Offering a range of consumer auto loans through your car dealership can help you land more customers with diverse financial needs. Some customers have a significant amount of cash to put down on a loan; others have poor credit and want the cheapest loan they can qualify for. When you can provide customers with a selection of financing options, you increase the chances of finding a match that leads to a sale. 

Explore the types of auto loans offered to car dealerships and how the right financial dealer services can make your dealership more attractive to buyers.

Understanding the Main Types of Auto Loans for Dealerships

Modern consumers have access to an extensive selection of financing options to help make major purchases like vehicles more approachable. As a dealership, you can work with financial institutions to offer lending options directly to your customers, thereby facilitating a smoother purchasing process. 

These are the main types of auto loans to offer in your dealership. 

Secured Auto Loans

Secured loans are the most common type of car loan. They are "secured" by some sort of collateral, usually the vehicle itself in the case of an auto loan. If the borrower were to default on the loan, the lender would have the right to seize the vehicle and sell it to repay the loan balance. 

Secured loans sometimes give way to lower interest rates than unsecured loans due to the security provided by the collateral. They are also commonly offered through dealerships and are the type of financing many customers expect to receive when getting a car loan.

Unsecured Auto Loans 

Connecting customers to unsecured auto loans may also be wise for those who would prefer not to tie their loan to collateral. These are also called "personal loans," and the loan funds can be used for virtually any purchase. 

Unsecured loans tend to have higher interest rates than secured auto loans, but they are sometimes simpler to apply for. Because the rates and terms are not tied to a vehicle, a customer could seek pre-approval before even selecting a vehicle to buy, making the purchase process faster.

Captive Financing

Vehicle manufacturers sometimes offer financing through a subsidiary financial institution for borrowers purchasing new or Certified Pre-Owned vehicles. These new car loans often feature 0% APR for a certain period as a way to incentivize customers to purchase the manufacturer's product. You can connect customers to these types of auto loans when they express interest in a new or Certified Pre-Owned vehicle.

Lease Buyout Loans

For customers who are currently leasing vehicles through your dealership, a lease buyout loan gives them an opportunity to purchase the vehicle at the end of the lease. This is a secured loan that treats the vehicle as collateral.

Customers can often purchase their leased vehicle for less than they would if they were buying it off your lot, making lease buyout loans an attractive option for those who want to keep the same car they have already been driving.

Auto Loan Refinancing 

Offering auto loan refinancing through your dealership can also attract certain types of customers. Those who have existing auto loans with high interest rates or unaffordable monthly payments can consider refinancing their current loan with a new loan that is more affordable. They might choose a loan with a longer repayment term, making their monthly payments lower. 

Expand Your Vehicle Financing Options With Edge Financial Services LLC

These types of auto loans appeal to different buyers, and offering a selection of them within your dealership is important for meeting the needs of your potential customers. At Edge Financial Services LLC, we understand the importance of funding solutions that suit your customers' financial situations. We help dealerships expand their financing options to borrowers with poor credit or limited credit histories. 

We offer quick approvals and funding, and we reimburse dealers within 48 hours of submitting all documentation. Contact us today to learn more about our new and used car loans for dealerships.