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Why are car dealerships so pushy about financing through them?
Why do dealerships push buyers to finance through them so hard? I'm buying a new car at a dealership, and despite me saying that I already have preapproval from my credit union, they keep pushing me to finance through them. I don't get it.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Car dealerships
want you to finance through them for two main reasons:- Dealerships can make money off the interest of a car loan you finance through them.
- Dealerships earn commission for acting as the middleman between you and another lender
Additionally, financing through a dealership may also require buyers to purchase add-ons like
car insurance
which ultimately put more money in the dealer’s pocket.In other words, financing through a dealer makes them a higher profit. In fact, according to The Wall Street Journal, financing has become a major contributor to dealership profits.
Of course, nobody wants to deal with a pushy dealer—but in some cases, dealerships may have the best loan offers available, so it may be worthwhile to see what they’re prepared to offer you.
View full answer
- Gregory R.
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