Cps Dealer Agreement

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As a copy editor and knowledgeable in the realm of SEO, I have researched and crafted an informative article on the topic of CPS dealer agreements. This type of agreement, also known as a Consumer Portfolio Services dealer agreement, is a contract between an automobile dealer and a third-party finance company that backs or purchases the dealer`s loans for subprime customers.

Understanding CPS Dealer Agreements

CPS dealer agreements are designed to benefit both the dealer and the finance company involved by enabling the dealer to sell vehicles to customers who might not otherwise qualify for standard loans. Subprime customers who have poor credit scores or lack credit history are the primary targets of these agreements. By partnering with a finance company like CPS, dealers have access to funds for loans that they otherwise wouldn’t be able to offer to these customers.

In most cases, the dealer agreement is structured in a way that allows the dealer to receive upfront payment from CPS for the loans, and the finance company then assumes the risk of collecting loan payments from the customers. Dealers are not responsible for any loan defaults, unlike traditional loans, and can use the funds received from CPS to finance the purchase of new inventory and maintain their day-to-day operations.

However, CPS dealer agreements are not without drawbacks. Subprime loans typically come with higher interest rates and fees, which can lead to dissatisfaction among customers, and the associated risk of loan defaults may result in the finance company repossessing the vehicle. It may also lead to a negative impact on the credit score of customers, which can make it difficult for them to obtain loans in the future.

Benefits of CPS Dealer Agreements

Despite the potential drawbacks, CPS dealer agreements offer significant benefits to both dealers and subprime customers. For dealers, these agreements provide access to a broader customer base that may not qualify for regular loans, which can increase sales and revenue. As mentioned before, dealers also receive upfront payment from the finance company, which is beneficial in terms of cash flow management and inventory management.

On the other hand, subprime customers may not have any other options when it comes to purchasing a vehicle. CPS dealer agreements allow dealers to provide financing options that may not be available elsewhere, giving customers the opportunity to purchase a vehicle that they need. Additionally, successful repayment of a subprime loan can help customers improve their credit scores, potentially opening up more financing options in the future.


CPS dealer agreements can be an effective way for automobile dealers to expand their customer base while providing financing options to subprime customers. Although there are potential drawbacks, the benefits of these agreements can outweigh the risks involved. As with any financial agreement, it is essential for both dealers and customers to carefully review the terms of the agreement and seek legal advice if needed. These agreements give subprime customers an opportunity to build better credit scores, which can eventually lead to better financial opportunities in the future.