Your Car Loan May Cost You More If You Get It from the Dealer
When buying a car, you might think it’s more convenient to arrange your car loan through the car dealer. However, before you go to the dealer for your auto financing needs, you might want to consider the fact that the dealer may not only try to profit from the sale of the car, he might try to tack cost on to your car loan too.
A Common Practice
While it may be underhanded and unethical, it’s not uncommon for car dealerships to tack on interest points to your car loan in order to make a bigger profit for themselves. When you get a car loan with a car dealership, the actual price of the loan is called the “buy rate”. The dealership will then add points on to the car loan’s “buy rate” and will split the extra profit with the lender. Sometimes they’ll tell you that your credit won’t qualify you for a lower rate, even if your credit is fine.
How to Avoid Being Taken Advantage Of
To avoid being taken advantage of, arrange your car loan needs through your local bank or credit union. If you insist on getting the car loan through your dealership, make sure you have a copy of your credit report on hand and that you know the current car loan interest rates so you can be sure that the dealer gives you the interest rate you deserve.