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How come interest rates on car loans tend to be more on used cars and less on New cars?
By
kenneth j
Posted on
10/22/07 Total Answers
5
Answers-
Because the car manufacturer subsidizes the financing for new cars.
Answer by :
migz On Date
2007-10-22 00:45:13
In reality the interest rates on new cars are lower because the loans are generally for larger amounts than loans on used cars. Some manufacturers offer low interest rate financing, but that's only if you use their financial service.
I prefer to you Capital One for my auto financing simply because I do most of my banking through them.
Answer by :
Jerry C On Date
2007-10-22 00:48:21
The lender's risk (of losing money) is higher on a used car because who knows what is wrong with it or how long it will last. The risk is A LOT lower on a new car because it is, well, new.
Answer by :
Brian G On Date
2007-10-22 00:51:44
1. Used cars are rarely worth what you pay for them meaning if the bank repossesses it, they will always lose money.
2. People who buy used cars have barely sufficient income and there is greater chance for them to go in default.
3. Banks and other illegitimate entities like pawn shops make most of their money on poor people because they a. have little choice and b. can be easily abused and defrauded due to inability to do their homework.
Answer by :
Autoinspector On Date
2007-10-22 05:03:47
ITS THEIR WAY OF GETTING MORE MONEY FROM YOU BECAUSE OF THE SOMETIMES LOWER MONTHLY PAYMENTS.
