The "Money Factor" is decided by the lending institution, however in some cases the dealer can add a point or two to earn what is called "reserve" to the loan. This reserve pays the dealership for processing the loan paperwork. It is somewhat negotiable but not always. You need to have the discussion with the person who processes your loan and ask them what percentage of reserve they are earning on your loan. It is normally 1 to 2 percent but rarely higher.
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〉 Answered on Apr 22nd, 2009 by Jessie L Thatcher, F&I and Sales Specialist at Reynolds and Reynolds Company (Retired)