Consumers who understand their financial options tend to make better, more rewarding use of them than others. Some aspects of the consumer finance industry, though, are less well understood than they should be.
In some cases, consumers have even been left in the dark about financial options that can be especially helpful and valuable. The role played in the industry by indirect lenders like Consumer Portfolio Services, for instance, is an important one that deserves to be more widely recognized.
The Historical Norm for Car Financing
Most consumers use financing to enable their purchases of cars, SUVs, and trucks. Given that prices for new and late-model, pre-owned vehicles have been climbing steadily for many years, this is likely to remain the default for quite some time to come.
In the past, consumers would most often apply directly to banks and other financial institutions when they needed automotive loans. While that was not always especially convenient, it made for a relatively intuitive option that served a fair number of car buyers reasonably well.
Banks and other traditional sources of financing, though, tend to prefer working with borrowers who are among the most qualified. Having a few blemishes on a credit record can disqualify a consumer from virtually all such types of financing.
A Different Way of Financing Car Purchases
Fortunately, there are now other options that frequently prove to be a lot more accessible. For decades, certain lenders have been working behind the scenes to make automotive financing more widely available.
Most often, these companies form partnerships with dealers who commit to qualifying and assessing would-be borrowers themselves. Dealers work with consumers who visit their lots to find cars that can be financed, given income levels, credit history, and other factors.
Such a dealer will then personally extend credit to the consumer to enable the purchase of a desired vehicle. Later on, the lender will buy up all such contracts that meet its established, detailed standards.
This more personal, flexible style of financing has proved to be quite a bit more accessible to many car shoppers than the traditional type. Lenders who enable it with their own activities play an important role in the consumer finance industry that many people are nonetheless unaware of.