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Tuesday, June 11, 2013

New Vehicle vs. Used Vehicle Financing

Everyone wants to be the person in the neighborhood coming around the corner in that new car, but if you are worried about financing your vehicle and how much it is going to cost you, you may think about buying used or pre owned.

There are plenty of used luxury vehicles out there that could fulfill that everyday urge of the new car smell. We are going to compare a few points that you should keep in mind and think about when deciding which route to go in. Below we will take a look at the 3 main factors between new and used automobiles.

Sticker Price:
  • New cars are clearly going to cost more money depending on which makes and models you decide to go after but with that said you have the comfort of no previous owners. Manufactures warranty for as low as 3-years 36,000 miles to 10-years 100,000 miles.
  • With used cars there is still a very wide spectrum of price differences. A used car just two or three years old could average around three to five thousand dollars cheaper. However, you have to consider previous owners, and the possible mechanical problems the car could have. In most cases this is the idea choice for bad credit auto loans buyers. 
  • Used cars have usually taken their biggest hit in depreciation before you have purchased it. Depending on how much driving you do, and how well you or the previous owners maintained the vehicle, your chance of positive equity is much higher.
  • New cars will average a depreciation of twenty to forty percent once you drive it off the lot. If you don’t plan on keeping your new car for longer than five years, you probably are not going to have much equity, if any at all, when you sell or decide to trade it in.
  • Interest rates for newer autos are generally lower depending on your overall credit score. In some case thought financing the latest automobile can be more difficult if you have bad credit. Dealerships offer more rebates and incentives on new cars.
  • Again, depending on your credit score, used cars are going to have higher interest rates with less rebate and incentive options. However, with the lower price point, used cars could prove to be a cheaper auto loan option. Lenders are more forgiving to bad credit vehicle buyers with used cars. 

So regardless of the choice that a bad credit auto buyer makes or where they are located for example in Greenville SC  there is a, another cost that you will have to figure in when deciding to purchase a brand new or second-hand vehicle is going to be auto insurance. While insurance companies are going to have different price points based off the miles, make and model, other factors such as your driving record will also play a determining role in your insurance rates. After considering these important points and doing your necessary research, you should be in a great position to decide which option is best for you and your situation.