The biggest difference in a new car loan vs. used car loan is the amount of money you’ll be borrowing. Used cars cost less, which means you can get a shorter term loan you can afford, and spend less money in the long run.
Is it easier to get a loan for a brand new car?
The auto loan rate is just a portion of the picture over all. Banks and dedicated lenders work with both new and used car loans, but you will likely find it easier to secure financing on a new car. Calculate the expense of various options over time before making a decision on which contract to sign.
Is it better to get financing through dealership or bank?
The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, so financing through a bank or credit union can offer much more competitive rates.
Are interest rates cheaper on new or used cars?
If you’re thinking of driving home in a pre-owned vehicle, the average interest rate for a used car is around 6%. If you’re considering a new vehicle, new cars have an average rate of 5%. Generally, the interest for a used vehicle may be higher than that of a new vehicle.
Should I apply for a new or used car loan? – Related Questions
What is a good interest rate for a 72 month car loan?
The average 72-month auto loan rate is almost 0.3% higher than the typical 36-month loan’s interest rate for new cars.
Loans under 60 months have lower interest rates for new cars.
| Loan term |
Average interest rate |
| 60-month used car loan |
4.17% APR |
| 72-month used car loan |
4.07% APR |
What APR is too high for a car?
A high APR (“annual percentage rate”) car loan is one that charges higher-than-average interest rates. The legal limit for car loans is around 16% APR, but you will find lenders that get away with charging rates of 25% or more.
Are used car interest rates higher than new?
Used car loans typically have higher interest rates than new car financing because there’s more uncertainty as to the value of the car, and lenders can demonstrate that used car borrowers default more frequently on their auto loans, regardless of their credit.
Why is the interest rate higher on a used car than a new car?
Resale Value
If it’s a new car, you can easily estimate how much it will depreciate over time. That’s harder to predict when the car is several years old, has thousands of miles on the odometer and could have mechanical issues, as well. As a result, the lender makes up for the unknown by increasing the interest rate.
Why are interest rates for new cars lower than used cars?
New cars are often much more expensive than used cars. This means a larger loan amount that is more profitable for lenders, so they don’t have to charge as much interest. Also, people buying new cars generally have good credit.
Why is APR higher for used cars than new cars?
Used car loans are often more expensive because of the car’s depreciation, the lower value, and the higher potential for mechanical problems. Add these all together, and a car loan for a used vehicle is a higher risk. That’s why a used car loan has a higher interest rate.
What is a good interest rate on a used car?
The average auto loan rate is 4.33% for new cars and 8.62% for used cars, but shop around to get the best deal.
Average car loan interest rates.
| Credit score |
Average APR, new car |
Average APR, used car |
| Prime: 661-780. |
4.03%. |
5.53%. |
| Nonprime: 601-660. |
6.57%. |
10.33%. |
| Subprime: 501-600. |
9.75%. |
16.85%. |
Can dealers negotiate APR?
Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.
What’s the lowest APR you can get on a car?
Based on our research, borrowers with good credit can find APR as low as 2.99% for new and used vehicles from AutoPay’s network of lenders. Those with bad credit may still qualify for good rates, as the company tends to approve car loans for those with a minimum credit score of 575 or greater.
What credit score do you need to get 0 interest on a car?
Zero percent financing deals are generally reserved for borrowers with excellent credit — typically classified as a credit score of 800 and above. You’ll want to review your credit reports on your own before you start shopping for auto financing.
What is a good APR for a car 60 months?
On average, a good APR for a 60-month car loan is 3.81% as of September 2021. However, you may be able to get an even lower rate if your credit score is in the prime to superprime range, which includes credit scores between 661 and 850.
Is 24.99 APR high for a car loan?
A 24.99% APR is not good for mortgages, student loans, or auto loans, as it’s far higher than what most borrowers should expect to pay and what most lenders will even offer.
What is a good interest rate for a car 2022?
The average interest rate for auto loans on new cars in 2022 is 4.07%. The average interest rate on loans for used cars is 8.62%. If you have a high credit score, you can expect your interest rate to be slightly lower than these figures.
Does APR matter if you pay on time?
Does APR matter if you pay on time? If you pay your credit card bill off on time and in full every month, your APR won’t apply. If you pay your bill on time but not in full, you’ll be charged interest on your remaining balance.
Is 8% a good APR for a car loan?
If your credit score is in the 600 to 660 range, a car loan with an interest rate of 8% is good! However, if your score is higher, then an 8% interest rate is on the expensive side. The average interest rate on a 60-month car loan as of September 2021 is 3.81%. So, an 8% interest rate is high by comparison.
What is a good credit score to buy a car?
What Is the Minimum Score Needed to Buy a Car? In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.