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Frequent Contributor
Cotton_Britches
Posts: 259
Registered: ‎06-11-2008
0

New vs. Used

In terms of interest rate, do you receive a better rate if you finance a new car versus a used car?  I noticed on loan applications that they ask if the car will be new or used.

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Frequent Contributor
andyaycw
Posts: 298
Registered: ‎07-25-2007
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Re: New vs. Used

Better rates offered for new cars. Less risk on a new car versus a used car. 


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Established Contributor
namvet
Posts: 866
Registered: ‎09-22-2011
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Re: New vs. Used


Cotton_Britches wrote:

In terms of interest rate, do you receive a better rate if you finance a new car versus a used car?  I noticed on loan applications that they ask if the car will be new or used.


  A new car purchase will always have a better interest rate.  So do the math to determine whats best for you.  A lower interest rate with a higher price vs a higher interest rate with a lower price.  Sometimes the interest rate may not be your best option.

Member
brooklyn86
Posts: 8
Registered: ‎03-25-2012
0

Re: New vs. Used


Car Condition (New vs Used): Lender will favor (lower rates) new cars over used cars because there is less of a risk involved. There are instances, however, with a relatively new 'used' car will pull the same rate as a completely new one. For example, with BECU, I know if the car is 3 years old or newer, it can potentially qualify for the 'New Car' rate.


 

For more info, see this thread

New Member
tigger_435
Posts: 3
Registered: ‎04-30-2012
0

Re: New vs. Used

Being this post is almost 2 weeks old, I assume you've probably already bought a car. For the benefit of others who might be reading this though, buying new is almost (in at least 90% of transactions) always a bad deal for the consumer, and always great for the dealer and the bank. The other 10% of those transactions involve someone paying for that new car in cash. You finance a brand new car for 60-72 months for a "great interest rate" and then lose over the course of that time about 40% of the value. Yea, THAT'S financial saviness. (Insert Sarcasm) This is even true for the so-called 0% offers. It's not a great deal when you lose that value in your car. If you have to finance a vehicle, show yourself some control, and forego that new car smell, find a good vehicle that is about 2-3 years old, and finance it.  Yes, you will pay a slightly higher interest rate, but you're not losing that value that the poor schmuck who bought it new did. Then, pay it off as fast as possible. Websites like myFico are in business to push credit, which when you think about it, they're in the business to push debt. The best thing you can do for yourself is stay out of debt, and buying a new car will not, I say again, WILL NOT help you do that.


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