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Car Financing - How it Really Works Cedar Rapids 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
Hills Bank and Trust Company
(319) 654-9595
3610 Williams Blvd SW
Cedar Rapids, IA
Peoples Advantage Mortgage
(319) 294-2914
5250 N Park Pl NE
Cedar Rapids, IA
Household Finance Corporation
(319) 378-1998
151 Collins Rd NE
Cedar Rapids, IA
Admiral Home Mortgage
(319) 393-4500
1241 Park Pl NE Ste B
Cedar Rapids, IA
First Choice Mortgage Inc
(319) 378-0120
373 Collins Rd NE Ste 209
Cedar Rapids, IA
Check 'n Go
(319) 396-9700
353 Edgewood Rd NW
Cedar Rapids, IA
Check 'n Go
(319) 373-8300
124 Collins Rd NE Ste E
Cedar Rapids, IA
Wells Fargo Home Mortgage
(319) 362-3513
101 3rd Ave SW
Cedar Rapids, IA
Regions Bank
(319) 393-8745
4357 Czech Ln NE
Cedar Rapids, 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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