Buying a new or used car is not a decision to make on a whim. After finding the right model that falls into your budget, it’s time to start looking for the best financing option. Did you know that there are quite a few major differences between financing a new and used car? In some cases, choosing to finance one over the other can result in a positive financial future.
Financing a New Car
A new car has never had an owner and arrives in pristine condition. On the other hand, new cars can cost quite a pretty penny more than their used counterparts.
Typically, financing a new carwill net a lower interest rate. Some automotive manufacturers even offer special rate incentives to encourage consumers to buy a new car. Since new cars cost so much, the loan might last five or more years—and the interest can certainly add up over the length of the loan.
Sometimes automotive manufacturers offer bonus cash to incentivize buying a new car. Dealership specials can also entice consumers to opt for a younger vehicle.
Financing a Used Car
Thanks to their lower prices, used cars are the go-to option for drivers of all ages. Drivers who prefer to preserve the value of their vehicle often find used cars are the best choice in the long run.
Since used cars have already experienced depreciation, or a dramatic loss in value, they tend to hold their value even after they’ve left the lot. That means drivers are less likely to end up owing more than the car is worth when they finance a used car. While used cars may come with higher interest rates, the loan terms are shorter and can be paid back faster.
For more information about financing your next vehicle, call us at Pollard Used Cars.