The U.S. auto industry can only thrive if citizens are able to buy vehicles. Fortunately, many save up cash and others have excellent credit that ensures they get great auto loan terms from their banks. However, millions shoppers have little cash and credit issues that make bank loans nearly impossible. Many of them are still able to buy late-model vehicles with the help of lenders such as Consumer Portfolio Services, an indirect automobile financing business that works with auto dealers. They offer a convenient financing process as well as loan servicing.

Shoppers Buy and Finance in One Location

Car buyers can arrange financing through their banks or credit unions before looking for automobiles, but many begin their search first. After choosing a vehicle, they might pay in cash or go to financial institutions with contracts. This known as getting a direct loan and it allows the buyer to compare lenders. A huge number of buyers rely on dealers to negotiate financing for them. Dealership finance departments shop several lending institutions to get the best deals for clients. The loans they arrange are typically owned by indirect automobile financing businesses. The process is fast and all the work is done by the dealership.

Indirect Lenders Help Clients With Credit Issues

If buyers have a history of credit problems, dealers can often find indirect financing companies that will agree to loans that would otherwise be rejected by banks or credit unions. Dealers create a contract that outlines all costs as well as a monthly payment schedule. However, they do not administer the loans. Once customer paperwork is signed, the financing business holds and services the loan for the client. Customers typically have the option to make inquiries, get loan information, and make payments on the lender’s website.

Customers May Qualify for Incentives

While many car loans are financed through indirect financing businesses for credit reasons, not all of them fall into that category. Sometimes they are just the best deal. In these cases, lenders may offer incentives such as low finance rates that a bank might not consider.

In the auto sales industry, many retail purchases are financed with the help of indirect financing companies. Financing is typically arranged by dealer representatives who have shopped around for the best rates. Although customers do not arrange the initial financing, they pay directly to indirect lenders and rely on them for loan servicing.