Compare the interest rate on your contract with a pre-approval you had, or with typical rates for your credit score: if yours is 0.5 percentage points or more higher, the dealer may have added a markup on top of the lender's rate. The Rate Check on this page shows that gap in dollars in about a minute.
How rate markup works
When a dealer arranges your loan, the lender approves a buy rate. The dealer can sell you a higher contract rate and keep part of the difference — called dealer reserve. It's legal, it's usually not disclosed, and lenders commonly cap it at around 2 to 2.5 percentage points.
On a $30,000 loan over 60 months, a 2% markup costs approximately $1,800. It happened to the founder of this site: a buy rate of 2.93%, a contract rate of 5.49%.
The 0.5%+ tell
Rates vary a little within any credit tier, so a small difference means nothing. But if your contract interest rate is 0.5 points or more above a pre-approval you had — or above the typical range for your score — markup is a likely reason. At 2 points or more, it's a strong sign.
Where to find your numbers
- Annual Percentage Rate, Finance Charge, Amount Financed, Total of Payments — the box at the top of your retail installment contract.
- The lender — the contract is usually assigned to a bank, credit union, or finance company; its name is on the contract and on your first statement.
- The buy rate is not on your contract. You can ask the dealer or lender, but they may not be required to tell you.
What to do next
Run the Rate Check
Enter your credit range, contract interest rate, and amount financed below. It compares your rate with typical rates for your tier and shows the difference in dollars over 60 months.
Get a comparison quote
Check what a bank, credit union, or online lender would offer. Many show prequalified rates with a soft credit check that doesn't affect your score.
If you just signed, ask in writing
Some dealers will rewrite a loan at a lower rate shortly after the sale to keep a customer — there's no guarantee. Ask by email so you have a record.
Refinance if the numbers work
You aren't required to keep the dealer's loan. Check your contract for a prepayment penalty first, then compare offers in a short window.
If you believe you were charged a higher rate because of race, national origin, sex, age, or another protected characteristic, you can file a complaint with the Consumer Financial Protection Bureau.
Free Rate Check
Sixty seconds. No contact info. See the markup on your contract in dollars.
Not sure of your score? Check your credit score · We may earn a commission if you apply.
We may earn a commission if you apply.
Estimate. Not a lender quote. CheckMyCarDeal provides educational information and calculators only. We are not a lender, broker, insurance agent, or financial advisor. We do not take loan applications, make credit decisions, underwrite, or sell insurance or warranties. Estimates are illustrative, based on inputs you provide, and may differ from actual lender, insurer, or administrator offers. Confirm all terms, rates, fees, coverage, and exclusions with the provider before signing. This is not financial, legal, or tax advice.
Common questions
Is dealer rate markup legal?
Generally, yes. Dealers can be paid for arranging financing, and lenders commonly cap the markup. It becomes a legal problem if it's applied in a discriminatory way or if the dealer misrepresented the terms.
Can I make the dealer lower my rate after signing?
You can ask, and some dealers will rewrite the loan to keep a customer, but they aren't required to. Refinancing with another lender is the option you control.
How much does a markup cost?
It depends on the loan size and term. As an example, a 2% markup on a $30,000, 60-month loan costs approximately $1,800. The Rate Check estimates your number.
Will shopping for a refinance hurt my credit?
Prequalification usually uses a soft check. A full application uses a hard inquiry, which can lower a score slightly for a while; scoring models generally count several auto-loan inquiries in a short window as one.