Buy Rate
Definition
The interest rate approved by the lender before any dealership markup is applied.
Why It Matters
Understanding buy rate is essential for maximizing finance reserve while maintaining compliance. The buy rate is the starting point for determining the contract rate presented to the customer.
Examples
- If a lender approves a customer at 5.0%, that is the buy rate
- The dealership can mark up the rate within regulatory limits to generate finance reserve
Related Terms
Rate Markup
The difference between the lender's buy rate and the final contract rate offered to the customer.
Finance Reserve
Profit earned from marking up the lender's approved buy rate before presenting the contract rate to the customer.
Super Prime
A credit tier representing customers with the highest credit scores and strongest loan qualifications.