Why is it better to finance a newer car than an old one?

[Anonymous]

I am contemplating either and older BMW 01-08(mainly because those were my favortie models) or a newer one like an 09 or 10. I understand the whole 'older car, more repairs' theory but I work on the cars myself so thats not an issue for me. Do banks give lower rates on newer cars?

[sccredit]

Absolutely lower rates on newer cars.  Lenders look at the age of collateral because over time collateral value diminishes.  Once a vehicle hits a certain age (it’s either 5-7 years) the value diminishes faster.  So if a lender loans $20k on a 2008 BMW today it might be worth 50% of the value next year. 

Also, older vehicles have higher miles, higher likelihood of repair that owner won’t fix and thus turn the car back (again, with diminished value)