Tag Archives: cost

Not many people have sufficient on-hand resources to pay cash for a new/used car purchase. Most people HAVE to finance at least a major portion (about 80%) of any such acquisition. Most people just assume that financing through the car dealership is the simplest, easiest and most convenient way to go—and most people pay more than they need to because of that assumption!

Car dealerships rarely provide direct financing; i.e., they “partner” with a lending institution which provides funding to “qualified” buyers who apply for loans at car dealership offices. The lending institution accepts all the involved risk, while in most cases the dealerships accept a flat fee commission, a percentage of the total loan, and/or a bonus for each loan placement from their lending “partner.” This cost is paid for by the buyer through a higher loan rate. It might be simpler and easier to file for a loan at the car dealership, but please don’t assume that it doesn’t cost you for that convenience. In a small number of case, financing is provided, however the dealer does not receive any fee, percentage or bonus for placing the loan. The service is provided to make the car buying experience better and more convenient for the customer.