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new car dealership how they finance

josh1's Avatar
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04-18-03, 03:49 AM   #1  
new car dealership how they finance

Went looking for new car with current incentives with a friend. This prompted a great arguement about new car dealerships.

She says car dearlerships own the cars that are sitting on the lot, and that they go down to bank X and borrow 1 million dollars, to buy 1 million worth of Fords.
when dealer sells the car he gets the money and thats the end of it.

I said shes nuts, No way Ford wants to miss out on finance fees. I say the dealers have a revolving credit limit with the Manufactuers.(probably out of cayman islands co) So Dealer Smith has a 1 mil credit line with Ford, and gets 1 million worth of Fords on his lot. When he sells the car, he then has to pay back that part of the loan+ accrued interest.

We bet on this so please if anyone knows how it "really" works. Let me know! Thanks-Josh

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Joe_F's Avatar
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04-18-03, 05:08 AM   #2  
Never bothered to look into it, but I would say you are right. I'm sure if you asked the dealer, they would tell you. Shouldn't be anything to hide there.

harleyboy's Avatar
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04-18-03, 05:41 AM   #3  
Most new car dealerships have what is known as a "Floor Plan" with a bank. The bank actually owns the cars and the dealer pays interest on those cars until they are sold.

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04-18-03, 06:22 AM   #4  
Harleyboys right

And the bank sends their people by at least every month to check VIN,s on their vehicles to make sure everything is acounted for


cheese's Avatar
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04-19-03, 12:08 AM   #5  
I guess it depends. The Dodge dealership I worked at was owned and operated by a multi-millionaire, and he outright bought and paid for his cars on the lot, but he had the $$ to do it.

"Who is John Galt?" - Ayn Rand (Atlas Shrugged)

God bless!

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