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Used Car Financing Benefits
When looking for a new car that you intend to purchase through financing, you really can strike up a good deal through financing a used vehicle. The average price of a used vehicle is obviously lower and this is a real draw for many potential buyers. Also consider the fact that without the finance deal your budget might not stretch as far and as a result you may end up with a car that has a lot of miles, is very old and you are at risk of spending more money on repairs. There are other advantages to purchasing a used car when looking at finance deals and the below will try to help you see the benefits.
One of the real advantages over new car deals is the rate of depreciation. Taking into consideration that as soon as you drive a new car off the forecourt it loses money and in the first year they depreciate on average by around 20%, although the rate slows significantly in the following years. A risk you are less likely to take is where you owe more than the car's value (deposits are obviously beneficial for countering this). For example a Ford Fiesta Hatchback will depreciate on average by about 33% in the first year, by the end of the third it will be by around 49%, so you can see that the depreciation rate slows down.
Can give you more choice
Many new cars are out of reach for a lot of people's budgets, but buying the same car but 5 years old for example gives you the opportunity to buy the same car but with some miles on the clock. If having the most up to date model is less important than having more money free then a used car finance deal might be the best option for you.
Shorter loan deals
Used car finance deals generally have shorter pay back periods, this is due to the fact that you will generally be borrowing less because of the value of the car. You will however find that the APRs associated with used car finance deals are higher. Shorter loan deals mean you will have more spare cash quicker and be free of the debt a lot quicker. There is also the chance that you might not have to make a down payment for the car, or in a lot of cases the down payment itself is significantly lower than that of a new car finance package.
With any car loan act responsibly, don't stretch your budget too far or you may end up running the risk of missing payments and consequently losing your vehicle and having to pay it off. There are many tools and calculators you can use online to help you see what you can afford.