interest finance reserve

Dealer Finance Reserve:

When a dealer has a contract with a lender to handle loan applications, the dealer is considered an "indirect lender" for that lender. This allows the lender to handle far more loan applications than they would be able to without this arrangement.

Because of this, the lender does not have to pay multiple loan officers to handle these transactions, so they offer ways that the dealer can receive compensation for the time spent and paperwork required to process the loan.

This arrangement also allows for a very simple and convenient transaction for you as a buyer, because the dealer saves you the time and inconvenience of chasing around to banks, and the entire transaction can be done right in the dealer's office.

Flat fees:
Flat fees are determined by the lender based on the complexity of the loan and the amount of the loan, usually from $100 to $400. Harbro is compensated by the lenders primarily from these fees, which do not add to your interest rate, and sometimes may not even cover the cost to process them. 

Dealer Finance Reserve:
This is the amount that the dealer marks up your interest rate from the "buy rate" that the lender provides to the dealer. In the case of many national lenders, a customer may not be able to obtain financing from the lender directly, and the buy rate may be a discounted rate that the lender provides to the dealer. With a minimal markup, the rate is still very good for the buyer, and the dealer gets compensated for the time spent getting the loan approved, and producing and processing the loan.

Every car buyer wants to be careful of any dealer that has chosen to make this "dealer finance reserve" one of their primary sources of income. They will often advertise lower prices on the vehicles they are selling to entice the buyer to come in, but then mark the interest up enough so that your actual cost may be far more than a dealer who is honest with their advertised prices. At Harbro we give you an Honest Price Promise!