"Is 20% APR on a car loan okay? "

My local dealership offered me $10,000 of financing on a $12,000 car at 20%. I have the money to cover the other $2,000 and can afford the monthly $300 payments. But 20% seems a bit high to me, considering that my credit is good. Should I go ahead with the deal?

Answer
“An APR of 20% is a bit steep, and you could probably get better financing terms from a bank or credit union. Dealerships tend to offer more expensive loans because of interest rate markups.
When you choose to finance a car through a dealer, they basically shop for you by gathering offers from various lenders. Markups are a form of compensation for the dealer for managing the financing, and they could cost you thousands of additional dollars. “
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Johnny Puckett
Answered on Apr 26, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
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