Used vs New Car Loan: Find out which one suits you the best

by Anecito Santillan SEO Specialist & Website Developer

One of the first questions you have to face is whether you want to buy a new car or a used car. Opting for either of these options will make a huge difference to your finances. Additionally, if you are planning to get a loan to finance for your future car, then you need to find out whether your current credit score qualifies for a loan or not.

Advantages and Disadvantages of a new car loan

Advantages:

Lower rates — Interest rates and Annual Percentage Rates (APR) are typically lower for new cars than pre-owned cars, but with long loan periods.

Special rates — Car companies sometimes offer promo like zero or low Annual Percentage Rates (APR) on certain car models, which can be a big draw. Such rates are not typically negotiable and may be dependent on a consumer’s credit history and other requirements, however. It’s also worth knowing that, when there’s no special financing, rates generally are negotiable — for both new and used cars.

Sales events — Look out for year-end and holiday sales events when car companies offer a good promo. Black Friday through New Year is one of the best periods to get a deal.

Disadvantages:

When opting for a loan to finance a new car, there are certain things that you have to keep in mind. For instance, the premium for new car insurance is way higher compared to old cars. So even if the interest rate on a new car loan is low, when you add the insurance cost, the total cost will go up.

Advantages and Disadvantages of a Used Car Loan

Advantages:

Smaller loan amounts — the cost of a used car is less compared to a new car, which means the overall loan amount will be less and the cost of insurance will also be less. This makes financing a used car more affordable for most people.

Shorter loan terms — Used cars may be associated with higher Annual Percentage Rates (APR) compared to a brand new car but they typically have shorter loan periods.

Accessible to a broader range of credit types — New car loans tend to be secured by consumers with good credit, while lenders will often welcome applications for used car loans from consumers with all credit types.

Disadvantages:

For a used car, the loan amount is usually limited to a maximum of 80% of the value of the car. The rest of the money will have to be the borrower’s own down payment. Also, the interest rate on a used car loan is much higher compared to new car loans. At present, banks charge between 10–17% interest rate on used car loans.

If you are planning to buy a new car or a used vehicle, you may want to consider getting assistance from reliable car loan brokers in Sydney. Key Strategy Solutions is the leading mortgage broker in Sydney, They partnered up with over 20 lenders in Australia to give you the best deals you could ever have. Learn more about their car loan offer in here: www.keystrategysolutions.com/car-loan/ or you may contact them directly at 0488 173 353 or Laurayne@keystrategysolutions.com