Guide 3. The difference between new car loans and used car loans

Power and Gas

Credit Cards

So you're looking to buy a car and you're not sure whether you should purchase a new one or a used one. Before you make your decision, you should probably look into the difference between used car loans and new car loans.

When purchasing a new car, you might be able to arrange special financing through the manufacturer for a special introductory rate. The trick is that you must have almost perfect credit to qualify and if you don't pay the loan off by the end of the introductory period, the interest is calculated back from the beginning of the loan so you really didn't save money like you thought you would.

If you're purchasing a used car, you might be able to arrange financing through the dealer, but the dealer will oftentimes make a profit from the loan so they will want to charge you a higher interest rate, even if you qualify for a lower one. Because of this it is oftentimes best to walk into the dealer with cash in hand.

If you don't have enough cash on hand to purchase a car outright, it doesn't mean that you can't bring cash into the dealership. You just have to arrange your financing prior to purchasing your car. By arranging a loan through a broker you'll be able to walk into the dealer as if you were a cash buyer, giving you more negotiating power on the sales floor.

Arranging a used or new car loan with a broker is also often easier and can save you more money than arranging financing at the dealer. You'll usually get a better interest rate than you would have by arranging your financing at the dealer and you'll often be able to get a better price on the car because the dealer will treat you as a cash buyer.

When you do arrange your financing with the broker, they'll need to know if you're arranging for a new car loan or a used car loan. If you're arranging for a new car loan, you'll probably receive a better interest rate than if you were arranging for a used car loan. You can also usually finance a new car for a longer period of time than you can a used car, keeping your payments in line.

Whether you decide to opt for a new car or a used car, your loan broker will be able to help you understand the terms of the loan and how much of a loan you can afford, which may also affect your purchasing decision.

Return

(1) All information on Artog is of a general nature only and does not take into account your individual circumstances. (2) Artog does not hold an ASFL and does not give advice. All views expressed should be considered general comments that reflect the views of the operators of the Artog site only and should not be considered to be advice. (3) The Artog service provides general travel information and a price comparison only. No features or benefits have been compared and the results of this service are not a recommendation or endorsement of any particular product. (4) Artog is not an insurer, and does not act on behalf of any insurers. (5) The Artog comparison does not compare all available travel insurers. (6) In some instances, Artog may earn a referral fee/commission of up to 20% from an insurer if you purchase a policy as a result of using our service; this does not impact the price you pay. (7) Artog has used its best endeavours to ensure the accuracy of this information. (8) Not all policies are the same and insurers may provide different cover under different circumstances. As such, PLEASE CONFIRM ALL POLICY DETAILS with the insurer (including but not limited to: your information that has been submitted, policy features, benefits, coverage, terms and conditions) PRIOR TO YOUR PURCHASE!