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BTW, dealers can typically get much better rates than most local banks.
Large dealers are signed up with several lenders, and can easily shop rate. The lenders know that they have to be ultra-competitive to earn the dealer's business, which can be millions. A few tenths of one percent can be the difference between getting 100 loans through one dealer, or none. So dealer's 'Buy Rate' can be much less than walking into that same bank. Sometimes much less.
In California, the government has chosen to step in and 'cap' the profits that dealerships may make by marking-up the rate. If the buy-rate is 4.00%, the dealer may write your loan for 6.00% and keep the difference it makes over time. In California, the spread can only be a couple percent, depending on certain factors.
So, you want the dealer to write the loan at the buy-rate. Instead of making the spread, they make a 'flat' of $100-500 for originating the loan. But that's better than the big fat zero they'll make if you finance elsewhere on your own. So let them know that you're happy to finance with them for their buy-rate and let them make something rather than nothing. They'll probably find you a rate that's much better than you found on your own.
But knowing your baseline pre-approval puts you in the driver's seat when it comes to deciding on whether to finance through the dealer.
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