Stupid question, but is it really true that used-car refinancing rates are significantly higher than new car rates? Doesn’t really seem logic to me. (p.270, Schweser on Fixed Income)
I’m sure I read in the CFA material that often low financing rates are offered for new car purchases to entice buyers. Maybe these same low rates are not available in the second hand market.
but also from a risk point of view financing a used car is more risker than a new car, very low resale value if at all compared to new car sually the risk should be priced on top of a new car rate
thanks, seems reasonable!! thank you!
Definitely the case, the major US auto manufacturers are basically finance companies who happen to sell cars,they need to get the cashflow in with cheap deals to customers, otherwise their businesses would grind to a halt…as we have almost seen.