| With
prices averaging more than $20,000 for a new vehicle
and $9,500 for a four-year-old vehicle, most consumers
need financing or leasing to acquire a vehicle.
In some cases, buyers use “direct lending:”
a direct loan from a finance company, bank or
credit union. Once a buyer and a vehicle dealership
enter into a contract and the buyer agrees to
the new car price,
the buyer uses the loan proceeds to pay the dealership
for new Honda car,
for instance.
Consumers
also may arrange for a vehicle loan over the Internet.
“Dealership financing” is the most
common type of vehicle financing. This is where
a buyer and a dealership enter into a contract
where the buyer agrees to pay the amount financed,
plus an agreed-upon finance charge, over a period
of time. The dealership may retain the contract,
but usually sells it to an assignee (i.e., bank,
finance company, etc.).
For the new car buyer,
dealership financing offers:
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