There is one fundamental thing to understand about the difference between new and used car financing. Namly, it�s much easier to get new car financing. Not only is it easier, but Car Pro Show host and automotive expert Jerry Reynolds says new car loans also typically come with lower interest rates than offered with used car loans.
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Reynolds explains there are two big reasons why this is the case:
For those two reasons above, Reynolds says a new car loan is viewed as a more attractive loan to lenders. That�s not to say that you can�t get a used car loan. Just expect to pay more when it comes to actually financing. So pay careful attention to the loan term and aim for a short loan term period since you�ll likely pay more in interest.
The chart below supports what you�ve read here. Experian Automotive�s 2019 Q1 financial shows the average interest rate for used car loans is nearly four percent higher than new vehicle loans.
Overall, the big takeaway is that it�s easier to get new car financing and that new car financing typically comes with lower interest rates because newer model cars are perceived as less of a risk.
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June 12, 2019