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November 16, 2009

Should I finance a car through bank or dealership?

Posted: 09:50 AM ET

HELP ME CLARK!
From HLN's Money Expert Clark Howard

DWIGHT:

Is it better to get a loan from your bank for a certified used car or try and get financed through the dealer?

CLARK:
Absolutely 100% of the time you go to your bank to get pre-approved for a car loan for a used or new car.

Now if the car dealer will then meet or beat the interest rate offered by your bank, fine to do it with the dealer.

But almost always if you don't shop in advance for that loan you're gonna get chopped off at the knees.

Filed under: Auto • Clark Howard • Living


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bc   November 19th, 2009 11:15 am ET

I think this advice is wrong.

One of the advantages of purchasing a certified used car (certified by the manufacturer) is that you get a competitive interest rate, similar to what you would get for a new car. Most banks will charge higher rates for used car loans. To them, it doesn't matter if the car is certified or not.

The better advice would have been to check the usual car shopping sites (ie. edmunds.com) to see if there are any special rates from the car manufacturer's financing arm for certified used vehicles. Some brands like Honda/Acura publish their special rate offers online. Some manufacturers let you even get preapproved for special rates online.

Clark's answer might have been right for someone who is buying from a used car dealership, but Dwight specifically stated that he is purchasing a 'certified used car'.



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About this blog

Clark Howard helps you become a wise consumer. We know you're busy, and that's why Clark's tips are quick and effective. He'll arm you with the information you need to make smart choices. During these tough economic times, Clark wants to help you save more, spend less and avoid getting ripped off!