The Ins and Outs of Vehicle Financing

If the time has come to trade in your current vehicle, the first and most important decision you need to make is whether you are buying a new or used car. Both have their pros and cons, financing considerations, and more. At Twin State Ford, ensuring that our customers find the perfect vehicle that checks all of their boxes is our number one priority, no matter if they decide to buy new or used. In this blog, we will go over the basics of a car loan and everything you need to know about new vs. used car financing. It’s important to remember that while both used and new cars offer financing options, understanding the key differences between new vs. used car financing can significantly impact your overall cost and ownership experience.

Advantages of New Car Financing

Lower Interest Rates: As far as new vs. used car interest rates go, buying new is typically the better option if you are looking for lower interest rates. This is because newer cars are considered less likely to break down. Additionally, for certain new models, you often have the option of 0% APR new car financing via dealer or OEM incentives. Longer Loan Terms: As a general rule, the longer the loan term, the less you will be spending on your monthly car payment, which allows you to purchase a vehicle that is a higher price. If you decide to opt for a long-term loan, it is important to remember that you could be at risk of being “upside down” on your loan, meaning you will be paying more than the vehicle is actually worth. Manufacturer Warranties & Rebates: Another advantage of buying a new vehicle is that you can often reap the benefits of manufacturer warranties that come only with new vehicles. New cars typically come with comprehensive warranties that give your vehicle an extra layer of protection.

Advantages of Used Car Financing

Lower Purchase Price: One of the main reasons many people choose to buy used is the lower purchase price. Because used vehicles typically have a bit more wear and tear and possibly less advanced features than their newer counterparts, they are generally priced lower. That said, this doesn’t mean that used cars are not quality vehicles and a great choice for those on a budget. Faster Loan Payoff: Being able to pay off a used car loan faster gives you an advantage over new car buyers who have a long-term loan. It also allows you to avoid the negative impacts of depreciation, and reduce your monthly spending by a significant amount. Lower Insurance Premiums: For the most part, as cars decrease in value, so do their insurance premiums. Although, one of the best ways to lower your insurance premium is shopping around for better rates.

Factors to Consider

Budget: Analyze monthly payment affordability and total cost of ownership of a new or used vehicle. Down Payment: Explore the impact of down payment size on interest rates and loan terms with new vs. used car financing. Credit Score: Understand how your credit score can impact your financing options and interest rates. Vehicle Needs: Evaluate the specific features and requirements for your vehicle. Newer vehicles tend to have more advanced safety and technology features in comparison to used vehicles. Depreciation: Consider how quickly the vehicle's value will decline. Used vehicles are known to depreciate slower than new vehicles because depreciation slows down as a car ages. Maintenance Costs: Factor in potential repair and maintenance expenses. If you purchase a used vehicle, your car will likely require more maintenance than a new vehicle with no wear and tear.

Financing Options

Dealer Financing: New vs. used car financing through a dealership is often frowned upon because of high interest rates. At Twin State Ford, we aim to be transparent as possible and provide our buyers with the best financing options available. Banks and Credit Unions: Banks and credit unions provide competitive terms and rates for auto loans. Think about negotiating your loan terms and dealing with a reputable lender. Prior to deciding on a loan, exercise caution and thorough research.

Tips for Successful Financing

When it comes to new vs. used car financing, it is very important to research and compare different financing options, negotiate interest rates and terms, consider obtaining pre-approval to strengthen your negotiating position, and carefully review loan contracts before signing. At Twin State Ford, the talented team in our finance department will be ready to help you in all of your Ford new car financing needs. Visit us today.