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What makes used car loan financing different?

Answer

Pre-owned vehicles often have slightly higher interest rates and shorter term lengths than brand new vehicles. The higher interest rate can be attributed to the age and mileage that has accumulated on the vehicle. Shorter term lengths can be attributed to the typically smaller loan amount of a used vehicle compared to a new vehicle.

For a buyer, this means that getting a loan for a pre-owned vehicle is most often a more affordable option overall than buying new. New cars depreciate at the steepest rate in their first year on the road. When you buy pre-owned, the original owner takes the financial loss off that depreciation, not the second owner (you).

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