dyhppy

why is it so much higher than new cars? is it because the gov or banks want us to keep buying new?

mzk784

I think used cars risk factor is higher for for banks, so they jack up interest.

sahtt

If you do it the right way, going through a credit union etc., and buy that is relatively newer, the rates aren't much different.

The reason why they are typically higher is due to a couple reasons. First, because there are more people percentage wise with no/terrible credit finance used cars, the rates are on average higher. People with really good credit that buy used cars typically do so so they can pay cash.

Second, it has to do with the vehicle itself. The used vehicle is just a poorer form of collateral vs a new car. Lastly, there is a better chance that someone financing a used car with have large repairs that will leave them unable to pay the note on the car. If they have to have the car to get to work to make money, some will risk not making the payment so they can go to work.

If you were selling a 2004 accord with low miles, you might be willing to finance it over a period of a year if they paid a little interest to you if the overall market was sour. However, if you were selling a 94 MB S600 V12, there is no way in hell you'd let someone finance it. There is too high of a chance there will be a massive maintenance issue they will be tempted to pay for first being making payments on a broke down car.

Sabre

Or if the car breaks and they just abandon it completely.