Compare financing considerations for new and used vehicles, including interest rates, purchase price, depreciation and loan terms.

New Car vs. Used Car Financing

Financing a new vehicle and financing a used vehicle can involve different considerations.

The purchase price is only one factor. APR, loan term, vehicle age, depreciation and lender requirements can also affect the financing decision.

New Vehicle Financing

New vehicles generally have higher purchase prices than comparable used vehicles.

However, manufacturers may occasionally offer promotional financing on selected new vehicles.

Eligibility and terms vary.

Used vehicles often have lower purchase prices, but financing terms can vary depending on vehicle age, mileage, condition and lender policies.

Some lenders may offer different APRs or maximum terms for older vehicles.

When comparing a new and used vehicle, consider the complete financial picture.

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Vehicles generally depreciate, although the rate differs substantially between models.

Depreciation matters because it affects the relationship between the vehicle's market value and the outstanding loan balance.

A used vehicle may have a lower purchase price but a different APR or loan term.

A new vehicle may cost more but could have a promotional financing offer.

Calculate the actual financing scenarios rather than relying on general assumptions.

When comparing two vehicles, enter the same assumptions where appropriate.

Then compare the resulting monthly payment and total interest.

Our car loan calculator allows you to change vehicle price, down payment, APR and loan term to compare different scenarios.

There is no universal answer to whether a new or used vehicle is better to finance.

Compare the actual purchase price, financing terms and expected ownership costs before making a decision.