Car Shopping? Buy Used to Save on Loan Interest
Buying a new car is tempting until you consider the financial implications. By the end of its first year, a new car loses nearly 30 percent of its value. Depending on the car, that could equate to $10,000 or more! But even as your new car rapidly loses value, you’re still forced to pay an interest rate based on the vehicle’s initial value.
Why drain money from your bank account when you don’t need to? Purchasing a used car protects you from the painful phenomenon of depreciation while also lowering the interest payments on your auto loan. Here’s what you should know while you’re car shopping.
Lower Price Tag, Smaller Loan
The average new car costs about $30,000; but thanks to depreciation, that same car is only worth about $20,000 a year later. This means that you can wait 3 years to purchase that same car used and only pay about $15,000. That’s half of the original price for a car that’s only a few years old.
Of course, that also means you only have to borrow $15,000 instead of $30,000 to purchase a car that meets your needs. It’s much easier to obtain a loan for $15,000 than $30,000, and it’s easier to repay it over a 48-month or 60-month term.
The Less You Owe, the Faster You Can Repay It
The lower cost of a used car offers additional perks that you may not realize. First of all, a smaller auto loan may assess a lower interest rate than a larger loan, since you’re limiting the risk by borrowing less money. This makes it easier to repay your loan quickly, since more of your monthly payment applies to your principal balance.
In addition, used vehicles are cheaper to insure. You don’t need maximum comprehensive and collision coverages on a used car, so your monthly premium decreases. Even registry renewal on a used car goes down a bit every year. All of that saves you money that you can apply to your auto loan in order to pay it off before it comes to term.
If you live in Tampa, you don’t need to look far to find a reliable used car dealership to work with you. Car Credit has helped drivers purchase quality used cars and save money for over 25 years. Now we’re here for you as well.
When you work with Car Credit, you don’t need to worry about the approval process. Whether you have bad credit or no credit at all, we’ll get you approved as we guide you through the process. Everyone deserves a reliable vehicle, especially during a time like this.
Call us today at (866) 542-6385 to learn more about our extensive inventory and easy online car buying process.