I’m interested in understanding if the interest rates for used car loans are generally higher than those for new car loans. Are there specific factors that typically influence this difference, such as risk assessment or vehicle value depreciation?
I’ve observed that used car loans tend to come with higher rates, and there are a few reasons working against them. Lenders often view used vehicles as having a steeper depreciation curve and more uncertainty in value over time. This risk factor makes them a bit pricier to lend on, especially given some recent trends in interest rates and tighter lending criteria. Of course, market dynamics like ever-changing repo trends also have an impact. It’s not just a blanket rule—dealer promotions and credit profiles can sometimes blur the lines, but overall, that risk premium is pretty consistent. 
I’m pretty sure that in most cases used car loans do end up with higher interest rates compared to new car loans. My understanding is that because the car has already started depreciating, lenders see it as riskier, so they compensate by charging a higher rate. I’ve also heard that some lenders try to mitigate this by offering longer loan terms, which might be tempting but can end up costing more over time. Of course, it might depend on your credit score, the exact car model, and where you’re borrowing from. Personally, if someone can afford a new car or has a good credit score, it might save money in the long run to go for the new car loan option. But like most things, it’s not one-size-fits-all.
Used car loans usually come with higher interest rates because lenders take on more risk with assets that depreciate quickly and might have hidden issues. The car’s value isn’t as predictable or stable as a new one, which means if the borrower defaults the collateral could be significantly less in value. In my experience, even with a strong credit profile, you’ll often see a noticeable difference in rates. It pays to check for certified pre-owned programs and negotiate the terms aggressively if you’re leaning towards a used car purchase because every point in the interest rate counts over the loan term.