Is it better to get a new car loan or old car loan?

Choosing between a new car loan and a used car loan is entirely dependent on your financial position, your comfort with long-term costs, and what you want out of your next car. New car loans tend to be lower, last longer, and have higher loan-to-value ratios. With a new car, you also gain peace of mind with a full manufacturer warranty and state-of-the-art features.

On the flip side, used car loans are well suited for buyers who are looking to spend less on the front end and avoid the immediate steep depreciation that takes place as soon as the new car is driven out of the showroom. Interest rates on used car loans are usually higher, but the total loan amount and therefore EMIs, for the loan is less. Insurance rates are also generally lower for used cars, and you have a larger pool of models to choose from at your price point. A used car will depreciate in value slower than a new car, so you will less value simply by the nature of owning the used car.

• New Car Loan- Lower interest, longer loan term, higher loan amount, most up to date features, quite a bit higher insurance costs, steep depreciation.
• Used Car Loan- Higher interest, shorter loan term, lower loan amounts, lower insurace, slower depreciation, more choices of models.

You will want to consider your budget, how long you plan to keep the car, and your comfort level with maintenance. It is advisable to use an EMI calculator to compare loan pricing and determine which loan type is right for you.