Dealer Financing

AAA

DEFINITION of 'Dealer Financing'

Loans that are originated by a retailer to its customers and are then sold to a bank or other third-party financial institution. The bank purchases these loans at a discount and then collects principle and interest payments from the borrower. Also called an indirect loan.

INVESTOPEDIA EXPLAINS 'Dealer Financing'

A well-known example of dealer financing is auto dealers that offer car purchase financing. Many car dealers markup the finance company's interest rate and keep the difference as additional profit.

RELATED TERMS
  1. Dealer Incentive

    A corporate sales strategy in which the price a dealer has to ...
  2. Time-Sale Financing

    A form of indirect dealer lending or financing used by banks ...
  3. Loan

    The act of giving money, property or other material goods to ...
  4. Combination Loan

    1. A transaction consisting of two separate loans for the same ...
  5. Unsecured Loan

    A loan that is issued and supported only by the borrower's creditworthiness, ...
  6. Financing

    The act of providing funds for business activities, making purchases ...
RELATED FAQS
  1. What impact does disposable income have on the stock market?

    In theory, the impact that disposable income has on the stock market is that a widespread increase in disposable income leads ... Read Full Answer >>
  2. How can stock dividends provide protection against inflation?

    Stock dividends protect against inflation by providing tangible returns that supplement capital returns from rising stock ... Read Full Answer >>
  3. What types of risk should an investor consider before investing in the chemicals ...

    The chemicals sector is highly regulated and most businesses in the sector monitor supply chain risks very closely. Chemical ... Read Full Answer >>
  4. What types of industries are the main consumers of the products of the chemicals ...

    A variety of different industries use chemical products. Construction, automotive manufacturing and other industrial manufacturing ... Read Full Answer >>
  5. How important are seasonal trends in the automotive sector?

    The automotive industry has some definite seasonal trends, with peak demand occurring in the spring and fall, and lowest ... Read Full Answer >>
  6. How is the basket of goods selected for the Consumer Price Index?

    In the United States, the inflation level in the economy is approximated by the Bureau of Labor Statistics via a basket of ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Leveraged Investment Showdown

    Margin loans, futures and ETF options can all mean better returns, but which one should you pick?
  2. Entrepreneurship

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  3. Options & Futures

    Car Title Loans: Good Option For Fast Cash?

    These loans provide fast cash, but they could leave you deeper in debt - and without a car.
  4. Options & Futures

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
  5. Stock Analysis

    How Altria Lights Up Portfolios

    A look at how the highly profitable brands of tobacco giant Altria just won't quit.
  6. Savings

    How to Invest in Liquor (and Avoiding the Hiccups)

    Investing in liquor has been profitable for ages but there could be some hiccups along the way.
  7. Economics

    What are Consumer Goods?

    Products that are purchased for consumption by the average consumer. Clothing, food, automobiles and jewelry are all examples of consumer goods
  8. Economics

    What are Consumer Packaged Goods?

    Consumer packaged goods, CPGs, are items that consumers use and purchase often.
  9. Mutual Funds & ETFs

    This ETF Can Weather Any Market Condition

    Looking for a winning ETF that's capable of performing in almost any environment?
  10. Home & Auto

    The Real Cost Of A Speeding Ticket

    Speeding can come at a cost that goes well beyond one driver and one ticket.

You May Also Like

Hot Definitions
  1. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  2. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  3. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  4. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  5. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
Trading Center