Differing car loan rates for the same car?
Dear Driving for Dollars,
I have been car shopping and I visited two different dealerships, inquiring about the exact same car -- same model, engine, options, etc. Each dealer gave me a different monthly payment on a five-year loan. Why? Shouldn't it be the same?
I'm not at all surprised you were quoted two different monthly payments on a five-year car loan for an identical new car. There are several reasons why. Assuming the cars were indeed identical, including the paint color, which can sometimes add cost, the dealerships' salesmen may have been quoting you a different total price for each car, since car prices are believed to be negotiable. In addition, if you have a car to trade in, the salesperson may have been factoring in a different price for that as well, based on differing assessments of its value.
Even if the process of buying a new car with your trade-in was identical at the two dealerships, it's possible that one of the salespeople quoted you a monthly payment based on a standard interest rate for which you may or may not qualify. Or, if they did an actual auto loan application with a lender, each dealership may have used a different lender, hence getting different interest rates. Or, they may have used the same lender, but one "padded" the interest rate so the dealership could make more on the car loan, which may be legal even if it is underhanded.
Your best bet is to determine what you want and apply for an auto loan yourself. By working directly with a lender, you'll know the exact parameters of your loan before agreeing to buy a new car.
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