Used car financing follows the same basic principles as new car financing, but can be more expensive due to several factors. Because of the higher risk for lenders in used car loans, the interest rates on the loans are typically higher, the loan terms are shorter, and the down payments are bigger. On the loan terms, according to the Consumer Banking Association, 29 percent of used car loans carry a loan term of more than 5 years, while the same figure for new car loans is 40 percent.
The higher risk reflected in the financing terms for used cars is partly based on the collateral value of the used car, which is lower than the value for a new car. The value of a used car is also more uncertain, which also translates into higher risk of financing.This gap between new and used car loan rates used to be more extensive, but increased competition among lenders, partly thanks to Internet, has narrowed the gap between the borrowing rates.
However, you typically won’t find similar financing deals as new cars have from time to time, such as manufacturer-backed zero percent financing (or cash back) deals. The leading manufacturers for such interest-free financing deals on new cars have been Ford and GM. They do these deals to clear inventory and improve overall sales (as they make money on these special deals on the sales, not on the financing).
However, somewhat similarly, selling used car dealers in uk decrease the selling prices of their cars the more time the car has been on their inventory. If the car has been unsold for a longer period of time, the dealers usually unload them at car auctions or sell my CAR to other dealers for little or no profit. They need to do this to better match their inventory of cars to the changing seasons and changing tastes of used car buyers.
Dealers may also improve their sales by offering attractive used car financing rates, like manufacturers do for new cars. These financing incentives are generally not as good as they are for new cars

