When shopping for a car, you’ll definitely notice a few differences between new and used cars, not only aesthetically but also in terms of financing, which can greatly impact your decision to buy new or used.
First and foremost, many new car loans will have lower interest rates. While you may end up spending more overall (because of the increased sticker price), new cars often have lower rates associated with them than a used car. That’s because many manufacturers choose to subsidize some of the cost to incentivize buyers to get new cars.
There’s also a greater risk when you buy used because the financer is lending you money against older collateral. That means it is slightly riskier to give you a loan on a 2010 car compared to a brand new 2018 model year. With less risk of a break down, the 2018 model will tend to have a lower rate as well.
However, despite having higher rates, many used cars will allow you to make a lower down payment because of the low sticker price. Alternatively, you may be able to pay more down with a lower sticker price, which in turn lowers the rate as well. In this sense, buying used may be a better option for you if want to owe less each month.
If you have questions about financing options on a new or used vehicle, stop by Larry Jay Mitsubishi; our experts will help you understand how to successfully navigate the financing process.