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Should I avoid financing with the car dealer?

"Should I avoid getting a loan through a dealer? I'm going to buy a car from a dealer, but I need a loan. I've heard that financing through a dealer can be a headache."

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Some dealerships are fine with regard to financing a
new car
and don’t use any unsavory business practices.
However, the main reason that people don’t go with dealerships has to do with rates and fees.
If you use the dealers, you’re likely going to pay some clerical fees, as well as have to negotiate your interest rate. If you choose dealer-arranged financing, you might also be upcharged on the interest rate, as dealers can get kickbacks and bonuses.
If you go straight to the lender, you won’t have to worry about any of this. The rate you get is what you get, and you shouldn’t find any hidden fees. It’s often the way to get the best rate and forge a relationship with your lender.
Whichever financing method you choose, paying a large
down payment
will help you save money in the long run.”
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