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Car Financing - How it Really Works Sioux Falls 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
Dakota Loan Company
(605) 332-7345
300 N Dakota Ave
Sioux Falls, SD
Cortrust Mortgage
(605) 331-4092
2101 S Minnesota Ave
Sioux Falls, SD
Advance America Cash Advance
(605) 331-6944
2023 W 41st St
Sioux Falls, SD
Dollar Loan Center
(605) 274-7444
1901 W 41st St
Sioux Falls, SD
Sioux Falls, SD
Avantis Financial Services Llc
(605) 357-9100
Sioux Falls, SD
Home Federal Bank
(605) 333-7620
Sioux Falls, SD
(605) 362-8965
3208 E 10th St
Sioux Falls, SD
Gateway Acceptance
(605) 336-3222
4733 N Cliff Ave
Sioux Falls, 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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