Man Walks Into The Dealership. Then He Asks For The Buy Rate: 'Finance Manager Is Under No Pressure To Tell You'

A California car salesman offers advice on how to get the lowest possible interest rate at the dealership. Here’s what he says to ask before signing on the dotted line.

Creator MrElevate (@elevate.autohaus) posted a video with his tip from Orange County, California. 

“Alright, here’s a simple tip,” he says. “Next time you go buy a car, ask them for a buy rate. Whatever rate you get hit at, just tell them, 'I want the buy rate.' They’re gonna tell you, ‘OK, I got you approved for 8%.’ [Ask them,] 'What’s the buy rate?' More times than not, it’s gonna be 6%.”

What Is A Buy Rate And Should You Ask About It?

According to the Consumer Financial Protection Bureau (CFPB), a buy rate for an auto loan is the interest rate that the bank or financial institution quotes the dealership when a customer applies for financing. 

The difference in the buy rate and the rate the customer gets (known as the contract rate) is essentially how the dealership gets paid for its services. That’s why many financial experts recommend working directly with the bank or credit union to secure a rate before even entering the dealership.

The CFPB notes that dealers and lenders are not obligated to offer the best rates, which is why it’s important to shop around, compare offers, and negotiate whenever possible. It appears that Elevate Autohaus is suggesting that you can get the best possible rate simply by asking the dealer for the buy rate.

Would Asking For The Buy Rate At The Dealership Actually Work?

In the comments section of the video, viewers questioned the advice and whether it would actually work in practice.

“You think we’re going to tell you ‘oh, yeah, the buy rate is 6, but I’m holding 2?” one viewer asked. “Nah, dude the buy rate is whatever rate I tell you.”

A second person said, “This is misleading. The buy rate is not always what the customer’s credit profile is approved for. The lender may offer a lower rate (than the customer applying directly to that bank) to the dealer-originated loans, because the dealership sends them a large volume of business, the loans are electronically submitted, or they want to compete for dealership financing.”

Another person said, “While knowing what a buy rate means is helpful, I wouldn’t use this as a go-to tactic to negotiate a rate. The finance manager is under no pressure to tell you what the buy rate is, if they don’t just flat out lie to you.”

The person continued, “A better route is to come prepared with approvals (typically from a credit union) either on other cars or on the car you’re coming in to buy. The buy rate makes up a good chunk, if not half, of a finance manager’s income. They’re not letting go of it because you know a few buzz words. Knowledge is only leverage if you have the mind [and] tools to weaponize it.”

Can The Dealership Really Get The Best Interest Rates?

A Reddit user posted to r/askcarsales a few years ago to ask whether the dealer can really get the best interest rates. The person said they had a credit union approval at 5.4%, but the dealership they spoke to said they could beat that rate.

“It depends on what type of vehicle you’re buying and what incentives are available from the manufacturer,” wrote one person. “Basically, the creditor is subsidizing the cost of the loan to give a lower interest rate to incentivize you to buy from them.”

A second person said, “When a [finance] manager tells you s/he can’t beat a rate, it’s not because they can’t. They’re just yatta-yatta-yatta-ing over a more complicated explanation that it doesn’t make financial sense in this deal for them to pay down the rate to get the deal done.”

Motor1 contacted MrElevate via email for comment. We will update this story if he responds.