The Consumer Financial Protection Bureau is encouraging car-buying
consumers to ask their dealers more questions, specifically about auto
loans. The CFPB is advocating that consumers ask dealerships for
something called a “buy rate” on their auto loan. Cutting through the
jargon, a buy rate can be understood as the rate the
lender offers to the dealership to finance the auto purchase, and it’s
common practice for dealers to add a few percentage points on top of
this rate. Instead, the CFPB is encouraging customers to negotiate with
their dealer to pay a flat fee instead of this elevated rate.
enough, the CFPB doesn’t specify what this flat fee should be, but it
does insist that consumers qualify for a buy rate and shouldn’t be
paying above that, and if they do, they should not be paying much more
past that rate. The additional interest rate can be added by the
dealership providing the financing. Avoiding this by offering to pay a
flat rate is the wisest choice.