Auto Financing Secret Revealed

Most of us know that dealers mark-up prices of new cars. But did you know that the interest rate for a car loan might be marked up too? Rosemary Shahan, President of Consumers for Auto Safety and Reliability, a non-profit advocacy group, says this is a common practice among car dealers nationwide. The interest you qualify for, based on your credit rating, is called the "buy rate." The dealer might add a couple of percentage points to that for arranging the loan. The income from the extra interest you accept over the "buy rate" is split between the dealer and the lender. This could amount to hundreds of dollars on a new car.

To protect yourself, you can check your own credit score for less than $50 by going to myfico.com. And you can find out the going interest rates for car loans at bankrate.com or eloan.com. Compare rates at your local bank or credit union before signing any new car-financing contract.