When is a vehicle considered to be in the new vehicle category?
In terms of car financing, you benefit from advantageous conditions and a reduced APR as long as the desired vehicle is less than three years old since its first registration. After three years, it should be considered a used vehicle.
Car financing or installment loan?
This is another important distinction to keep in mind. If you buy your vehicle from a professional in the used car sales – currently all car brands have a “used cars” department – you can get car financing and benefit from a reduced rate.
However, if you buy your used car from a private individual, you cannot get car financing. You will need to take out an installment loan with less advantageous conditions.
Why such a distinction?
Simply because of the accessory warranty on the sale of the used vehicle. Indeed, when you buy a car from a private individual, you do not benefit from any warranty on the vehicle.
On the other hand, if you buy your used car from a professional seller (a garage owner), they are required to provide you with a parts and labor warranty of at least one year and can – if you negotiate well – extend this warranty to two years. This is a legal provision that the professional seller cannot evade.
Since your credit institution enjoys additional security on the credit object, it is normal that the APR affecting your used car loan is reduced and more attractive.