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Can a car dealership refuse outside financing?
I went to a car dealership and found a car I liked. The salesman told me that they don't accept outside financing. Can a car dealership do this?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes, dealers are allowed to refuse any type of financing for any reason.
If you’re buying a car, it’s important to be aware that dealerships can refuse financing, and it is not immoral or unethical—it’s just business.
- Why dealers refuse: If a dealer has seriously lowered the price, they usually want you to finance with them to recoup the money from the discount. It’s a simple break-even policy from their standpoint.
- What you can do: You can walk away from the deal if it doesn’t feel right or if the term is longer than you want, like a72-month car loan. Always trust your instincts and don’t sign anything that seems like a poor deal.
Keep in mind: When you do find the right deal, remember that most lenders require
full coverage
. It’s a good idea to find car insurance
before signing on the car loan, or else the dealer may require you to use their insurance—and this can be quite pricey.View full answer
- Gregory R.
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