borrowing to maintain the car in inventory.

Most automobile dealers offer some financing options for buying a car, including leases and loans. However, because of some complaints about predatory or discriminatory lending practices, car financing is heavily regulated in many states. For example, in California, dealers have to post several signs on the premises and the contract must indicate several prominent warnings.

Only a small number of dealers offer loans directly to their customers but most are indirect lenders. Most dealers immediately assign or resell the contracts to third-party finance companies. Automobile dealers may benefit from this arrangement by marking up the interest rate of the contract and retaining a part of that markup.

Car dealers may also offer service contracts because while cars sold in the U.S. have a standard warranty coverage, customers may want to have a broad range of choices to cover their automobile from mechanical failure beyond that point. However, because of the large number of choices, customers need to acquaint themselves of the coverages before signing a contract. Service contracts do not usually cover regular maintenance items such as filters, brakes and fluids.

There are three main types of service contracts which are usually available. The first type of service contract is provided by the manufacturer through the dealership. The second kind of service contract is a simple insurance policy that the car dealer has bought wholesale and is administered via a third party that is working for the dealer. The third type of service contract can be bought directly from a number of automobile insurance companies.

It should be noted that most aspects of the operation of an automobile dealership, such as Audi Oakland, are regulated by various states.
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