How the Consumer Portfolio Services Financing Model Works

There are thousands of car dealers nationwide, and each puts its own particular spin on the business. Car and truck buyers who fail to receive the service they seek from one dealer often find that another nearby is ready to step up.

One common complaint among vehicle shoppers is a lack of financing options. Companies like Consumer Portfolio Services help remedy such problems by enabling selected dealers to extend loans where they otherwise could not. Understanding the importance and value of this relatively novel type of financing can be helpful to many who might someday be shopping for cars themselves.

Extending Financing to Those Banks Overlook

For many years now, car and truck buyers have been faced with a traditional lending environment that remains fairly strict and demanding by historical standards. Lending requirements remain, in most cases, significantly tighter than they were before the last recession when a massive financial meltdown led banks and other conventional sources of financing to scale back their activities.

In the years since, however, a previously uncommon option has become a lot more widespread. Instead of obtaining financing from large banks or financing companies owned by auto manufacturers, many more buyers today ultimately receive it from alternative sources. While the details of this arrangement are not always as directly obvious as in the past, it has proved to be a mutually rewarding one in a great many cases.

Supporting the Dealers Who Know Their Own Customers Well

In order to obtain financing of this general kind, a buyer will work with a dealer who extends its own loans at the time and point of sale. With each dealer making its judgments regarding the creditworthiness of particular clients, flexibility is much more the norm than with traditional types of financing.

Rather than keeping that loan on its own books and being forced to service it, however, a dealer who focuses on this style of business will sell it off to a financing partner. Although this can expose the dealer to a bit of risk and uncertainty, it also means being able to close deals that would not normally be viable. As a result, more people receive the financing they need and dealers can sell more vehicles.