Dealer glossary
Dealer reserve
The portion of a financed deal the dealership earns for arranging the loan, based on the difference between the lender rate and the contract rate.
Definition
Also called finance reserve, rate participation
When a lender approves a customer at one rate and the contract is written at a slightly higher one, the difference is shared with the dealership. That share is dealer reserve, and it is a component of back gross.
It is worth understanding as a number that varies with lender, term and the structure of the deal rather than a fixed percentage, which is part of why the same customer can be worth different amounts through different lenders.
Reserve is subject to lender agreements and to rules on how it may be set. Anything specific belongs in a conversation with your lenders and your compliance advisor rather than in a glossary.
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