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Car Financing - How it Really Works Gig Harbor WA

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.

Bucky's Muffler, Radiator & Brakes
(253) 566-0747
6318 6th Ave
Tacoma, WA
 
Pacific Motor Co
(253) 572-7214
1408 Martin Luther King Jr Way
Tacoma, WA
 
Kay Parks/Dan Meyer Auto Rebuild, Inc
(253) 272-0512
3102 S 12th St
Tacoma, WA
 
Shaub-Ellison Co., Inc
(253) 272-4119
1117 Broadway Plaza Ste 500
Tacoma, WA
 
Auto Outlet of Tacoma
(253) 473-1900
3430 S Tacoma Way
Tacoma, WA
 
WrapJax, LLC
(877) 309-9290
2305 S Wilkeson Ste B
Tacoma, WA
 
Bucky's Muffler, Radiator & Brakes
(253) 627-8267
603 S Sprague Ave
Tacoma, WA
 
Alfa of Tacoma
(253) 572-2532
615 Saint Helens Ave
Tacoma, WA
 
Williams Oil Filter Service Co
(253) 627-8163
PO Box 2155
Tacoma, WA
 
Robert Larson's Automotive Group-Robert Larson's Chrysler
(253) 474-0621
7601 S Tacoma Way
Tacoma, WA
 

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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