The Truth about Dealership Financing

If you are in the market for an easy online car loan, you probably already know that dealerships are not the best place to finance your new car. If you are considering dealership financing, here are some things you should know before you make your decision.

Dealership Financing

Part of the reason the easy online car loan market came about is because dealerships are notorious for bilking customers on new car financing. Dealerships are in the business of selling cars, not delivering low-cost financing. In fact, financing has become such a cash cow for dealers that most now make a higher profit on the financing agreement than the actual sale of the vehicle. This translates into a raw deal for you.

What Happens with Dealership Lenders

When you get an easy online car loan, you don't have to deal with an untrustworthy middle man who will unnecessarily inflate your interest rates. This is not the case when you finance through the dealership. When the dealer contacts lenders, he is not only searching for lenders who will give you a loan with your credit, but also for the lender who will give the dealership the largest commission. That means that the dealership will take a "cut" of the financing deal by ratcheting up your interest rate. Recently, this practice has gotten more and more outrageous. Some dealers have limits on how much they can increase your actual interest rate, while others have none. Dealers can increase your interest rate by as much as six to eight points. Clearly, this is all the more reason to apply for an easy online car loan, where you deal directly with the lender.

Credit Union Deals

Dealer arrangements with credit unions tend to be a little different. Credit unions usually pay the dealer a per-loan referral commission, but the interest rates on their loans stay the same. However, credit unions are very specific about who can qualify for their loans, which makes these loans much less accessible than an easy online car loan. Similarly, dealers are limited in their markups of discount financing deals straight from auto manufacturers. For example, if you qualify for 1% financing from the auto maker, the dealer cannot raise this number. On the down side, very few people qualify for this type of offer, as you have to have excellent credit. With our lenders, people with a variety of credit histories can still qualify for an easy online car loan.

No Uniformity

It is common practice among dealers to give customers with the exact same credit ratings drastically different deals on financing. The kind of rate you will receive will depend on your trade-in and the price of the car you're buying. Dealers may also give worse deals to customers who buy cars the dealer is not particularly eager to sell. When you apply for an easy online car loan, you can expect consistency without dealer profits complicating the matter. For the answers to the most commonly asked questions about an easy online car loan, see our FAQ page.