Why do auto dealerships balk at cash transactions, but real estate companies prefer them?
In: Economics
It depends on how self-interested they are with the loan. 1) if they handle the loans themselves (i.e, they own the debt along with all the pros and cons of doing something like that) or 2) a bank is doing it instead and they have a partner$hip with the bank. if either is the case then they are earning money from the loan itself and may price the cars cheaper to account for the earnings they will make on the loan itself.
of course they will not offer the same “discounted” car price if you don’t take up the loan then. they shouldn’t really have a problem with offering you a higher price for cash-only. but it does make them look bad and it is probably also more paperwork if they aren’t prepared for it already.
for real estate, the quantums are much higher and time horizons much longer. this is the kind of risk only banks will take and of course they are not going to share the rewards of such an endeavor with real estate people. they might throw a one time kickback to them though, in one form or another, for the loan referal. without bank involvement, the full cash process is much faster, less paperwork, they get their commission immediately and then can forget about you the same day.
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