If you want to finance a car and you’re looking for low finance rates then you’d be better off with a new car. Used car and refinance APRs are usually higher. There’s a reason for this.
Typically, used cars cost less than new cars. You may be financing $5,000 instead of $15,000. In general, the more you are financing the lower your finance rate can be expected to be. That’s because you are expected to stretch it out over a longer period of time. If you borrow $20,000 over a five year period, for instance, your finance company looks at it as a bigger risk. If they’re willing to take that risk on you then it’s because they’ve checked your credit history and you are a better credit risk. Otherwise, they wouldn’t take the risk at all.
On the other hand, if you are a high risk borrower then you might not qualify for the higher loan and therefore don’t deserve the lower finance rate. You will likely have to buy the used car at the higher interest rate to prove your credit worthiness. You’ll be borrowing less money, but it’s a slight inconvenience for the privilege of proving you are a good credit risk for the lender.
On a refinance, you pay higher APRs because if you are refinancing then it is because you are no longer a solid credit risk. You are refinancing due to a stressed financial situation. That increases your risk factor and therefore causes your finance rate to go up.
When financing an automobile, your finance rate is dependent upon your level of risk. If you want the low rates then you’ve got to buy a new car and be a good risk.








