Connect with us


Are interest rates better on a used car loan or a new car loan?

kokou adzo



pexels photo 8292883 scaled

When it comes to financing a car, one of the most important factors to consider is the interest rate on your loan. The interest rate determines how much you will pay in interest over the life of the loan, and it directly affects your monthly payments. But are interest rates better on a used car loan or a new car loan? Let’s take a closer look at the factors that can influence interest rates for both types of loans.

Depreciation and Value

One of the factors that can impact interest rates on car loans is depreciation. New cars typically depreciate rapidly in their first few years of ownership. This means that the value of a new car decreases significantly during that time. Lenders often consider this depreciation when setting interest rates on new car loans. On the other hand, used cars have already experienced their most substantial depreciation, so their value is generally more stable. This may result in slightly lower interest rates for used car loans.

However, it’s important to note that depreciation is not the sole factor that lenders consider when setting interest rates. Lenders also analyze other risk factors, such as the borrower’s credit history, income, and the loan term.

Lender Policies

Another factor that can influence interest rates is the policies of individual lenders. Some lenders may offer lower interest rates for new car loans as an incentive for buyers to purchase brand-new vehicles. This can include promotional offers or special financing deals that are only available for new cars. On the other hand, other lenders may focus more on used car loans and offer better rates for those. Each lender has its own lending criteria and policies, so it’s essential to shop around and compare rates from different lenders to find the best deal for your specific situation.

Loan Term

The loan term, or the length of time over which you will repay the loan, can also affect interest rates. Typically, shorter loan terms have lower interest rates compared to longer terms. This is because lenders consider shorter-term loans less risky, as there is less time for borrowers to default or for the value of the collateral (the car) to decrease significantly. When comparing interest rates on used and new car loans, take into account the loan term that each lender offers and choose the option that works best for you.

A shorter loan term can result in higher monthly payments but can save you money on overall interest payments. On the other hand, a longer loan term can provide lower monthly payments but may result in paying more interest over the life of the loan. It’s important to find the right balance that fits your budget and financial goals.

Your Credit Score

Your credit score plays a significant role in determining the interest rate you are offered. Lenders use credit scores to assess your creditworthiness and determine the level of risk they will take on by lending you money. Generally, borrowers with higher credit scores are offered lower interest rates, regardless of whether they are financing a used or new car. It’s crucial to maintain a good credit score by paying your bills on time, keeping your credit utilization low, and managing your debts responsibly.

Additionally, your credit score can impact the loan terms you are eligible for. If you have a higher credit score, you may have more options for loan terms, such as a lower interest rate or a longer loan term. Conversely, if your credit score is lower, you may be limited to higher interest rates or shorter loan terms. It’s important to understand your credit score and how it can influence your car loan.

Market Conditions

Interest rates can also be influenced by market conditions, including the state of the economy and the overall demand for car loans. In times of economic instability or when there is less demand for car loans, lenders may lower interest rates to attract borrowers. Conversely, during periods of high demand or economic growth, interest rates may be slightly higher. Monitoring market conditions and staying informed can help you make more informed decisions when it comes to your car loan.


In conclusion, whether interest rates are better on a used car loan or a new car loan in Alberta can vary depending on several factors. Used car loans may have slightly lower interest rates due to the stability of the car’s value, while new car loans may have incentives or promotional rates offered by lenders. Ultimately, the best way to determine which loan will offer the most favourable interest rate for you is to do your research, compare rates from different lenders, and consider your own financial situation and preferences. Additionally, maintaining a good credit score and understanding the factors that can influence interest rates can help you secure a better deal on your car loan.


Kokou Adzo is the editor and author of He is passionate about business and tech, and brings you the latest Startup news and information. He graduated from university of Siena (Italy) and Rennes (France) in Communications and Political Science with a Master's Degree. He manages the editorial operations at

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Top of the month

Copyright © 2023 STARTUP INFO - Privacy Policy - Terms and Conditions - Sitemap - Advisor


We are a global Innovative startup's magazine & competitions host. 12,000+ startups from 58 countries already took part in our competitions. STARTUP.INFO is the first collaborative magazine (write for us or submit a guest post) dedicated to the promotion of startups with more than 400 000+ unique visitors per month. Our objective : Make startup companies known to the global business ecosystem, journalists, investors and early adopters. Thousands of startups already were funded after pitching on

Get in touch : Email : contact(a) - Phone: +33 7 69 49 25 08 - Address : 2 rue de la bourse 75002 Paris, France