Torn Between a Used and New Car Loan?
When buying a car, an individual must make various decisions. Purchasing a car entails more than just putting money down or obtaining a loan. Choosing a brand, model and make of your choice is one of many decisions you must make. One of your first decisions is buying a new or used car. Choosing either of the options will have a significant impact on your finances.
Car loans allow you to buy a vehicle at the total price and drive your new vehicle off the lot after reaching an agreement with a lender or financier regarding the initial down payment, interest rate, and loan period. Below are some of the advantages and disadvantages of both new and used car loans:
Advantages of New Car Loans
- For new cars, the manufacturer provides a warranty, reducing some of the work for lenders. As a result, the entire process is less troublesome and has a higher insurance premium.
- New cars contain the most up-to-date technology, which means you can purchase a vehicle with better mileage and reduced emissions.
- New cars come with more features that provide a better driving experience.
- The loan term is generally between five and seven years, allowing borrowers to handle their repayments comfortably.
- Many lenders disburse new car loans because the risk is lower compared to that of a used car.
- You can acquire a loan for roughly 90% of the cost of the new car, saving you money.
Disdvantages of New Car Loans
Because the new car comes with an insurance cost, your annual cash outflow will increase. Even if loan rates are low, the total flow will rise due to insurance premiums.
Advantages of Used Car Loans
- A used car loan will be less expensive than a new one because the cost of insurance will also be cheaper.
- The loan amount for used cars may be substantially cheaper, and the repayment conditions could be more flexible.
Disadvantages of Used Car Loans
- The interest rate and the monthly repayments will be slightly higher than that of new cars.
- The loan amount will be approximately 80% of the car’s worth, with the remainder being your down payment.
However, many factors must also be considered when determining where and how to obtain a car loan. If you don’t calculate everything right, you may spend more than you planned or agree to terms you later regret. It’s usually preferable to walk into a car dealership with a financing offer in hand from a bank or lender. A pre-approved offer ensures you can obtain financing to meet your desired vehicle cost.
Loans have been simplified at Ezilend. We have been in the financial sector for more than 25 years now and are extensively focused on making loans as personal as possible. Depending on the asset you want to buy, we offer an auto calculator on our website that may assist you to set up and start a pre-approval request. Visit our website for more details or contact us today.