When you loan money for a car the car will definitely be worth less money in the near future than it is now. A house has a better chance
at least historically of keeping its value. Therefore the bank has less risk. Less risk justifies the lower interest.
There’s more risk. These risks include: the owner may drive far away with the car and stop paying, the car will depreciate in value, the car may be in an accident, the car may be stolen, etc.
The reason behind that is simple, that the car will depreciate in value as soon you drive it off the dealership car lot. How sad but its true, if you bought a new car that is worth $30,000 and you drove it off the lot, the value of your car just lost $5,000 and each month/number of miles on your car drop another 2 or 3% of the value of the car. They want to make as much money off each car as they can, for the house its value doesn’t depreciate once you approve for the loan.
There’s more risk with a car loan than a home loan. Cars depreciate in value where homes typically appreciate in value.
Don’t confuse yourself though, auto terms are only about 3-7 years long vs. a 30 year mortgage term. The lender makes hundreds of thousands in interest on a mortgage because the term is so long vs. only a few thousand on an auto loan.
When you loan money for a car the car will definitely be worth less money in the near future than it is now. A house has a better chance
at least historically of keeping its value. Therefore the bank has less risk. Less risk justifies the lower interest.
There’s more risk. These risks include: the owner may drive far away with the car and stop paying, the car will depreciate in value, the car may be in an accident, the car may be stolen, etc.
Higher risk.
The reason behind that is simple, that the car will depreciate in value as soon you drive it off the dealership car lot. How sad but its true, if you bought a new car that is worth $30,000 and you drove it off the lot, the value of your car just lost $5,000 and each month/number of miles on your car drop another 2 or 3% of the value of the car. They want to make as much money off each car as they can, for the house its value doesn’t depreciate once you approve for the loan.
There’s more risk with a car loan than a home loan. Cars depreciate in value where homes typically appreciate in value.
Don’t confuse yourself though, auto terms are only about 3-7 years long vs. a 30 year mortgage term. The lender makes hundreds of thousands in interest on a mortgage because the term is so long vs. only a few thousand on an auto loan.