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P. Simmons
P. Simmons, Attorney
Category: Business Law
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Experience:  12+ yrs. of legal experience.
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Do car dealers share responsibility for financed autos? If

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Do car dealers share responsibility for financed autos? If the loan is not paid, does the dealer lose? If so, is it advantageous for the dealer to get cash for the sale of a car?
Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.


The answer to your question

Do car dealers share responsibility for financed autos? If the loan is not paid, does the dealer lose?

Depends...it depends on the relationship between the dealer and the finance company.

In some cases, where the dealer simply sells the car and has no relationship with a particular finance company, the answer is no...you negotiate the price with the dealer, obtain the financing, the finance company pays the dealer and the finance company bears all risk associated with the loan.

On the other hand, many times a dealer and a finance company have a relationship...either they are both owned by a parent company...or in some cases they have a contractual relationship.

In such a case the dealership may well have a risk associated with a default. But at the same time, they would also likely have reward.

The finance company makes it money through interest...the more they can charge in interest and the longer they can make the loan the more money they make...and it is certainly possible for a dealer to benefit from this as well.

In such case, there may be no incentive for the dealer to take case...in fact, some dealers prefer to sell on finance (since they get a cut of the money made by the finance company)



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