Just like the dreaded dealership pricing games and negotiations, interest rates, too, can be misleading. That’s why it’s more important to finance your new car with a lender you trust than chasing the lowest advertised rate. Let’s review a few examples of how advertised interest rates can be confusing.

Tiered Rates

Generally speaking, the interest rate you receive is based on your credit history and score. The advertisements designed to draw in borrowers only show the absolute lowest interest rates without revealing the full tier. While each financial institution has its own tier for determining interest rates, they may look something like this:

Credit Score






Lender A






Lender B






Lender B offers the lowest advertised rate of 1.99%. At first glance, this would make it appear that Lender B provides the best auto loan rates between the two lenders. However, unless you fall into the top credit score tier (750-850), you’ll actually pay a higher interest rate. Lender A’s rates are lower in every other tier. So, if you don’t have perfect credit, Lender A would be your best choice.

But you would likely never know Lender A’s rates are lower in most tiers strictly by advertised rates. You would have to request both lenders’ full rate sheets to learn this.

Included Discounts

Another way rates can vary by lender is determined by the inclusion of discounts factored into the interest rates. For instance, if you do not read the fine print, you may not realize that the “advertised” rate includes specific discounts, such as:

  • New vehicle purchases only. Preowned vehicles may have higher interest rates.
  • The vehicle must be no more than two to three years old.
  • A specific down payment amount may be required.
  • Financing is only available for amounts less than the full value of the vehicle.
  • Must have a checking account or another service with the lender.
  • Dealers often include “loyalty” discounts for customers that currently own one of their vehicles.

Reading and understanding the fine print is a must if you want to know exactly what criteria you need to meet in order to receive the advertised rates.

Length of the Loan

The duration of your loan may also be a substantial factor in the interest rate you receive. For instance, shorter loan terms often receive the lowest available interest rates. Those for longer durations, such as five years (60 months), receive average interest rates. Extended loan periods, such as those for six or seven years (72-84 months), receive the highest interest rates due to the added risk the lender is taking.

Getting the Best Rates

As you can see, it’s not always straightforward on which lender is providing the lowest rates. Even if you had access to every credit tier chart for all the lenders in your area, it is nearly impossible to make apples-to-apples comparisons.

The best solution is to work with a lender you trust. Since the Eagle Community Credit Union is a not-for-profit financial institution, we’re dedicated to helping you make informed financial choices that best fit your unique circumstances.

When you get pre-approved for an auto loan with us, you’ll enjoy complete transparency, so you know exactly what you’ll pay for your loan. This allows you to go into a dealership to get the car you want without worrying about pricing games in the process.

We’re Here to Help!

Buying a car can be exciting but also a bit of a challenge. As your credit union, our goal is to make that process as easy to understand as possible. From auto loan pre-approvals to clear and transparent interest rates, your credit union is the place to go for your car-buying needs.

Please stop by one of our convenient branch locations or call (949) 588-9400, and we’ll be happy to answer all your questions and help you become pre-approved to buy your new car.


Each individual’s financial situation is unique and readers are encouraged to contact Eagle Community Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.