Although some people tend to put down the idea of buying used vehicles, there are benefits of financing a used car. The insurance rates on used cars are a lot lower, and they typically have minimal registration fees, which could help a person save over 30 per cent of the money that they would have spent on financing a new car. Due to the reduced cost of used cars, loans are smaller, however the interest rates can be a lot higher.
From the lenders perspective, the value of a used automobile could go below the value of the loan before it’s fully paid off, and if a person defaulted on their payments, the dealership would have to make up the cost. To make the loan less dangerous for the lender, a lot of the times, a higher interest rate is given to people who choose to finance a used car. Although the interest rates may be high, getting financing for a used car can save you a ton of money in the long haul.
Contributors: Cody Green from USA Drives