Dealers have been acting as middlemen in the auto financing business for decades. Every dealer has relationships with dozens of different lenders including banks, credit unions and independent finance companies, as well as the financing arms of major manufacturers such as Ford Credit and General Motors Acceptance Corporation. In exchange for bringing customers to lenders, dealers dip into some of the profit by boosting interest rates. Some lenders set limits as to how much a dealer can boost the price of a loan. Others do not.
Some lenders get a cut of the increased interest rates.
Others do not. Some lenders will have a maximum. Some lenders have no limits. So a dealer could bump it up six to eight points. And that can mean some serious profits for dealers and some serious losses for consumers.