Deciding between buying a brand-new car and a certified pre-owned vehicle involves not just vehicle cost, but how banks structure financing for both categories.

Interest Rate Differences

New car loans generally carry interest rates between 8.5% to 9.5%, whereas used car loans range between 11.5% to 15.5%. Banks charge higher interest on used cars due to vehicle depreciation and resale risk.

Loan-to-Value (LTV) Ratio

• New Cars: Lenders typically finance 85% to 90% of the on-road price.
• Used Cars: Financing is usually capped at 70% to 80% of the bank's independent valuation of the car.

Which Should You Choose?

If you are buying a car under 3 years old with high retained value, a used car can save significant capital upfront despite the higher interest rate. Use our Car Loan Calculator to simulate total costs before deciding.