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If you have good credit, you can get rates under 2% on a new car and your lender will negotiate a lower car price for you since that will lower their risk. If
by cowsandmilk 12y ago
If you have good credit, you can get rates under 2% on a new car and your lender will negotiate a lower car price for you since that will lower their risk.
If you have poor credit, you likely will end up at a sleazy dealership that overcharges you on the price and you end up with the 20% interest rate to take care of the risk.
- grandalf 12y agoYep that's b/c the lender has drastically different levels of risk in each scenario. If you're a bank, you get negative overnight rates.
- stephenbez 12y agoHow do you get a lender to negotiate a lower car price for you?
- grandalf 12y agoTo the extent that the collateral value of the purchased item impacts the lender's overall risk, all lenders have an incentive to drive down the purchase price to reduce risk (since this reduces the difference between the loan amount and the collateral value). The value of that risk reduction is relatively insignificant to the lender, but some offer services like that (car buying services) to help attract desirable borrowers.