New cars can be cheaper than used ones due to low-interest financing deals

Financing offers from car dealers are making new vehicles more affordable than used models in some cases, according to a report by Finnish public broadcaster Yle.

Car dealerships are offering new car loans with interest rates as low as 1%, while used car loans typically carry rates between 7–9%. Tero Hellman, sales manager at the J. Rinta-Jouppi dealership chain, explains that manufacturers and dealers absorb part of the interest costs to attract buyers.

“Car sales have been very weak for several years and remain below normal levels,” Hellman said. Last year’s new car registrations nearly matched the lows of the 1990s economic downturn.

Petri Poukkula, CEO of Saka—a dealership specialising in used cars—agrees that demand for used vehicles is stronger, particularly for newer, low-emission models. However, he argues that low financing rates for new cars are effectively built into the vehicle’s price.

“Free money doesn’t exist,” Poukkula said. “The cost is always factored in somehow.”

Over half of private new car purchases in Finland were financed through loans last year. For used cars, financing rates are significantly higher, often adding thousands in interest compared to a similarly priced new car.

Some buyers opt for cash purchases, avoiding interest altogether. Poukkula notes that at Saka, about half of customers pay upfront, while the rest use financing.

Dealers occasionally run low-interest campaigns for used cars, but these are less common since manufacturers do not subsidise them. Hellman confirms that when interest rates are below market levels, the dealership covers the difference.