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Car Financing - How it Really Works Ames IA

Car financing is frequently misunderstood by automotive consumers. Learn how dealer financing works, how to get approved, when to get a co-signer, and the importance of good credit.

Des Moines, IA
(515) 233-0159
107 S 5th St
Ames, IA
First National Bank
(515) 232-5561
405 5th St Ste 1
Ames, IA
First Choice Mortgage Inc
(515) 663-0993
Ames, IA
Mister Money USA
(515) 232-7105
303 Lincoln Way
Ames, IA
Wells Fargo Bank Na
(515) 232-2714
424 Main St
Ames, IA
Advance America Cash Advance
(515) 233-0606
620 Lincoln Way Ste 3
Ames, IA
Iowa Mortgage Professionals Inc
(515) 292-2839
Ames, IA
Wells Fargo Bank Na
(515) 268-6800
3910 Lincoln Way
Ames, IA
Zions Agricultural Finance
(515) 232-7310
500 5th St
Ames, IA

Car Financing - How it Really Works

One of the most misunderstood concepts about buying or leasing a new car is how car financing really works. Dealer financing, specifically, is misunderstood.

We'll say it again later, but the key concept to understand is that car dealers do not finance car loans and leases. However, dealers can most certainly affect how you finance and what you pay for financing.

Dealers always sell for cash
Car dealers are independent business people who have an authorized franchise with one or more car manufacturers. They do not work for the manufacturer; the manufacturer does not own the dealership.

Dealers buy cars from the manufacturer, usually with large "floor-plan" loans from a bank or finance company. The bank charges dealers interest on these loans. Dealers have to sell cars to pay off these loans with associated interest, as well as cover other expenses of running a business.

When a dealer sells or leases a car, he always receives cash, whether it's directly from the customer, or from a finance company or bank who has loaned a customer the money.

A common misconception is that dealers would rather get cash directly from a customer, bypassing the financing step. Some people mistakenly believe that dealers give cash customers a discount. This is not true. In fact, dealers typically get a commission or "finders fee" on car financing provided by banks or finance companies and therefore prefer that customers finance or lease...

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