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Car Financing - How it Really Works Iowa City 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
Instant Cash Advance Inc
(319) 466-9653
5 Sturgis Dr
Iowa City, IA
Hills Bank and Trust Company
(319) 338-1277
1401 S Gilbert St
Iowa City, IA
Countrywide Home Loans
(319) 358-6882
2346 Mormon Trek Blvd
Iowa City, IA
Check 'n Go
(319) 337-7200
94 Sturgis Corner Dr
Iowa City, IA
Commercial Federal Bank
(319) 338-9751
301 S Clinton St
Iowa City, IA
Check Into Cash
(319) 688-0092
1855 Lower Muscatine Rd
Iowa City, IA
Great Midwest Mortgage Corp
(319) 358-8118
2346 Mormon Trek Blvd
Iowa City, IA
Commercial Federal Bank
(319) 351-6110
1720 Waterfront Dr
Iowa City, IA
Commercial Federal Bank
(319) 466-0103
812 S 1st Ave
Iowa City, 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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