Auto Financing
How Much Might YOU Overpay on Your Car Loan?
Many car dealers are like loan brokers – they typically write the car loan, then sell the loan to a third party lender. Markups involve kickbacks from the third party loan purchaser (or lender) to the dealer for arranging a loan. Before arriving at an agreement with a customer, a dealer will contact several potential lenders. Purchasers tell the dealer the interest rate at which they are willing to buy the loan, a rate known as the “buy rate." Unfortunately for the car buyer, the purchaser often agrees to allow the dealer to arbitrarily add interest to the buy rate, placing the buyer in a more expensive loan than what they qualify for. The extra profit is either split between the dealer and lender or pocketed entirely by the dealer. Auto dealer loan markups cost Americans more than $20 billion each year.
Whether you bought a car recently, are in the market for one, or are curious about the real cost of auto financing, insert the relevant information in the calculator below to discover the possible range of overpayments by consumers.
Research &
Publications
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Auto Race to the Bottom (Report by Cambridge Winter Center for Financial Institutions Policy evaluates whether auto dealers should be exempt from the proposed Consumer Financial Protection Agency)
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Car Trouble: Predatory Auto Loans Burden North Carolina Consumers
Resources
Headlines
- Late Payments on Auto Loans Fall in 2nd Quarter
Associated Press, 08/30/10 - Lenders Loosen Car-Loan Criteria
Wall Street Journal, 08/25/10 - False Hopes, Hassles and Auto-Loan-Modification Offers
Main Line Media News, 08/24/10 - Don't Get Taken By Car-Loan Scams
MarketWatch, 08/19/10
