When a dealership closes: What it means for you

Chrysler's plan to shut down 789 dealerships, about a quarter of the car company's franchises (see related news story here), may have you wondering: What does this mean for me? Let's break it down like this:

If you own a Chrysler, Dodge or Jeep: Your biggest issue is likely convenience, says Philip Reed, consumer advice editor for Edmunds.com. A factory-backed warranty will be honored at any of Chrysler's remaining authorized dealerships. You may just have to travel farther for service.

The one exception: if you bought a service plan, extended warranty or a pre-owned certified vehicle backed by the dealership or a third party, not Chrysler. In that case, there's no guarantee your agreement will be honored at other dealerships. And in the past, says Reed, "there have been reports of dealerships going out of business and leaving people out of luck."

Take heart: Even if a dealership is axed, it may not go out of business, says Reed. The dealership could turn into a service center or a used-car shop, and, as a result, continue to honor its contracts. Joe Wiesenfelder, senior editor at Cars.com, also notes that these are "extraordinary circumstances." There's hope, he says, "that other dealerships will honor those [third-party warranties]."

If you want to buy a Chrysler, Dodge or Jeep: According to Chrysler's proposal, dealerships would close by June 9. That means there's less than two months to unload inventory (only authorized dealerships can sell new cars). So look for discounts on top of existing incentives--today, as much as $4,000 in cash rebates--offered by Chrysler. "If you're shopping," says Wiesenfelder, "chances are you can get a good deal."

A word of caution: Make sure the warranty you sign up for is factory-backed. That way, it will be good at any dealership. Also, don't get caught up in the lure of a good deal. First, find a car that fits your needs. Then start negotiating.

-Carolyn Bigda