Quick FInance Tips 4 - 7

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4. What does the term "usury rate" mean?

Usury rate is the maximum interest rate that a bank can charge a person (by law) which fluctuates by state to state.

For example, Rhode Island 's usury rate is 18%, whereas, Massachusetts ' usury rate is 21%. This is important to know in the event you have a low credit score and have had credit problems in the past.If you live close to the border of another state with a lower usury rate, it may save you a considerable amount of money to finance your vehicle in that state. We'll show you just how to do that as a member.

 

5.  What does the term "buy rate" mean?

The buy rate is the interest rate that is sent back to the dealer upon approval. In other words, this is the rate the DEALER gets. Unless specified by the lender that the rate cannot be marked up or the rate is already at that state's "usury rate", the BM has the option to mark that rate up depending on the bank's guidelines before quoting the final rate or "sell rate" to the customer.

Our members learn how to deal directly with the bank.

 

6. What is "Dealer Reserve?"

Dealer reserve is money that is paid to the dealer by the lender based on a percentage of the difference between the dealer's BUY RATE and SELL RATE (the difference between what the bank charges the dealer, and what the dealer charges you).

For example, the dealer gets an approval from the lender at a buy rate of 6% and contracts the customer at 9%. The lender gets the contract in at 9% therefore making more profit (interest from the customer). The lender then funds the dealer for the contract and in addition, pays them a percentage of that difference in rate.

The actual amount of money financed and how much the rate was marked up will determine whether the dealer makes more reserve or less. As a member of AUTOXCITE.COM , we have some excellent tips for you on how to avoid this RATE TRAP in the future.

7. Are there certain items or products that I MUST PURCHASE in the business office in order to obtain financing or a lower interest rate?

ABSOLUTELY NOT!!!

Believe it or not, in today's auto industry, there are still some "dinosaurs" working in the business office who will try to slip items in on your contract without disclosure, or will use the same old storylines they did 10-15 (even 20) years ago.

Statements like, "If you purchase the life and disability insurance and/or an extended warranty, it protects your and the bank's investment therefore, it is much easier to get an approval or even a lower interest rate" are not only false but ILLEGAL.You as the customer are never required to purchase any aftermarket products as a condition for bank approval.

Now in defense of these products, I must say that some or all of these products exist for a reason - they're good products to have depending on each person's preference, but knowing if they're beneficial to have or not and knowing how much you should be expected to pay for these items is the key. As a member of AUTOXCITE.COM, you will have around the clock access to information that breaks down all of these products.

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