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What is a buy rate for an auto loan?

A buy rate is the interest rate that a financial institution quotes to the dealer when you apply for dealer-arranged financing. The actual interest rate offered to you may be higher to compensate the dealer.

When you find a car you like, the dealer’s finance and insurance department will obtain loan quotes from banks, credit unions, and other lenders. The rate the dealer receives is called the “buy rate,” and the rate the dealer offers you is called the “contract rate.”

In other words, the interest rate you receive through a dealer may be higher and include more fees than if you work directly with a bank or credit union to secure your financing before you shop for a car.

Keep in mind that dealers and lenders are not required to offer the best rates available, and you may save hundreds or thousands of dollars over the life of the loan by getting quotes directly from other lenders, comparing offers, and negotiating for the best interest rate available to you.

Know what is negotiable

Did you know that you can negotiate the terms of your auto loan? Negotiating can save you hundreds or even thousands of dollars over the life of your loan.

Find out more about negotiating loan basics