Most people are fairly familiar with the basic process of taking out an auto loan. After checking your credit score and putting a down payment towards the total cost of the vehicle, buyers will then apply for financing to cover the remaining cost, which they will then pay back over the loan term. There are a few key differences between financing a new car vs. a previously-owned vehicle that buyers should be aware of.

Financing a New Car

It probably goes without saying that new cars typically cost more than used vehicles. They come with the latest tech and features and have no vehicle history yet. Because of this, dealerships will often offer perks and incentives for purchasing new vehicles, such as 0% APR on certain models. New cars also often come with lower interest rates overall because there is less risk associated with financing them.

Financing a Pre-Owned Car

The biggest draw of purchasing a used vehicle is that they are typically much more affordable than new cars. This contributes to a number of advantages that come along with financing a pre-owned vehicle, such as having a smaller loan amount and shorter loan terms. In addition to this, used vehicles that are more than a few years old depreciate much more slowly than their brand-new equivalents.

Another perk of financing a pre-owned car over a new car is that used cars are often accessible to a broader variety of credit types. If you have low or no credit score, or a shorter credit history, it is easier to get approved for a pre-owned vehicle than a new one.

Choosing the Best Option

When it comes to choosing which option best suits your lifestyle, you should take into account a number of factors. As mentioned above, used cars are often the better choice for buyers with little credit, while someone looking for the newest designs and features with a good credit score can get better rates on a new car loan. Use tools like auto payment calculators and speak with finance departments to get a better idea of what's best for you.

Discover an assortment of new and pre-owned cars to pick from here at Mike Raisor Auto Group in Lafayette, IN.

Sales Showroom Hours

  • Monday 09:00AM - 07:00PM
  • Tuesday 09:00AM - 06:00PM
  • Wednesday 09:00AM - 07:00PM
  • Thursday 09:00AM - 07:00PM
  • Friday 09:00AM - 06:00PM
  • Saturday 09:00AM - 06:00PM

Have Financing Questions? Ask Us!