Used Car Loan Rate

Have you ever wondered why the used car loan rate is often higher than the new car loan rate?

The easy explanation is that banks and lenders need security or collateral for the loans they give out. To a bank assessor, a new car might represent slightly better collateral for them as it’s likely to last longer than a used car. They seem to believe that used cars might not be as valuable to them as collateral later if they have to try to sell it if you default on your loan.

This is the primary explanation for charging you more on the used car loan rate, but there is a sneakier reason that they don’t admit out loud to the public. You see, banks are in business to make a profit. This means lending out money to as many people as they can and then charging you interest on that money. It makes sense that they want people to borrow more money instead of less, otherwise they’d be out of business.

When the bank considers that a customer wants to buy a used car, they increase the used car loan rate a little and tell you it’s because it’s an older security, thus worth a little less as collateral. Then they’ll try to tempt you into buying a new car for the cheaper interest rate. The real reason is that new cars often cost more, which means you need to borrow more, so they get to make more profit in the long run.

Banks can be sneaky, but there are always ways to beat them at their own game, especially when it comes to negotiating a used car loan rate. Before you submit an application for finance, always take a little time to shop around for the best possible used car loan rate first. You should also understand what the difference is between the used car loan rate and the new car rate so you have something to compare.

Then when it’s time to apply, you simply point out that you want to apply with your own lender, but you already know that another lender is offering a much cheaper used car loan rate and you’d like to ask if they’d consider matching the rate for you.

Some lenders will immediately reduce the used car loan rate you’re charged to match their competition’s offer. Others will simply say no. That’s okay. You already understand they’re trying to make a profit. Simply move onto the next lender and enquire again.

One thing you should remember when you’re making your inquiries into used car loan rates is that you don’t want to enter an actual application with your full details until you’re sure you’ve got the right one. This is because the lender might try to list your inquiry onto your credit report. Be sure you shop for and compare your used car loan rate as privately as you can until you’re ready to apply and you could save yourself thousands in the long run.

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Used Car Loan Rate

best used car loan rate

Used Car Loan Rate

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