Buy Rate
The actual interest rate the lender offers the dealer. The dealer marks it up.
The buy rate is the rate the lender will give the dealer for your loan. The dealer can mark it up before quoting it to you (called "rate bumping") and keeps the spread as profit (finance reserve). If you walk in with outside financing pre-approved at 6%, the dealer's buy rate may actually be 5.5% — meaning they could match or beat your rate while still profiting. Always ask the dealer to "match my pre-approval rate" rather than accept their first offer.
01How to find your buy rate
The dealer is not required to tell you the buy rate, and most will not volunteer it. You can still work around it. Get a pre-approval from a bank or credit union first. That gives you a real rate in writing that the dealer has to beat.
For manufacturer promotional rates, like a 1.9% special, the advertised rate is usually close to the buy rate already. If a dealer quotes you higher than the advertised promo, ask in writing whether you qualified for the promo tier and, if not, why.
02How much can the dealer mark it up?
Lenders limit how far a dealer can raise the rate above the buy rate. The cap is set in each lender's agreement with the dealer and varies by lender, so there is no single number to quote. The markup becomes the dealer's finance reserve, and it is paid in addition to any profit on the car itself.
On a lease, the same idea applies to the money factor. The lender's base money factor is the buy rate, and anything the dealer adds on top is markup.
03A worked example
Say the lender approves your $30,000, 60-month loan at a 6.5% buy rate, and the dealer quotes you 7.5%. At 6.5%, the payment is about $586.98 and total interest is about $5,219. At 7.5%, the payment is about $601.14 and total interest is about $6,068.
That one point costs you about $14 a month and about $849 over the loan. It does not show up anywhere as a fee. It is only visible if you know what rate you could have gotten.
04How to push back
Put it in writing before you visit the finance office. Reply by email: "I'm pre-approved at X% for 60 months. If you can beat that, send me the APR, term and lender in writing and I'll finance with you. Otherwise I'll use my own lender." Then check that the APR on the contract matches the email. If it does not, do not sign until it is corrected.
05Questions buyers ask
Is marking up the rate legal?
Generally yes, within the lender's limits and any applicable state rules. Rules vary, so check your state. Your protection is comparison: an outside pre-approval shows you what the market will give you.
What if the dealer changes my rate after I take the car home?
If you drive off before financing is final, the dealer may come back saying the loan fell through and offer a higher rate. Do not sign a new contract under pressure. Read our guide to spot delivery first.
Will the dealer still finance me if I ask for the buy rate?
Usually. Dealers often still earn something from the lender at a lower markup, and they want the sale. If they refuse to beat your pre-approval, use your own lender and finish the deal on price.