One of the possible ‘hidden’ costs of purchasing or renting a car dealer a profit margin so your interest can be added, even if you have a good credit score… They say that the speed of operation used by the person entitled to 6.0%. The dealer will set the tone for a percentage, say 2.0%, so that their real interest rate of 8.0%. This information is not to sign any statement in the documents. Dealers say the practice is justified by the cost of funding its brokerage customers to cover. In fact, there is an advantage or just making concessions to customers in another part of the bargain.

Automotive News reports that a number of companies such as DaimlerChrysler Services, GMAC and Honda Finance were established in consultation highlighted a limit of 2.5%. California now has a law that an upper limit of 2.5% for the majority of auto loan rates down. So it seems that 2.5% is the magic number in the box.

A common question from consumers in the auto industry: “I can negotiate my interest rate?” In most cases, you can try to profit, but not the base rate, which was established by the finance company depending on FICO score to negotiate. In the past there was no good way to how many car dealers know that pace, but now, with the recent “agreement” and the laws, we can assume that the price will be marked to 2, adding 5% rate to the base. Lease payments are particularly difficult to treat because the interest as a “money factor” (see the analysis of financial leasing in our monthly rental items), and the rate is not listed on your lease.

Note that not all dealers in the rates of the brand, but it seem to be a growing practice. Also remember that the base rate, as financial enterprise values ​​of your credit history and credit score is determined. That is why it is so important to understand how credit scoring works. A low score or errors in your credit report can get a higher base rate, even without identification. Therefore, knowing your credit score and shop around for the best price is always a good thing to do.