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SEARCHIn light of two major vehicle-financing events, the 2.5 percent cap on dealership markups is becoming a trend, if not the standard.
In light of two major vehicle-financing events, the 2.5 percent cap on dealership markups is becoming a trend, if not the standard.
In recent weeks, California signed into law the Car Buyer’s Bill of Rights, which mandates a 2.5 percent ceiling on most markups. Loans of more than 60 months are limited to a 2 percent markup. Also, as part of a settlement agreement to a class-action lawsuit, DaimlerChrysler will limit most markups to 2.5 percent, according to Automotive News.
General Motors Acceptance Corp. placed the same cap on its markups as part of legal settlement. Other lenders and captives agreed to similar caps, with American Honda Finance Corp. placing a 2.25 percent ceiling on markups this year to resolve a lawsuit.
Consumer activists in California had pressed for an abolishment of rate markups. Instead, they wanted dealerships to accept a flat fee for arranging loans.
The Car Buyer’s Bill of Rights was signed in July and will take effect next year.
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