Index
Why many small dealerships do not offer financing and why it is a mistake
What a finance company values before signing an agreement with a dealer
What documentation and requirements you need to get started
What leverage you have to negotiate even if you are small
What legal obligations are involved in offering financing as a professional
How to improve conditions over time
Mistakes small dealerships make when negotiating with finance companies
Frequently asked questions
Why many small dealerships do not offer financing and why it is a mistake
The reasons that are often repeated are usually two: "we do not know how it works" or "we think we will not be accepted". Both can be solved with information and prior preparation.
The Spanish second-hand car market moves nearly two million transactions a year, and a significant portion of them are financed. According to sector data, 84% of car acquisitions by individuals in Spain are carried out through credit. If your dealership does not offer that possibility, you are ruling out a relevant part of your potential buyers from the start.
The financing argument is not just for high-ticket items. An €8,000 car that can be paid in instalments of €180/month is much more accessible for many buyer profiles than a single payment. And that translates into cars that sell faster and with less price negotiation.
What a finance company values before signing an agreement with a dealer
Before sitting down to negotiate, it is helpful to understand how the finance company thinks. It is not a bank granting a loan to you: it is a company that will work with you on an ongoing basis, managing financing operations for your clients. What they evaluate is whether that business is profitable and reliable for them.
Estimated volume of transactions. It is not necessary to move fifty cars a month, but you do need to have a minimum activity that justifies the agreement. A dealership that sells four or five cars a month and expects to finance two or three of them already has a reasonable argument.
Age and stability of the business. A dealership with two or three years of demonstrable activity generates more trust than a newly opened business. If you have been operating for some time, that track record is an asset in the negotiation.
Profile of stock vehicles. Finance companies have preferences regarding the type of vehicles they want to finance. Cars over ten years old or with a very low price generate less interest. A stock with vehicles between 3 and 8 years old and average prices of €10,000 to €20,000 is a more attractive profile for most finance companies.
Solvency and business organisation. Having your documentation in order, presenting data clearly, and having the business correctly registered in the corresponding activity (epigraph 6541 of the IAE for vehicle buying and selling) counts more than it seems. A dealership that arrives at the meeting with an organised dossier transmits professionalism.
What documentation and requirements you need to get started
Before contacting any finance company, prepare this basic documentation: registration in the corresponding economic activity heading (IAE 6541), recent VAT and personal income tax (IRPF) or corporate tax returns according to your legal form, incorporation deeds if you operate as a company, information about your usual stock (number of vehicles, average price, average age), and an estimate of monthly sales volume along with the percentage you expect to finance.
With this information, you can have a serious initial conversation. Finance companies do not expect a formal business plan, but they do want to see that you know your own business and that you have some predictability. If you are still in the process of formalising your activity, you can review the guide on how to register as a car dealership.
What leverage you have to negotiate even if you are small
Volume is the main argument in any negotiation with a finance company, and that is where small dealers start at a disadvantage. But there are other levers that are useful to know and use.
Compare several finance companies before signing. In Spain, entities such as Santander Consumer, CaixaBank, BBVA, Lendrock, and other finance companies specialised in the automotive sector operate. Contacting several and comparing before committing to any of them gives you real negotiating room.
Propose a minimum volume commitment. If you can commit to a minimum number of transactions per month, even if modest, the finance company has more certainty about the business you will bring. A commitment of three or four monthly operations, consistently met, is a better argument than promising a lot without guarantees.
Negotiate the commission you receive as a dealer. Finance companies pay a commission to the dealership for each transaction closed through them. This commission varies depending on the product, volume, and agreed conditions. It is part of the agreement that should be negotiated from the outset and not taken for granted. To understand how to declare these commissions correctly, you can consult the guide on how to declare the sale of financed cars.
Offer initial exclusivity. If you are starting out with a finance company and do not yet have a history with them, proposing to work exclusively during an initial period can improve the conditions they offer you.
Present a clear client profile. The more specific you are about the type of buyer who usually visits your dealership, the better the finance company can tailor its product.
What legal obligations are involved in offering financing as a professional
This is the point most often overlooked and the one that can generate the most problems. When your dealership acts as an intermediary in a financing transaction, you assume specific legal obligations.
The reference standard is Law 16/2011, of June 24, on consumer credit contracts. This law obliges lenders and credit intermediaries to provide consumers with pre-contractual information free of charge and with due notice, before they assume any obligation under the credit contract.
In practice, before your client signs anything, you must ensure they have received and understood clear information about the total credit amount, the APR (TAE), the number and frequency of instalments, opening fees if any, and early cancellation conditions.
The APR is the most important figure and the one most manipulated in the sector. Some finance companies may demand up to 3.95% of the borrowed amount as an opening fee and require taking out life insurance or other linked products. As an intermediary, you are obliged to make sure your client understands the real cost of the operation, not just the monthly instalment. Presenting only the instalment without the APR is not sufficient and in some cases can be considered a practice contrary to the law.
A common mistake is including lock-in clauses that penalise early cancellation without informing the client clearly. If that happens in a transaction you intermediated, you could be held liable.
How to improve conditions over time
Negotiating with a finance company is not a one-off event: it is a relationship that improves or worsens depending on how you manage it.
Meet volume commitments. If you agreed to a minimum number of monthly transactions, meet it. The finance company periodically reviews each dealer's performance and adjusts conditions based on real results.
Maintain a low default rate. The finance company assumes the credit risk, but the profile of the clients you bring to them also counts. If you consistently refer clients with high risk profiles who subsequently default, the conditions offered to you will deteriorate.
Request an annual review of conditions. Initial conditions do not have to be permanent. Once you have been working with the finance company for six or twelve months and have a clean transaction history, you have concrete arguments to ask for a review. That conversation is worth having even if the finance company does not propose it themselves.
Add volume to negotiate better. If you grow in stock or sales, communicate it. A dealership that went from selling five cars a month to twelve has a different argument than they had when they signed the initial agreement. To see how to scale the business beyond financing, you can review the guide on how to scale your used car dealership.
Mistakes small dealerships make when negotiating with finance companies
Signing with the first finance company that accepts without comparing. The urgency to have financing available leads many dealers to sign conditions that are not the best on the market. Spending two weeks contacting three or four entities before committing to any of them usually pays off well for the time invested.
Not understanding the difference between TIN (nominal interest rate) and APR (TAE). The TIN is the nominal interest rate, excluding commissions or associated expenses. The APR reflects the actual annual cost of the financing, including everything. Negotiating on the TIN without understanding the APR offered to the end client means working with incomplete information.
Presenting the business without preparation. Arriving at a meeting with a finance company without data on your activity, without your documentation in order, and without a volume estimate is the quickest way to be offered generic and uncompetitive conditions.
Assuming conditions are fixed. Everything is negotiable: the dealer commission, the maximum financing term, the minimum amount per transaction, the approval requirements. Not asking is not a strategy.
More than 750 dealerships already use Dealcar to manage their daily operations
From stock control to managing sales files and dealer contracts, everything is recorded in one place. With each transaction well-documented, the relationship with the finance company is simpler and condition reviews have a solid database to support arguments.
If you want to see how it works, you can schedule a free demo at dealcar.io.
Frequently asked questions
How many cars do I need to sell per month for a finance company to accept me as a dealer?
There is no universal minimum, but most finance companies specialised in the automotive sector work from two or three transactions per month. What matters is not just current volume, but track record and predictability.
What is the dealer commission in a financing transaction?
It is the amount the finance company pays the dealership for having intermediated the transaction. Its amount varies according to the entity, product, and agreed business volume. It is one of the negotiable points of the agreement.
Can I work with several finance companies at the same time?
Yes, unless you have signed an exclusivity agreement. Working with two or three finance companies simultaneously allows you to direct each client to the product that best fits their profile and increases your approval rate. The disadvantage is that the volume is split.
What happens if a client does not pay the finance instalments?
The credit risk is assumed by the finance company, not the dealer, in most standard agreements. Once the operation is approved and signed, the debt is between the finance company and the client. However, if you repeatedly bring clients who default, the finance company may review the conditions of your agreement.
Am I obliged to inform the client of the APR before signing?
Yes. Law 16/2011 on consumer credit contracts obliges to provide complete pre-contractual information, including the APR, before the client assumes any obligation. It is not enough to present only the monthly instalment.
Index
Why many small dealerships do not offer financing and why it is a mistake
What a finance company values before signing an agreement with a dealer
What documentation and requirements you need to get started
What leverage you have to negotiate even if you are small
What legal obligations are involved in offering financing as a professional
How to improve conditions over time
Mistakes small dealerships make when negotiating with finance companies
Frequently asked questions
Why many small dealerships do not offer financing and why it is a mistake
The reasons that are often repeated are usually two: "we do not know how it works" or "we think we will not be accepted". Both can be solved with information and prior preparation.
The Spanish second-hand car market moves nearly two million transactions a year, and a significant portion of them are financed. According to sector data, 84% of car acquisitions by individuals in Spain are carried out through credit. If your dealership does not offer that possibility, you are ruling out a relevant part of your potential buyers from the start.
The financing argument is not just for high-ticket items. An €8,000 car that can be paid in instalments of €180/month is much more accessible for many buyer profiles than a single payment. And that translates into cars that sell faster and with less price negotiation.
What a finance company values before signing an agreement with a dealer
Before sitting down to negotiate, it is helpful to understand how the finance company thinks. It is not a bank granting a loan to you: it is a company that will work with you on an ongoing basis, managing financing operations for your clients. What they evaluate is whether that business is profitable and reliable for them.
Estimated volume of transactions. It is not necessary to move fifty cars a month, but you do need to have a minimum activity that justifies the agreement. A dealership that sells four or five cars a month and expects to finance two or three of them already has a reasonable argument.
Age and stability of the business. A dealership with two or three years of demonstrable activity generates more trust than a newly opened business. If you have been operating for some time, that track record is an asset in the negotiation.
Profile of stock vehicles. Finance companies have preferences regarding the type of vehicles they want to finance. Cars over ten years old or with a very low price generate less interest. A stock with vehicles between 3 and 8 years old and average prices of €10,000 to €20,000 is a more attractive profile for most finance companies.
Solvency and business organisation. Having your documentation in order, presenting data clearly, and having the business correctly registered in the corresponding activity (epigraph 6541 of the IAE for vehicle buying and selling) counts more than it seems. A dealership that arrives at the meeting with an organised dossier transmits professionalism.
What documentation and requirements you need to get started
Before contacting any finance company, prepare this basic documentation: registration in the corresponding economic activity heading (IAE 6541), recent VAT and personal income tax (IRPF) or corporate tax returns according to your legal form, incorporation deeds if you operate as a company, information about your usual stock (number of vehicles, average price, average age), and an estimate of monthly sales volume along with the percentage you expect to finance.
With this information, you can have a serious initial conversation. Finance companies do not expect a formal business plan, but they do want to see that you know your own business and that you have some predictability. If you are still in the process of formalising your activity, you can review the guide on how to register as a car dealership.
What leverage you have to negotiate even if you are small
Volume is the main argument in any negotiation with a finance company, and that is where small dealers start at a disadvantage. But there are other levers that are useful to know and use.
Compare several finance companies before signing. In Spain, entities such as Santander Consumer, CaixaBank, BBVA, Lendrock, and other finance companies specialised in the automotive sector operate. Contacting several and comparing before committing to any of them gives you real negotiating room.
Propose a minimum volume commitment. If you can commit to a minimum number of transactions per month, even if modest, the finance company has more certainty about the business you will bring. A commitment of three or four monthly operations, consistently met, is a better argument than promising a lot without guarantees.
Negotiate the commission you receive as a dealer. Finance companies pay a commission to the dealership for each transaction closed through them. This commission varies depending on the product, volume, and agreed conditions. It is part of the agreement that should be negotiated from the outset and not taken for granted. To understand how to declare these commissions correctly, you can consult the guide on how to declare the sale of financed cars.
Offer initial exclusivity. If you are starting out with a finance company and do not yet have a history with them, proposing to work exclusively during an initial period can improve the conditions they offer you.
Present a clear client profile. The more specific you are about the type of buyer who usually visits your dealership, the better the finance company can tailor its product.
What legal obligations are involved in offering financing as a professional
This is the point most often overlooked and the one that can generate the most problems. When your dealership acts as an intermediary in a financing transaction, you assume specific legal obligations.
The reference standard is Law 16/2011, of June 24, on consumer credit contracts. This law obliges lenders and credit intermediaries to provide consumers with pre-contractual information free of charge and with due notice, before they assume any obligation under the credit contract.
In practice, before your client signs anything, you must ensure they have received and understood clear information about the total credit amount, the APR (TAE), the number and frequency of instalments, opening fees if any, and early cancellation conditions.
The APR is the most important figure and the one most manipulated in the sector. Some finance companies may demand up to 3.95% of the borrowed amount as an opening fee and require taking out life insurance or other linked products. As an intermediary, you are obliged to make sure your client understands the real cost of the operation, not just the monthly instalment. Presenting only the instalment without the APR is not sufficient and in some cases can be considered a practice contrary to the law.
A common mistake is including lock-in clauses that penalise early cancellation without informing the client clearly. If that happens in a transaction you intermediated, you could be held liable.
How to improve conditions over time
Negotiating with a finance company is not a one-off event: it is a relationship that improves or worsens depending on how you manage it.
Meet volume commitments. If you agreed to a minimum number of monthly transactions, meet it. The finance company periodically reviews each dealer's performance and adjusts conditions based on real results.
Maintain a low default rate. The finance company assumes the credit risk, but the profile of the clients you bring to them also counts. If you consistently refer clients with high risk profiles who subsequently default, the conditions offered to you will deteriorate.
Request an annual review of conditions. Initial conditions do not have to be permanent. Once you have been working with the finance company for six or twelve months and have a clean transaction history, you have concrete arguments to ask for a review. That conversation is worth having even if the finance company does not propose it themselves.
Add volume to negotiate better. If you grow in stock or sales, communicate it. A dealership that went from selling five cars a month to twelve has a different argument than they had when they signed the initial agreement. To see how to scale the business beyond financing, you can review the guide on how to scale your used car dealership.
Mistakes small dealerships make when negotiating with finance companies
Signing with the first finance company that accepts without comparing. The urgency to have financing available leads many dealers to sign conditions that are not the best on the market. Spending two weeks contacting three or four entities before committing to any of them usually pays off well for the time invested.
Not understanding the difference between TIN (nominal interest rate) and APR (TAE). The TIN is the nominal interest rate, excluding commissions or associated expenses. The APR reflects the actual annual cost of the financing, including everything. Negotiating on the TIN without understanding the APR offered to the end client means working with incomplete information.
Presenting the business without preparation. Arriving at a meeting with a finance company without data on your activity, without your documentation in order, and without a volume estimate is the quickest way to be offered generic and uncompetitive conditions.
Assuming conditions are fixed. Everything is negotiable: the dealer commission, the maximum financing term, the minimum amount per transaction, the approval requirements. Not asking is not a strategy.
More than 750 dealerships already use Dealcar to manage their daily operations
From stock control to managing sales files and dealer contracts, everything is recorded in one place. With each transaction well-documented, the relationship with the finance company is simpler and condition reviews have a solid database to support arguments.
If you want to see how it works, you can schedule a free demo at dealcar.io.
Frequently asked questions
How many cars do I need to sell per month for a finance company to accept me as a dealer?
There is no universal minimum, but most finance companies specialised in the automotive sector work from two or three transactions per month. What matters is not just current volume, but track record and predictability.
What is the dealer commission in a financing transaction?
It is the amount the finance company pays the dealership for having intermediated the transaction. Its amount varies according to the entity, product, and agreed business volume. It is one of the negotiable points of the agreement.
Can I work with several finance companies at the same time?
Yes, unless you have signed an exclusivity agreement. Working with two or three finance companies simultaneously allows you to direct each client to the product that best fits their profile and increases your approval rate. The disadvantage is that the volume is split.
What happens if a client does not pay the finance instalments?
The credit risk is assumed by the finance company, not the dealer, in most standard agreements. Once the operation is approved and signed, the debt is between the finance company and the client. However, if you repeatedly bring clients who default, the finance company may review the conditions of your agreement.
Am I obliged to inform the client of the APR before signing?
Yes. Law 16/2011 on consumer credit contracts obliges to provide complete pre-contractual information, including the APR, before the client assumes any obligation. It is not enough to present only the monthly instalment.
