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When buying a car, most of the time it is necessary to secure car financing. It doesn’t matter if it is a new car or a used car; you have to pay for it somehow and financing is usually how it is done.
Depending on whether you are buying new or used is going to determine the type of loan that you receive. It is also a good idea to get preapproved for the financing first. That way you have more negotiating power when sitting down with the dealer. There is also the fact that many car manufacturers are offering 0% auto financing because they need to offer as many incentives as possible to entice individuals to buy new cars.
However, there are some things you need to look at in regards to your financing options:
- Look into car financing with incentives such as 0% auto financing, but make sure it is something you can afford. Don’t get lost in the sea of incentives
- Take into consideration that used car loans have an average interest rate that is hovering around 7.09% and 7.10% for a 36 month loan. New car loans are hanging around 6.46% for a 60 month loan. The interest is cheaper on the 60 month new car financing, but remember that it is for a longer period of time. The used car financing will cost less because the term is nearly cut in half, which means less interest charged despite the higher rate
As for how to shop for used car loans and new car loans, look at what the dealers are offering and also check with your own bank. See who is offering the better deal in the long run. Incentives are great, but they may have short-term benefits that will cost you more in the future.
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