What “APR” means
APR stands for annual percentage rate. Federal Truth in Lending rules require it to be disclosed on your contract, in a box near the finance charge, amount financed and total of payments. On most car loans the APR and the interest rate are the same or very close, because car loans usually have few separate lender fees.
Your APR depends mainly on your credit score, the loan term, the car’s age and the lender. It also depends on whether the dealer added a markup over the lender’s buy rate.
How it shows up at the dealership
In the finance office the APR is often mentioned last, after the monthly payment. A payment can look fine while the APR is two or three points higher than what a credit union would offer you. Read the APR box on the retail installment contract before you sign, and compare it with your pre-approval.
Worked example · illustrative numbers, not a quote
What 2 points of APR cost on $30,000 over 60 months
| At 6.9% APR | $593/mo · $5,557 interest |
| At 8.9% APR | $621/mo · $7,278 interest |
| Difference | $29/mo · about $1,720 |
Illustrative rates; what’s “good” depends on your credit tier and current market rates.
What to do
- Get pre-approved before you shop so you have a real APR to beat.
- Ask the dealer to beat your rate, not to “get you approved.”
- Read the APR on the contract itself, not on a worksheet or tablet summary.
What to say
“My credit union approved me at 6.9% for 60 months. If you can beat that APR with no products added, I’ll finance with you.”
Also called: annual percentage rate.