Is there any other factor besides my credit score that decides my interest rate?
how do they decide the interest rate for auto loan
Started by
eazy_money
, Jan 10 2012 05:01 PM
6 replies to this topic
#1
Posted 10 January 2012 - 05:01 PM
#2
MarvBear
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Posted 10 January 2012 - 05:01 PM
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#4
Posted 11 January 2012 - 02:03 PM
LOL.
<3 Marv
<3 Marv
#5
Posted 11 January 2012 - 08:01 PM
Yes. The Dealer.
Most auto financing is not done "in house", but rather as follows: The dealer sends in your credit app to a number of Banks/Finance Co's he's signed up with. They respond to him with an approval or denial, and an approval comes with a contract interest rate, for example 5% depoending on your credit rating/score (He requests the term).
He can then turn to you, tell you that you were approved at 9%, and have you sign a contract for 9%, and the difference in interest of the 4% over the life of the loan gets kicked back to the Dealer from the finance company/bank on the backend. (Sometins this kickback is a 75/25 split somrtimes its 100%).
I would ask the Dealer for the approval sheet, or better yet, negotiate a sales price on the car as a "cash sale", and arrange your own financing. there is a wealth of finance companies willing to finance dealer purchases (some, like cap1 will only finance apurchase froma new franchise dealer, and not from a used car store, others like penfed, chase, aaa, dont care.)
Good luck.
Most auto financing is not done "in house", but rather as follows: The dealer sends in your credit app to a number of Banks/Finance Co's he's signed up with. They respond to him with an approval or denial, and an approval comes with a contract interest rate, for example 5% depoending on your credit rating/score (He requests the term).
He can then turn to you, tell you that you were approved at 9%, and have you sign a contract for 9%, and the difference in interest of the 4% over the life of the loan gets kicked back to the Dealer from the finance company/bank on the backend. (Sometins this kickback is a 75/25 split somrtimes its 100%).
I would ask the Dealer for the approval sheet, or better yet, negotiate a sales price on the car as a "cash sale", and arrange your own financing. there is a wealth of finance companies willing to finance dealer purchases (some, like cap1 will only finance apurchase froma new franchise dealer, and not from a used car store, others like penfed, chase, aaa, dont care.)
Good luck.
#6
MarvBear
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Posted 11 January 2012 - 08:20 PM
Yes. The Dealer.
Most auto financing is not done "in house", but rather as follows: The dealer sends in your credit app to a number of Banks/Finance Co's he's signed up with. They respond to him with an approval or denial, and an approval comes with a contract interest rate, for example 5% depoending on your credit rating/score (He requests the term).
He can then turn to you, tell you that you were approved at 9%, and have you sign a contract for 9%, and the difference in interest of the 4% over the life of the loan gets kicked back to the Dealer from the finance company/bank on the backend. (Sometins this kickback is a 75/25 split somrtimes its 100%).
I would ask the Dealer for the approval sheet, or better yet, negotiate a sales price on the car as a "cash sale", and arrange your own financing. there is a wealth of finance companies willing to finance dealer purchases (some, like cap1 will only finance apurchase froma new franchise dealer, and not from a used car store, others like penfed, chase, aaa, dont care.)
Good luck.
Your analogy is not correct in regard to the apr.
#7
Posted 11 January 2012 - 09:24 PM
Most states don't allow that much markup; some don't allow any at all. It can only happen when the buyer is overqualifed and doesn't realize it. A well-qualified buyer should know what their credit is worth and insist on a low APR (it's also possible to "buy down" the customer's APR by the dealer paying the finance company).
With very bad credit, often the opposite is true, if a finance company takes the loan at all they charge an "acquisition fee" which means that the lump sum they pay the dealer is less than the face value.
With very bad credit, often the opposite is true, if a finance company takes the loan at all they charge an "acquisition fee" which means that the lump sum they pay the dealer is less than the face value.
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