Does buying an extended warranty at the dealer lower your car loan APR?
"I bought a car, and the dealer told me that I could lower my APR by buying a $2,000 extended warranty.
Is this a normal practice?"
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Answered on Jun 18, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
“No. That’s not normal practice from a lender like a bank or credit union, but it’s definitely something a dealer would do.
It sounds like you got taken by the dealer. Even a substantial drop in APR might not even save you $2,000 over the life of the loan, and many extended warranties are generally considered a waste of money because they cover so little.
If you didn’t sign the papers, walk away from this one, as it sounds a bit sketchy.
Instead, get pre approved from a lender, get the offer letter in hand, and use it to guide your decision-making on a new car.”
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