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Car Financing - How it Really Works Des Moines 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
Financial Plus Credit Union
(515) 283-2526
2426 Hubbell Ave
Des Moines, IA
Dial National Bank
(515) 280-6611
219 8th St
Des Moines, IA
Advance America Cash Advance
(515) 285-8474
5132 SE 14th St
Des Moines, IA
(515) 278-6737
6200 Aurora Ave Ste 406W
Des Moines, IA
Des Moines, IA
Bank of America
(515) 235-8546
2827 Hubbell Ave
Des Moines, IA
Liberty Home Loans
(515) 276-7010
8525 Douglas Ave
Des Moines, IA
Check 'n Go
(515) 334-0044
3424 Merle Hay Rd
Des Moines, IA
Supreme Lending
(515) 277-0552
2740 Cottage Grove Ave
Des Moines, 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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