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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.

St. Paul, MN
Edgewood Vista
(218) 741-2090
605 17th St N
Virginia, MN
Wells Fargo Financial
(763) 546-8455
10100 6th Ave N Ste 110
Minneapolis, MN
Cornerstone Mortgage Co
(320) 587-8111
222 2nd Ave SE
Hutchinson, MN
Cambridge State Bank
(763) 689-2501
127 Opportunity Blvd N
Cambridge, MN
McCarthy Auto World
(916) 420-9923
3350 129th Ave NW
Coon Rapids, MN
(651) 674-5535
6063 Main St
North Branch, MN
Heart of the Lakes Credit Union
(218) 346-4450
108 Judd St
Perham, MN
First Financial Bank
(218) 584-5161
205 Main Ave
Twin Valley, MN
Beneficial Loan & Thrift Co
(651) 426-1017
4433 Lake Ave S
White Bear Lake, 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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