There are two kinds of lots. 'normal' lots will sell a car, and the financing comes from a finance company. could be a bank, could be a credit union, could be a business that provides money to car purchasers. the normal lot has markup on the price, and also gets a kickback from the finance company. the car buyer does not pay, the finance company has a problem.

'buy here, pay here' lots sell a car, and do the financing. They buy cars at auction, fix them if they have to, then sell them. The down payment money usually covers the auction cost of the car. Then every 2 weeks, the buyers drops by with a payment. The buyer stops paying, the car is repossessed. And then it is sold again. The dealer wins in both directions; the buyer pays a lot of money in finance charges, and if it is repossessed then you don't have to buy new inventory at the auction.

Poor people with bad credit way over pay for cars both ways. One a little worse than the other.