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Car Financing - How it Really Works Rapid City SD

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.

Sioux Falls, SD
North American Title Loans
(605) 343-5003
1215 E Saint Patrick St
Rapid City, SD
First Western Bank
(605) 348-4545
650 Flormann St
Rapid City, SD
Check 'n Go
(605) 388-3333
1320 Mount Rushmore Rd Ste B
Rapid City, SD
Dollar Loan Center
(605) 341-5626
1575 N Lacrosse St Ste E
Rapid City, SD
(605) 393-2274
3788 E Highway 44
Rapid City, SD
Pioneer Bank & Trust
(605) 399-1510
2018 Mount Rushmore Rd
Rapid City, SD
Affordable Loans
(605) 716-7774
1000 Cambell St
Rapid City, SD
Wells Fargo Home Mortgage
(605) 341-4000
825 Saint Joseph St
Rapid City, SD
First National Pawn
(605) 341-5090
935 E North St
Rapid City, SD

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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