If your financial status is similar to most of the Canadians, you cannot afford to pay the entire amount to purchase a new vehicle. As a result, you need to take a car loan from a lender, to pick up an automobile.
However, you face a new dilemma, as you have to select between a new and used vehicle. As each type of credit comes with a different set of advantages, you find it confusing to pick the right one. Here is a simple comparison, which will help you select between used or new car loan:
New Car Loan
One significant advantage of picking up a new vehicle is that you have to pay lower interest rates. Financial institutions associate these automobiles with lower risks, as they come with guarantees from the manufacturers. They use the latest technologies in the market, to provide better fuel efficiency while extending the lifespan of the engine.
At the same time, you can take a car loan with a larger amount, giving you the freedom to purchase a vehicle with better features. You can get a longer tenure for a new car loan, which makes the monthly payments affordable.
Used Car Loan
Due to the increase in risk associated with used cars, there is a limit to how much you can borrow from the lender. As a result, you can get a vehicle for a smaller amount, which is easier to pay off. The tenure for used car loans is quite short, giving you the freedom to pay off the credit quickly.
One considerable advantage of these types of auto loans is that you can avoid the rapid depreciation of your asset. As the vehicle had a previous owner, he/she absorbed the majority of the loss. Due to this reason, you will never find yourself in a situation, where the car’s value is lower than the loan amount.
These are the advantages of used and new car loans you should know. The type of credit you require from a financial institution depends on your needs. Take your time to learn which one suits your needs, before making a decision!