Home Business An Introduction to Indirect Automobile Financing

An Introduction to Indirect Automobile Financing

by Uneeb Khan
Automobile Financing

Every day millions of car buyers arrange to finance their purchases through banks or other lending companies, and it’s a reasonably straightforward process. However, financing a car isn’t always so simple for those who do not qualify with traditional lending institutions. Businesses like Consumer Portfolio Services provide indirect auto financing that offers a solution. Indirect lenders work with dealers to help ensure clients can get the vehicles they need.

How is Indirect Financing Different from Direct Financing?

With conventional direct financing, customers apply for an auto loan through their preferred financial institution, often their bank. Once approved, the customer gets their loan or is advised of their interest rate. Buyers can then go to a dealer, choose their vehicle, and make payment arrangements.

When customers do not qualify for direct financing, dealers can often arrange for indirect financing by reaching out to their network of lenders. Unlike those who use direct financing, buyers arrange financing at the time of purchase.

Automobile Financing

More Buyers Qualify for Loans

Today a vehicle is a necessity for most people, yet many face challenges that make it nearly impossible to qualify for a conventional loan. Some have poor credit histories. Even those just starting with no credit history may be unable to get auto financing. Many do make enough money to get a loan.

Indirect financing offers an answer. Dealerships work with lenders willing to loan funds, even if borrowers are not ideal credit risks. Once a customer chooses a vehicle, the dealer reaches out to indirect lenders, who make one or more offers. The dealer’s sales staff provides this information to the buyer, outlining the interest rate, terms, and number of monthly payments. If the buyer agrees, they sign a contract and take possession of their car.

The Process Is User Friendly

Financing a vehicle using traditional direct financing can take time and effort on the part of the buyer. They need to check with lenders, get a quote from each, and make a decision. Customers may become the middlemen between a bank or credit union and dealerships during the buying process.

When dealers offer indirect financing, their team does all the work. Once the customer provides their essential credit and income data, the dealership has everything they need to get one or more offers.

Lenders Offer Excellent Customer Service

When an indirect lender provides financing to a car buyer, they also service the loan. In addition to providing data about the loan, lenders walk customers through the application process. Customers can access their information online at a designated customer section on the company website.

Loan servicing also includes making online payments and viewing payment history. Buyers can also get a payoff quote.

The traditional method of buying a vehicle involves obtaining a loan from a conventional lending institution like a bank. However, this option is not always available to customers with little or no credit and those who do not meet income minimums. Dealerships can reach out to indirect lenders to help these clients purchase vehicles. Indirect financing is convenient, and buyers receive excellent customer service while paying off their loans.

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