Why are interest rates higher for used car loans?

I want to buy a luxury used car, but I was shocked about the interest loan rates? Why are the rates higher for used cars than new cars?

Answer
Buying a used car is a smart move. You get the comfort and reliability of a solid car without the depreciation and high price tag.
Used car loans are often more expensive because of the car’s depreciation, the lower value, and the higher potential for mechanical problems. Add these all together, and a car loan for a used vehicle is a higher risk. That’s why a used car loan has a higher interest rate.
However, you aren’t hit for the 10% to 20% depreciation that happens when you drive a new car off the lot. In many ways, it’s a financially savvy move that can bring great value.
Remember that you’ll need full coverage car insurance for your vehicle. You’ve already saved money by buying a used vehicle, so you may as well keep your savings going and shop around for car insurance.
That’s when Jerry can help. Sign up in just minutes to compare rates for your car and get the best value possible. What you do with the extra savings is up to you.
Eric Schad
Answered on Nov 15, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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