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Car Financing - How it Really Works West Des Moines 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
Advance America Cash Advance
(515) 327-1155
1960 Grand Ave Ste 15
West Des Moines, IA
First Class Credit Union
(515) 224-4300
2051 Westown Pkwy Ste A
West Des Moines, IA
State Savings Bank
(515) 457-9533
4800 Mills Civic Pkwy Ste 100
West Des Moines, IA
Bank of America
(515) 224-0615
3400 Westown Pkwy
West Des Moines, IA
Des Moines, IA
Wells Fargo Financial
(515) 223-0054
4150 Westown Pkwy Ste 101
West Des Moines, IA
First Bank
(515) 440-7190
1630 22nd St
West Des Moines, IA
Iowa Mortgage Professionals Inc
(515) 225-3100
1200 35th St
West Des Moines, IA
Cash Now
(515) 255-5567
105 Grand Ave
West Des Moines, 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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