Why do auto dealerships balk at cash transactions, but real estate companies prefer them?
In: Economics
Cars are terrible collateral so banks generally don’t want to deal with them.
Car dealerships often partner with finance providers who capitalise on this disparity by offering high interest loans by quoting only the repayment price.
If you buy a car on a loan, you can expect to pay at least twice the price unless you’re paying it all off in less than 2 years.
Real estate is the complete opposite, banks generally love real estate, and will happily provide “competitive” interest rates on a mortgage.
The real estate agent would much rather deal with direct money as they have no interest in facilitating the loan for the buyer, which would just add risk and delay to the transaction for them.
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