Index
Why many small dealerships do not offer financing and why it is a mistake
What a finance company evaluates before signing an agreement with a dealer
What documentation and requirements you need to get started
What levers 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 won't be accepted". Both are solvable with information and prior preparation.
The Spanish second-hand car market moves nearly two million transactions a year and a significant part of them are financed. According to sector data, 84% of car purchases by individuals in Spain are carried out through credit. If your dealership does not offer this possibility, you are discarding from the outset a relevant part of your potential buyers.
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 evaluates 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 that grants a loan to you: it is a company that will work with you on an ongoing basis, managing financing operations for your customers. 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 plans 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 a while, that track record is an asset in the negotiation.
Profile of the vehicles in stock. Finance companies have preferences regarding the type of vehicles they want to finance. Cars older than ten years 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 organisation of the business. Having your documentation in order, presenting data clearly, and having the business correctly registered in the corresponding activity (IAE heading 6541 for vehicle sales) matters 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 under the corresponding activity heading (IAE 6541), latest VAT and Personal Income Tax (IRPF) or Corporate Tax returns depending on the legal form, incorporation deeds if you operate as a company, information about the usual stock (number of vehicles, average price, average age) and an estimate of the monthly sales volume with the percentage you expect to finance.
With this information, you can have a first serious 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 levers 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 worth knowing and using.
Compare several finance companies before signing. In Spain, entities such as Santander Consumer, CaixaBank, BBVA, Lendrock and other specialised automotive finance companies operate. Contacting several and comparing before committing to any 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 are going to bring. A commitment of three or four monthly transactions, consistently met, is a better argument than promising a lot with no guarantees.
Negotiate the commission you receive as a dealer. Finance companies pay a commission to the dealership for each transaction they close 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 beginning 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 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 customer profile. The more specific you are about the type of buyer who usually visits your dealership, the better the finance company can adapt its product.
What legal obligations are involved in offering financing as a professional
This is the point that is most 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 24 June on consumer credit agreements. This law obliges lenders and credit intermediaries to provide the consumer with pre-contractual information free of charge and in good time, before they assume any obligation under the credit agreement.
In practice, before your customer signs anything, you must ensure they have received and understood clear information regarding the total amount of the credit, the APR (TAE), the number and frequency of instalments, opening commissions if any, and early cancellation conditions.
The APR (TAE) 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 have the obligation to ensure your customer understands the real cost of the transaction, 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 tie-in clauses that penalise early cancellation without informing the customer clearly. If that happens in a transaction you have 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 actual results.
Maintain a low default rate. The finance company assumes the credit risk, but the profile of the customers you bring to them also matters. If you systematically refer customers with high risk profiles who subsequently default, the conditions offered to you will deteriorate.
Request a review of conditions annually. 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 on their own initiative.
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 the one it had when it 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 in the market. Spending two weeks contacting three or four entities before committing to any usually more than compensates for the time invested.
Not understanding the difference between NIR (TIN) and APR (TAE). The NIR is the nominal interest rate, excluding commissions or associated expenses. The APR reflects the real annual cost of the financing, including everything. Negotiating on the NIR without understanding the APR offered to the end customer means working with incomplete information.
Presenting the business without preparation. Arriving at a meeting with a finance company without data on your activity, without documentation in order, and without a volume estimate is the quickest way to be offered generic and uncompetitive conditions.
Assuming that conditions are fixed. Everything is negotiable: the dealer's commission, the maximum financing term, the minimum amount per transaction, the approval requirements. Not asking is not a strategy.
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From stock control to managing sales files and purchase agreements, 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 book 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 specialised automotive finance companies work starting from two or three monthly transactions. The important thing is not just current volume, but track record and predictability.
What is the dealer's commission in a financing transaction?
It is the amount that the finance company pays to the dealership for having intermediated the transaction. Its amount varies depending on the entity, the product, and the agreed volume of business. 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 refer each customer 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 customer does not pay the financing instalments?
The credit risk is assumed by the finance company, not the dealer, in most standard agreements. Once the transaction is approved and signed, the debt is between the finance company and the customer. However, if you repeatedly bring in customers who default, the finance company may review the conditions of your agreement.
Am I obliged to inform the customer of the APR (TAE) before signing?
Yes. Law 16/2011 on consumer credit agreements obliges you to provide complete pre-contractual information, including the APR, before the customer assumes any obligation. It is not enough to present only the monthly instalment.
