New Car Loan Rate
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Is the new car loan rate still lower?
Traditionally it has always been more expensive on the auto financing front for used cars than it has been for new cars. The reasons behind this seem a bit antiquated to say the least! With the auto loan market becoming ever more competitive is the new car loan rate still lower than a used car loan rate?
The loan rate is the percentage APR that an auto lender will charge you for loaning money to purchase a vehicle. There are a number of factors to consider when determining if the new car loan rate is still less than if you bought a used car using a used auto loan. The main influences are discussed below:
Change of attitude in lenders
In the past, an auto lender would raise their interest rates when someone told them that they wanted to purchase a used car as they saw such an individual as a higher risk! It is more likely that they saw less of a profit potential in used cars as their values are inherently lower.
Due to the influx of used lease cars and more and more people turning to buying used cars than new, many lenders are now changing their opinion and see used cars as good collateral to risk lending money on. This is because they don't depreciate in value as quickly as a new car. As a result used car loan interest rates have been decreased by many institutions.
Some credit unions don't differentiate on their interest rate just because the car is new or used. Their new car loan rate is just the same as a used car loan rate.
Depends where you find the loan
If you do not have access to the internet then you will probably find that the new car loan rate is perhaps two or more percent below that of a used car loan.
Online, due to increased competition and increased consumer demand for used cars, the new car loan rate available will be pretty much on a par with that of a used car loan interest rate. There may be as little as less than 1% difference between the two.
As you can see, changing times mean changing attitudes towards differentiating between the new car loan rate and the used car loan rate. If the market continues the way it is then soon we will just be looking at one auto loan rate, no matter whether the car is new or used. It is always much more fun driving away in a brand new car but if a used car is cheaper and the new car loan rate does not entice us to stay with purchasing new, what is there to say that new car loan rates will even exist in a few years?