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Car Financing - How it Really Works Mound MN

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.

AutoLoansInMinnesota.Com
St. Paul, MN
 
Bremer
(218) 643-8721
225 5th St N
Breckenridge, MN
 
Satisfaction Mortgage Inc
(320) 229-2233
606 25th Ave S Ste 108
Saint Cloud, MN
 
Central Minnesota Federal Credit Union
(320) 285-2256
114 Woodman St N
Grey Eagle, MN
 
Jennings State Bank
(651) 351-1000
1150 Stillwater Blvd N
Stillwater, MN
 
McCarthy Auto World
(916) 420-9923
3350 129th Ave NW
Coon Rapids, MN
 
Farm Credit Services
(218) 463-2766
208 3rd Ave NW Ste A
Roseau, MN
 
Farm Credit Services
(218) 843-3627
224 Atlantic Ave N
Hallock, MN
 
North Star Bank
(651) 489-8811
1820 Lexington Ave N
Saint Paul, MN
 
Brier Mortgage Corp
(507) 451-6961
660 W Bridge St Ste 100
Owatonna, MN
 

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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