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Did You Know?

Most dealers disclose to consumers that the finance rate they are offered may be negotiable and that the dealership may receive a portion of the finance charge for extending credit to the consumer.

Additionally, to help consumers make informed decisions, the National Automobile Dealers Association (NADA) and American Financial Services Association (AFSA), in cooperation with the Federal Trade Commission, created a brochure called “Understanding Vehicle Financing” that walks consumers through the auto financing process, and encourages shopping around to find the best deal.

The Auto Financing Road Trip

Before visiting the dealership:

• Based on your needs and budget, determine a realistic price range for the auto you are thinking of buying.
• Know the difference between buying and leasing an auto.
• Know your credit record and that it may affect the finance rate you are able to secure.
• Compare annual percentage rates and financing terms from multiple sources such as banks, finance companies, and credit unions.

When shopping for an auto at the dealership:

• Stay within the price range you can afford.
• Negotiate your finance arrangements and terms.
• Understand the value and price of optional products such as extended service contracts, credit insurance, or guaranteed auto protection. If you don’t want these products, don’t sign for them.
• Read the contract carefully before you sign it.

After completing the auto purchase or lease:

• Make your payments on time. Late or missed payments incur late fees and appear on your credit report, which can impact your ability to get credit in the future.
• If you financed the auto, be aware that the dealership (or a bank, finance company or credit union that purchases the contract from the dealership) holds a lien on the auto title (and in some cases the actual title) until you have paid the contract in full.
• The dealership may retain your finance contract, but usually sells it to a third party, such as a bank, finance company or credit union, at a wholesale rate (often called the "buy rate"). The bank, finance company or credit union that buys your contract will service the account and collect payments.