The appropriate comparison is the rate the consumer gets from the dealership versus what the same consumer could have gotten from a bank on their own. When judged by that standard, dealers not only provide very competitive rates, but also the convenience of one-stop shopping. Customers can seek credit from a number of sources. Given the intense competition from credit unions, banks and the Internet, dealerships must offer low rates and good service if they expect to earn a customer s financing business. In addition, only franchised dealers can offer special financing programs directly from the manufacturer.
Dealerships provide a wide range of valuable services to assist consumers with vehicle financing.
For example, dealership personnel shop various sources to secure a loan that meets the financial needs of the consumer. And because financial institutions generally provide funds to dealerships at a wholesale rate, dealerships can usually meet or beat rates from other sources. Most consumers have experienced some type of credit problem. Dealerships often spend several days working with financial institutions to secure financing when a customer has a significant credit problem. Also, a dealership s relationship with a financial institution often allows the dealership to secure a loan for a consumer who otherwise could be denied if they applied directly to the bank.