Buying a Car at a Car Dealership

Like waiters, bartenders and chefs, many dealership employees specialize in specific functions. One group demonstrates vehicles while another calculates sales prices, trade-in values and payments. The third group ties up loose ends and does the final paperwork.


But technological and cultural shifts are reshaping car dealerships’ processes. To meet customer expectations, dealers must make some changes to their traditional models.

Getting a Dealer’s License

Before you can sell cars as a dealer, you must meet the state’s licensing requirements. This includes securing a place of business, obtaining insurance and securing a dealer’s bond. To learn more about getting a dealer’s license, visit the New York Department of State’s website. You will also need to pass a dealership inspection.

Typically, the requirements for a new dealer will vary from state to state. Each state will have its own set of guidelines for potential dealers, so it’s important to check with your local Department of Motor Vehicles. Once you’ve figured out your state’s rules, you can then begin the process of applying for a dealer’s license.

In addition to the above steps, you will also need to obtain a federal tax ID number and secure a sales tax certificate. You may also be required to attend a dealer education seminar. In some cases, you will be required to purchase a surety bond. The amount of the bond will vary based on your personal credit.

Some dealers may charge documentation fees, or “doc fees”. These fees cover the time and effort that goes into preparing sales paperwork. These fees can be as low as $100 or as high as hundreds of dollars. Additionally, some states have a cap on doc fees that dealers can charge.

Buying a Car

Car dealerships typically carry multiple makes and models of cars. This gives shoppers a better chance of finding the vehicle they want, especially as new vehicles come off the assembly line. It also gives buyers a variety of financing options and warranties. But car buying can be a complex process that is not always easy to navigate. Buyers should be well-informed and prepared before entering a dealership.

It’s important to know the manufacturer’s suggested retail price for a particular model. This will give you an idea of what to expect when negotiating with the dealer. Also, be aware of any factory rebates or incentives that may be available for a particular model. These are often tied to specific terms such as a higher down payment or shorter contract length.

Some dealers may offer dealer-installed add-ons such as nitrogen in the tires, all-weather floor mats or theft protection packages. They can add thousands to the sale price of a new car. Do not purchase any of these extras until after you’ve negotiated the price of the car and its financing.

Be sure to compare financing offers from several lenders before making a final decision. Also, check whether the dealer requires credit insurance as part of your loan. This is not required by law, and it’s possible for the dealer to include it without your knowledge or consent.

Financing a Car

If you don’t have enough money saved to buy a car outright, you’ll need to finance it. Some dealerships offer in-house financing, which can be convenient because the dealer handles all the paperwork. However, it’s important to compare dealer-arranged loans with offers from direct lenders such as online and traditional banks before you make a decision. The dealership may be able to offer you better loan terms than a direct lender, but it also might have added fees like application, documentation and processing charges.

Often, dealers push their own in-house loans because they receive compensation for handling the loan process. They might use tactics such as lengthening the term of the loan to lower your monthly payment, but this will cost you more in interest over time. Some dealers also offer manufacturer-sponsored low rate or incentive programs, which may require a certain vehicle or meet special requirements like a larger down payment.

To avoid being swayed by these types of incentives, get preapproved for an auto loan before you go to the dealership. This will let you know the credit terms that are available to you, including the annual percentage rate (APR), the total cost of borrowing and other details. It can also help you to shop smarter and be prepared for any negotiation that might come your way at the dealership.

Repairing a Car

Car dealerships are often the first choice for vehicle repair, as they offer original manufacturer’s parts and specialized techniques. However, some owners prefer to shop around for the best value in repairs and choose a local auto mechanic instead. In the end, both choices may offer similar quality and service, though the latter can save you a lot of money through comparison shopping.

The reason why dealers are so well-known for their service departments is that they typically have technicians who are trained in specific vehicle brands. This means that they can do the job better and faster than mechanics working in independent shops, who are less familiar with the brand of cars they work on.

Moreover, dealerships often have larger facilities with more service bays. This may also translate into quicker turnaround times, but it’s important to keep in mind that size isn’t always everything.

Before you drop off your vehicle at a dealership, make sure that they’ll provide you with a written estimate detailing the condition of the car and all the expected repairs. The report should also indicate the price of the parts and labor. Additionally, the dealership should tell you if they plan on exceeding a certain amount of time or money. This is usually required by state law. If the dealership exceeds this limit, they must give you the option of repairing the car at another shop.