If you’re looking at
used cars in Erie, PA, and planning to finance your purchase, your interest rates may be higher compared to new vehicles. Here we go over why this is often the case for
used car financing and what you can do to lower your costs.
Why are Interest Rates Higher for Used Cars?
Used cars generally come with higher financing rates than new vehicles for a few reasons. First of all, this has to do with their value. With higher interest rates, lenders protect themselves against a drop in a vehicle’s value. Another reason is that older cars are perceived as less reliable – especially when a warranty no longer covers them – and repairs can be costly. Finally, higher interest rates are because people who buy used cars are statistically more likely to default on the loan than new-car buyers.
Cutting Your Financing Costs
Fortunately, there are things you can do to reduce your financing expenses, including:
Choosing a Different Vehicle
The less expensive your car, the less you will need to borrow to pay for it. A pre-owned
GMC Acadia, for example, could save you thousands of dollars compared to a new model.
Supplying a Bigger Down Payment
Another way to shrink your car loan is to put up a larger down payment. If you have an older car, find out what it is worth. You can then use its value towards your down payment.
Picking a Shorter Loan Term
An excellent way to mitigate higher interest rates is to reduce your monthly payments so you don’t have to pay as much interest. Some buyers opt for longer loan durations – 72 months instead of a 36-month or 48-month term – to lower monthly payments. Although a shorter loan term will raise your monthly payments, you’ll benefit by avoiding extra interest.
Maximize Your Used Car Financing Options at Rick Weaver Buick GMC
Rick Weaver Buick GMC can help you find the right car at the right price. Plus, we make the
Buick financing process simple. You can get it started now by filling out our online application to get pre-approved for a loan.
