What is a rack rate and a floor rate?
The Rack Rate is the rate that the financier tells you about, at the start of the negotiation or the one that is normally mentioned in their brochures. This rate is arrived at after taking into account the deductions from the rack rate. Normally, you may be entitled to the deductions because of your negotiating skills itself or because you satisfy some of their conditions. These deductions vary from scheme to scheme and financier to financier. They may be in the form of reduction in the interest rate because you hold the credit card of that financier, your good track record of paying back loans, or a host of other reasons.
