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Can I negotiate the interest rate on an auto loan with the dealer?

Yes, just like the price of the vehicle, the interest rate is negotiable.

The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders. Those lender(s) may propose a rate to the dealer to finance the loan, referred to as the “buy rate” or may decline to finance the loan. The interest rate that you negotiate with the dealer may be higher than the “buy rate” because it may include an amount that compensates the dealer for handling the financing.  Dealers may have discretion to charge you more than the buy rate they receive from a lender, so you may be able to negotiate the interest rate the dealer quotes to you. Ask or negotiate for a loan with better terms. Be sure to compare the financing offered through the dealership with the rate and terms of any preapproval you received from a bank, credit union, or other lender. Choose the loan that best fits your budget.


Ask or negotiate for a loan with better terms.  Since dealers and lenders are not generally required to offer you the best rates available, negotiating like this could save you hundreds or thousands of dollars over the life of the loan.