why are interest rates lower for new cars?
Posted by admin
dgmotley asked:
i never understood that. i have a 06 dodge stratus and am wondering if i would have made out better with a used car. of course, all my used cars have never given me over 2 years. but i dont want a used car with a high interest rate
HARRISON
i never understood that. i have a 06 dodge stratus and am wondering if i would have made out better with a used car. of course, all my used cars have never given me over 2 years. but i dont want a used car with a high interest rate
HARRISON
June 10th, 2006 at 3:23 pm
the low interest rate is merely to get you in there. they are making plenty of money off of the mark up…and they have to turn the cars so by offering a low interest rate they make the sell..make money…and even if it’s low interest…the financing company is making money too.
The dealer really doesn’t care about the interest rate…because the financier makes that money…not the dealer…unless they have some kind of deal with the financier.
In most cases such as GMAC for example…the dealer arranges the financing…however after the deal is done…all they get is the markup on the car…GMAC gets all the interest money.
June 13th, 2006 at 7:03 am
When you take a loan for a used car, you alone pay for the loan.
On new car promotions, the auto manufacturer is subsidizing your loan as a way of selling more cars.
Buy a quality used car if you want one that lasts. Dodge Stratus does not fall into this category, sorry. Check out the NADA price for a Dodge Stratus for 2005, 2004 and 2003. You will see the value depreciates dramatically in three years. That’s an indication of how well the vehicle retains value. The more value retianed, the better the car in 90% of cases.
June 15th, 2006 at 12:50 am
newer the car the lower the rate in most cases
June 16th, 2006 at 5:24 pm
6 of 1, 1/2 dozen of the other. DJ is right when you buy a new car with the dealer financing it’s low as an incentive to sell cars, the low rate is built into the price of the new car. But if you went to the bank and took a loan on the same car, the dealer has all these discounts he can give you, You have to make sure you get them all sales guys like to hold back. Your monthly payments would be similar.
Now as soon as you drive the new car of the lot it depreciates 20-30 %. You would be better off buying something 1 or 2 years old. Someone else has paid the depreciation and it still has warranty on it. Plus you can negotiate a lot more on used than new.
June 17th, 2006 at 2:42 pm
Special interest rates like 0% are usually offered by the finance company of the dealer. For example, when financed through GMAC, you have the option of 0%.
There are other incentives if you opt out of the 0% or are paying cash for the car.
Other banks offer lower percentage rates for newer vehicles because they are more comfortable with a newer car if they ever had to resell it to get their investment back.
They basically aren’t as worried about you defaulting on the loan, or are less worried about getting their money out
Interest rates are higher for bad credit and for older vehicles because the banks feel they need to get as much money from you early on…since you are more likely to default on the loan.
June 18th, 2006 at 2:01 pm
Well well… there are specific terms with different auto credit landers. some lander differentiate the credit type as per amount…but there are some more auto lander who provide the cheap interest rates on used auto if you have good credit score… check this :