Should I Get a New or Used Auto Loan?
Are you in the market for a new or new-to-you vehicle? It can be confusing knowing which to pick. Here is what you need to know about a new auto loan or used auto loan.
New Auto or Old Auto
It is much easier to get a new auto loan than a used one. A lender looks at the value of the auto purchase because that vehicle is held as collateral. An older auto with less value equals less collateral for the financial institution that gives the loan. When a financial institution loans money for a new one, they know they have a new and valuable vehicle if the loan goes into default due to non-payment from the borrower.
Watch the interest rates
Additionally, if a loan is for a used car older than ten years, the financial institution or dealership will charge higher interest rates than they would for a new one. As a result, the higher rate may make the vehicle cost more in the long run because of costs related to the interest. A new auto, however, depreciates once mileage increases on the vehicle. Usually, the most significant depreciation happens in the first two years of owning it.
Dealers may not have the best deal when it comes to the loan
Don’t assume the dealer will have the best interest rate, whether you decide to go with a new or used one. Sometimes, dealership rates are even higher than rates offered by financial institutions or online options. Check out your local credit union first! Not only will you get a better rate, but you will know what you can afford. And if the dealer offers you other rates you will know if you have the best deal or not.
Empower yourself
Become an empowered buyer who knows your financial plans and options before walking through the dealer’s doors. Research and compare interest rates to find the best loan rate. Look online. Call different dealers and financial institutions. Having your financing plans in place before you go to the dealership will have more bargaining power to negotiate the best possible interest rate.
Do a little research to make sure you get the best deal and the best interest rate. If you are in need of an auto loan Elevate would love to get you into the auto you want at the rate you need. Find out more about our auto loans!
