Why do auto dealerships balk at cash transactions, but real estate companies prefer them?
In: Economics
Real estate transactions prefer cash because there’s no risk to the deal. Mortgages can fall through for any number of reasons, and then the deal is off. The selling agent and the seller don’t have any financial interest in your loan, so whether you pay cash or with a mortgage, they get the same money at the end
Car dealers make money when you take out a loan with them. If your interest rate is 7%, the bank is probably getting 5% and the other 2% goes to the car dealer. They are highly motivated to get you into a loan and know that the deal is solid before offering you the loan (most of the time) and you close a car transaction the same day so there’s little risk to it falling apart due to financing. So, the car dealer makes more if you pay with a loan through them than they would if you paid cash
Latest Answers