February 17, 2006, Newsletter Issue #29: Limits of Used Car Financing
Tip of the Week
Used car loans are essentially the same as new car loans with two exceptions. First, banks aren't generally willing to go as far out on a limb when financing a used car, so the loan terms aren't usually as generous as those for a new car. Some banks, for example, will only allow you to finance a new car for a maximum of 48 months, whereas the same bank may allow a new car to be financed for up to 72 months.
Used cars, in theory, won't last as long as a new car. The bank doesn't want to be holding the note on a vehicle that's in the scrap heap instead of on the road. Though not always the case, interest rates on new cars are generally lower than those for used cars. Still, it is entirely possible to get a great rate on a used car loan.
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