How to decide between a used or new car | finder.com
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New cars vs. used cars

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Make the right decision and drive away without regret.

It’s the age-old question that every car buyer needs to decide: buy new or get a used car? A new car won’t have the same risk or wear and tear as one that’s been used, but it’ll cost you more.

New vs. used cars in a nutshell

New CarUsed Car
PriceGenerally costs more and depreciates immediatelyGenerally costs less and retains its value longer
Car optionsLots of options that you can customize to your needsYou’ll face a limited selection depending on your location
What you need to knowKnow how to avoid expensive sales tacticsKnow what to look for in a used car and how to avoid a lemon
Financing optionsMore options with lower interest ratesFewer options with higher interest rates and more stringent requirements
Information availableManufacturer stickers, dealer documentation and up-to-date reportsTypically general information only, and private sales may have none
WarrantyManufacturer and dealer warranties are availableVaries depending on the age and condition of a car

Test drive a new car in your area Test drive a used car in your area

Compare your financing options for new and used cars

Rates last updated December 15th, 2018

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Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
Name Product Product Description Min. Credit Score Term of Loan Requirements
car.Loan.com Car Loans
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
300
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Auto Credit Express Car Loans
Get connected with an auto lender near you, even if you have bad credit.
300
Typically 3 to 6 years
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
LightStream Auto Loans
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
Good to excellent credit
Flexible terms
Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
RateGenius Auto Loan Refinance
Connect with a network of over 150 lenders to refinance your car loan.
510
Varies
Income of $2,000+/month, vehicle has less than 150,000 miles and is no older than 8 years, loan balance is between $10,000 and $100,000, debt-to-income ratio is less than 50%
LendingClub Auto Refinancing
Lower your monthly car payments and save on interest through a fast and easy online application process.
Fair or better credit
Minimum of 2 years
Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
MotoRefi Car Loan Refinancing
A car loan connection service for borrowers looking to refinance.
525
1–6 years
Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles.
LendingTree Auto Loans
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
Good to excellent credit
Typically 1 to 7 years
Must be a US citizen and 18+ years old. Must have good to excellent credit.

Compare up to 4 providers

What factors should I consider?

Test drive a new car in your area Test drive a used car in your area

Financing options for new and used cars

There’s considerable overlap between used car loans and new car loans. Most lenders offer both to cover the range of consumers, but you’ll see a difference in the interest rates they offer.

Financing a new car

It’s likely that if you have decent credit and are looking to buy a new car, you’ll be given a lower interest rate than someone looking to finance a used car.

Since you’re still paying a premium for a new car, you may need to borrow more. This means that whatever you’re saving on interest could be negated by the higher price tag on your new car.

Financing a used car

A used car may have a higher interest rate, but you’ll likely be paying significantly less than you would for a new car. The downside? Some lenders only finance a used cars under a specific amount of miles or under a certain age.

Secured vs. unsecured loans

Secured loans can give you better interest rates because your using your car as collateral. This means if you default then your car can be repossessed by the bank.

If you aren’t interested in using your car as collateral, there are still other ways to finance your vehicle. You may want to consider an unsecured car loan.

Compare loans for new and used cars

Bottom line

Used cars are considerably cheaper, but you’re not getting the first-owner benefits that come with a new car. Take your finances into account, and be sure to take your time making this decision. After all, whichever you choose, it will likely be with you for at least a few years.

Frequently asked questions

Image source: Shutterstock

Kellye Guinan

Kellye Guinan is a writer and editor with finder.com and has years of experience in academic writing and research. Between her passion for books and her love of language, she works on creating stories and volunteering her time on worthy causes. She lives in the woods and likes to find new bug friends in between reading just a little too much nonfiction.

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