A Guide to Financing New vs. Used Cars
If you’re in the market for a new car, you’re probably wondering whether to buy a new or used model. Both have their benefits, but it ultimately comes down to what makes the most financial sense for you. To help you make the best decision, we’ve put together a guide to financing new vs. used cars.
Do your research
Before you decide to finance any vehicle, it’s important to do your research and compare offers from multiple lenders before making your decision. Financing can help you get the car you want without having to empty your savings account. It can also increase your credit score as long as you can consistently make all of your monthly payments. Be sure to utilize a used car loan calculator to get a better idea of what your costs will be.
The benefits of financing a used car
When it comes to financing a car, many people assume that it is always better to finance a new car as opposed to an old car. However, there are several benefits to financing an old car instead of a new one.
- Old cars are much cheaper than new cars, so you will save money on your monthly payments.
- Some older vehicles have better engines than their newer counterparts. For instance, Ford has stopped making 7.3 diesel engines for their vehicles. However, if you can find an old 7.3, it will probably outlast any of Ford’s newer engines. In this case, financing a used Ford would be better than financing a newer model.
- Old cars are less likely to depreciate in value as quickly as new cars, so you will owe less money if you decide to sell the car before the end of the loan term.
The benefits of financing a new car
When it comes to financing a new car, there are a few key benefits that you should be aware of.
- A new car is likely to have a lower interest rate than an older car. This means that you will save money in the long run by financing a new car as opposed to an older one.
- A new car is likely to have a longer warranty than an older car. This means that you will be covered for any repairs that may be needed during the life of the car.
- A new car is likely to have better resale value than an older car. This means that you will be able to get more money back when you go to sell the car down the road.
How to decide which option is best for you
There is no easy answer when it comes to deciding whether to finance a new or used car. Ultimately, it depends on your personal circumstances and what makes the most financial sense for you.
If you are looking for the lowest monthly payments, financing a used car is probably your best bet. However, if you are looking for the best long-term value, financing a new car is probably your best option.
If you are still undecided, we recommend talking to a financial advisor who can help you make the best decision for your unique situation.
4. What to do if you can’t afford a new or used car
If you can’t afford a new or used car, there are a few things you can do to try to make it more affordable.
- You can try to get a loan from a bank or credit union. You may be able to get a lower interest rate if you have good credit.
- You can try to get a loan from the dealership. Many dealerships offer financing, but the interest rates can be high.
- You can try to find a cheaper car. There are a number of ways to do this, including buying a used car, looking for discounts, or negotiating with the dealer.
If you still can’t afford a car after doing all of these things, you may need to reconsider whether or not you can afford a car at all. In some cases, it may be better to wait until you have saved up enough money to buy a car outright.
When it comes to financing a car, there’s no one-size-fits-all solution – it all depends on your personal circumstances. If you have good credit and can get a low-interest loan, then buying a new car may make the most financial sense. However, if you have bad credit or limited funds for a down payment, then financing a used car might be your best bet.
Ultimately, the decision of whether to buy new or used comes down to what makes the most sense for you financially.