Where do your rates come from?

Either way, the rate you see includes the selling dealership's financing participation where it applies, and the lender sets your actual APR. Each car shows the rates it qualifies for at your credit range, and you choose.

Source one: the dealership and the factory lender.

A franchise dealership finances cars through the manufacturer's own finance company, called the captive lender: Mercedes-Benz Financial Services, Toyota Financial Services, Ford Credit, and so on. The dealership gives The Model Black two kinds of captive rates.

• Captive standard rates: the lender's everyday rate sheet, set by credit tier and term, available on nearly every new car the brand sells. What are captive standard rates?
• Incentivized rates: special APR programs the manufacturer pays for, on specific models and terms, for a limited time. Some require giving up a rebate. Incentivized rates vs. rebates

A dealership may add financing participation to a captive rate, within the limit the lender allows. The rate on the car already includes it, so the estimate you see is built the way the dealership would quote it.

Source two: Rateous.

Not every car has a captive program, and not every buyer fits one. For every car, The Model Black also prices a market-based estimate built on Rateous. It is risk-based and market-based, and it includes the selling dealership's financing participation where it applies, so it estimates what the dealership would quote. It is not a quote from your own bank or credit union. Here is how it is built.

• Risk-based. Rateous prices a loan the way lenders price risk: from your credit range, the term, the loan-to-value, and the car itself, including its age.
• Market-based. The rates follow current market rates and the Federal Reserve's primary credit rate, so they move when the market moves.
• Dealer participation included. The selling dealership may add financing participation to the market rate, and the estimate already includes it where it applies.
• Real lender limits. When a mix of credit, term, and loan-to-value falls outside what lenders typically write, Rateous says so instead of inventing a rate.
• Private. No credit pull and no application. Rateous prices from the credit range you choose, and nothing about you leaves The Model Black.

How the rates show up on a car.

• The vehicle page lists every estimated APR available for that car, term, and credit range, in the order the dealership sets, and each one says it includes any dealer participation.
• Switch between them and the payment, the total cost, and the out-the-door number all reprice.
• Your choice rides with your deal when you send it, so the dealership starts from the same number.

Quick answers.