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AUTO DEALER FINANCE SECRET
Dealerships too often "markup" their car loans interest rates which
are initially approved by the banks or money lenders that the
dealership goes to on behalf of car buyers who are looking for the
lowest possible interest rate! For example, the "deal" may go down
something like this.
You go into a dealership to buy a car and eventually you will meet the
dealership's finance manager. His job is to make as much money for the
dealership as he can!
He tells you your car loan has been "shopped around" to different
lenders and the best possible interest rate for your particular car
loan is, for example, let's say, 14%. However, the lender may have
actually approved your car loan at a lower 11% interest! This means he
effectively is "marking up" your interest rate by 3%, thus
overcharging you probably thousands of dollars!
Making matters worse, the dealership and lender may end up splitting
the profit they make when overcharging you! The 3% you are overcharged
in this case may add thousands of dollars to the cost of your car over
the course of the loan!
Possibly consider not even going through the dealership for a car loan
and shop around on your own for lenders. Or, when the car dealer's
finance manager offers you his "so-called" best possible interest
rate, tell him it is too high and if he cannot lower it you may have
to shop for a car elsewhere!
Regardless, shop around for other lenders anyway. Also, be aware that
non-white, ethnic car buyers may sometimes possibly have more to worry
about concerning getting hit with "marked up" car loan interest rates,
so do your homework.
SUPPLEMENTAL SOURCE: ABC TV 20/20 10/27/00
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