I have a high interest rate loan on a truck, I am paying the payments on time and I am thinking about getting something else with a better interest rate. But I found out that car dealerships and finance companies have participation splits when they sell a car and complete the financing. I wanted to know what that means and am I paying for it. My rate is 24.9% I know that is high but my wife and I had not choice due to a loss in job. We are ok with it but really need to make a change now. Any advice would help. We have stable income and credit scores between 540 and 587, all of our credit cards and car payments and other bills have been on time for the past 12 months. We have some old judgments that maybe total $3500.00; one is a medical bill and the other a membership we never used at a discount supply place. Thank you for your answers in advance.
2006-11-13 03:35:21 · 3 answers · asked by xsvideo 1 in Cars & Transportation ➔ Buying & Selling
participation split is when car dealers mark up the rate from the financial institution and keep the profit. it is one of the ways for them to earn money by providing financing for the customer. It has no bearing on whether you get a loan or not. Based upon what you are saying you should have no trouble qualifying for a better rate this time. Good luck.
2006-11-13 03:42:31 · answer #1 · answered by SKYDOGSLIM 6 · 1⤊ 0⤋
In subprime lending there usually is no dealer participation the lender sets the rate at the max the state will allow in most cases. What you are talking about is a dealer will get a percentage of two or three points of the financing caharges depending on the bank most times they will get 70%. I dont get it why shouldn't car dealerships get paid for providing a service for you every other business does and we are not out thinking they are all ripping us off. In your case I am sure somebody told you about this and they only have limited knowledge of it.
2006-11-13 07:50:21 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Participation Split - Especially when your Trading Up and still have money owed on Vehicle your Trading In. You would have to do more leg work just dealing with the Bank to make the purchase. Strictly dealing with the Dealer they will take care of all the loop holes and play the numbers game with THEIR Bank.
2006-11-13 04:11:02 · answer #3 · answered by rwrocketrider 2 · 0⤊ 0⤋