Auto loan marketplace Outside Financial recently released the Outside Financial Markup Index that found the average new auto loan arranged at a car dealership contains $1,850 in undisclosed fees and markups, an increase of 5 percent since late 2018.
The index, which is updated monthly and subject to minor revisions for up to four months, analyzes consumer costs on auto loans arranged by dealerships for new-vehicle purchases. Data is obtained from the Securities and Exchange Commission, the Federal Reserve Bank, the Consumer Financial Protection Bureau, the National Automobile Dealers Association, DealerStrong and Auto Finance News.
"A Santa Secret is that you could save $1,000 by arranging your auto loan before you go to the dealership," Outside Financial Jon Friedland said in a press release. "When you arrange your car loan in the car dealership's back office, standard practice is to mark up your interest rate. That can cost you $1,000 or more. Keep that in your own stocking by arranging your loan with a local credit union or bank."
"Most of us want to save as much money as we can around the holiday season," Outside Financial CEO Sonia Steinway said in the release. "It's also a great time of year to buy a car because many dealerships want to maximize their sales to make their month- and year-end quotas. But it doesn't help to save a few hundred dollars on your car's purchase price if you over-spend by thousands on your financing. At Outside Financial, we believe car buyers should understand their options so they can make the right choices for themselves."