176:
car buyer obtains financing facilitated by a dealership, the buyer and dealer sign a Retail
Installment Sales Contract rather than a loan agreement. The dealer then typically sells or assigns that contract to a bank, credit union, or other financial institution. Usually, the dealer knows in advance which financial institution will buy the contract. The borrower then pays off the financial institution the same as for a direct loan. Typically, the indirect auto lender will set an interest rate, known as the "buy rate". The auto dealer then adds a markup to that rate, and presents the result to the customer as the "contract rate". These markups have been the focus of some regulatory scrutiny because they can cause variations in interest rates that are not correlated with credit risk.
106:
83:
262:) is a term used in the automobile industry that means delivery a vehicle to a buyer prior to financing on the vehicle being completed. Spot delivery is used by dealerships on the weekend or after bank hours to be able to deliver a vehicle when a final approval cannot be received from a bank. This method of delivery is regulated by many states in the U.S., and is sometimes referred to as a "Yo-Yo sale" or "Yo-Yo Financing".
20:
222:
option for buyers. Studies have shown that the average per-unit finance cost can be higher when financing through a dealership than independent lenders. For example, one study found that the price increased by $ 674 when dealer financing was used, potentially due to additional products or services (an average of 4.63 add-ons per deal) in the financing package.
221:
Dealer financing is an option automobile dealerships offer to customers purchasing a vehicle. It is a significant source of profit for dealerships, with estimates suggesting that 78 percent of all cars are financed through this method. However, dealer financing may not always be the most advantageous
236:
A lease is a contractual agreement between a person who owns the property (lessor) and a person who gets to use it during the term of the lease (lessee). Usually, car leases allow the lessee to drive the car for a certain number of miles for a certain number of years. The lessee pays a fixed monthly
175:
There are two primary methods of borrowing money to buy a car: direct and indirect. A direct loan is one that the borrower arranges with a lender directly. Indirect financing is arranged by the car dealership where the car is purchased. Legally, an indirect “loan” is not technically a loan; when a
167:
The most common method of buying a car in the United States is borrowing the money and then paying it off in installments. Over 85% of new cars and half of used cars are financed (as opposed to being paid for in a lump sum with cash). Roughly 30% of new vehicles during the same time period were
237:
payment for the privilege of driving the vehicle, and when the lease ends, the lessee returns the vehicle to the lessor. The lessee pays only for the value of the vehicle for the term of the lease. Lenders calculate lease payments based on the vehicle’s
183:. Captives have a smaller share of the overall car financing market (new and used cars), along with banks, credit unions, and finance companies. A small number of cars are financed directly by the dealership at "
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333:"CFPB and DOJ Reach Resolution with Honda to Address Discriminatory Auto Loan Pricing - Consumer Financial Protection Bureau"
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Roughly half of new cars in the U.S. are financed by the captive financing arms of car manufacturers, such as the
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refers to the various financial products which allow someone to acquire a car, including car
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488:"Yo-Yo Sales: For Subprime Borrowers, Car Contracts With Many Strings Attached"
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191:. Buy Here Pay Here financing accounts for 6% of the total financing market.
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395:"Toyota Motor Credit settles with U.S. Over racial bias in auto loans"
241:, or what they estimate the car will be worth when the lease is over.
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Car financing options in the United
Kingdom similarly include car
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371:"State of the Automotive Finance Webinar | Experian Automotive"
347:"State of the Automotive Finance Webinar | Experian Automotive"
309:"State of the Automotive Finance Webinar | Experian Automotive"
514:"Consumer Advocates Seek Halt to 'Yo-Yo' Car Financing"
465:"Spot delivery is a bad idea when buying a car"
213:was found guilty of racist lending practices.
16:Financial products enabling ownership of a car
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8:
202:, personal contract hires (car leasing) and
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187:" dealers, which cater to customers with
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1042:Valuation using discounted cash flows
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153:General Motors Acceptance Corporation
23:Prime Rate floats about 3% above the
7:
486:Dunn, Catherine (24 November 2014).
437:Vincent, John M. (31 January 2019).
546:Financial Consumer Agency of Canada
67:United States Consumer Price Index
14:
41:interest rate 48 months new autos
31: Credit card interest rates
942:Quantitative behavioral finance
151:Car financing started with the
86:Average new car interest rates
982:Strategic financial management
629:Bull (stock market speculator)
439:"How Does Leasing a Car Work?"
100: Auto financing companies
1:
1012:Sustainable Development Goals
512:Carrns, Ann (18 April 2012).
492:International Business Times
542:Auto Finance: Market Trends
463:Ducey, Joe (20 June 2016).
412:Dayen, David (2024-07-08).
204:Personal Contract Purchases
1089:
694:Enterprise risk management
441:. US News and World Report
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679:Diversification (finance)
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181:Ford Motor Credit Company
892:Investment performance
594:Alternative investment
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887:Investment management
872:International finance
699:Environmental finance
659:Computational finance
418:The American Prospect
414:"Escape From the Box"
109:Average loan rate by
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58:10 year Treasury bond
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952:Risk-return spectrum
907:Mathematical finance
827:Fundamental analysis
821:Financial technology
719:Experimental finance
714:Exchange traded fund
1068:Automotive industry
1017:Sustainable finance
987:Statistical finance
967:Statistical finance
877:Investment advisory
837:Greater fool theory
1002:Structured product
997:Structured finance
882:Investment banking
857:History of banking
644:Capital management
518:The New York Times
401:. 2 February 2016.
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76:Federal funds rate
25:Federal Funds Rate
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932:Position of trust
664:Corporate finance
649:Capital structure
609:Asset (economics)
581:General areas of
185:Buy Here Pay Here
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927:Personal finance
917:Over-the-counter
897:Investor profile
867:Impact investing
862:History of money
842:Growth investing
704:Equity (finance)
614:Asset allocation
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1032:Too big to fail
1027:Systematic risk
947:Quantum finance
852:Hedge (finance)
832:Government bond
669:Cost of capital
654:Climate finance
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634:Asset growth
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111:credit score
1037:Toxic asset
977:Stockbroker
962:Speculation
912:Mutual fund
902:Market risk
809:social work
759:engineering
604:Super angel
523:26 February
497:26 February
471:26 February
157:World War 1
133:Car finance
1062:Categories
794:regulation
774:management
684:Divestment
423:2024-07-09
380:2019-01-02
356:2019-01-02
318:2019-01-02
292:"Car Loan"
278:References
226:Car leases
49:Prime Rate
1073:Car costs
823:(Fintech)
764:inclusion
754:economics
749:deepening
724:Financial
544:from the
209:In 2016,
39:Auto loan
804:services
729:analysis
619:Bad debt
266:See also
126:Used car
113:Q4 2022
789:planner
734:analyst
583:finance
445:13 July
399:Reuters
147:History
814:system
779:market
211:Toyota
170:leased
155:circa
141:leases
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739:asset
196:loans
137:loans
799:risk
784:plan
525:2018
499:2018
473:2018
447:2023
258:(or
139:and
709:ESG
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