Quote:
Originally Posted by POBA
Please forgive my ignorance, what is the difference between indirect vs direct loans?
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Great question:
Direct is when yourself or end user walks into a branch of a bank or applies for a loan online via a bank, credit union, finance company, etc
Indirect is when yourself or an end user allows the dealer to source the financing/lending institution. Most franchise dealers have strong access to banks like Chase Auto Finance, Wells Fargo Dealer Serivices, Ally Financial, etc that will give those dealers different and usually lower rates than what is delivered if one applies or gets a direct bank loan. These are the dealer arms of these banks and clearly they do way more loans than the direct channels do. Ally was doing over 200 thousand loans a month at one point in the indirect channel.
EG: my friend applied for a bofa loan online (direct) and got a pre approval for 72 months up to 100k with an ltv of 100% or less. Instead he had the dealer source the financing (I helped push the dealer to not bump the rate) and he got BofA's indirect arm to give a lower rate thru the dealership.