You need to remember that the difference between new car loans and used car loans do not only lie on its purpose but also of its interest rates, loan tenures, and the cost of the car itself. Obviously, the cost of the new car will be way higher than the cost of used car, so do take some time before you choose to apply for any car loans. If you are confused about the difference between the two, below are the differences of both car loans, those differences are:
- Loan amount: as it said above, the price of a new car is way higher that used car. that’s why banks offer up to 85-100% of the showroom or on-road price of a new car while the used car is offered around 70-80% price of the car.
- Interest rates: the interest rates of new car loans are usually way higher than the used car. for example, the interest rates of new car loan are around 5-7%. Most of the tenders believe that providing new car loans are more profitable and less risky since a new car has more value and more easily to be sold than used car.
- Loan tenure: the loan tenure for the new car is way longer and in the rage of 1 to 7 years, while for used car is only for 3 to 5 years. The longer loan tenure happens because new cars tend to be more expensive that used car.
- Down payment: surprisingly, the down payment for used car loans is way higher than new car loans because tenders are only willing to lend only half of the price of the used car.
- Insurance: the insurance of used car usually is more expensive depends on its condition.
Have you decided on which car loans you will take? If you do, make sure to take all your purposes and the needs of the car into considerations so that it will cost you less and benefit more.