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"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?
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“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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- Gregory R.
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