Why Toyota has better finance rates on used cars compared to new cars

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What if we told you that Toyota recently has started to offer lower interest rates on used cars than new cars? Surprised? Yes, you read that right. What it basically means is that you will be offered a pre-owned factory-certified Toyota Camry at a lower interest rate than a Camry that’s freshly out of the factory. Usually, it’s the other way around; new cars have lower interest rates but this is perhaps happening for the first time in American auto history and we find it really funny.

Well, there are multiple factors that have pushed Toyota to make this move. First up, it’s the massive demand for new cars. When COVID-19 hit first back in 2020, the auto market suffered badly. Sales hit rock bottom, dealerships had to shut down, factories had to stop production and many people working in the auto and the allied sector lost their jobs.

However, after spending a year at home, not traveling all that much, not eating out, partying, or holidaying, many people found out that they have extra cash in their accounts. Moreover, with stimulus cheques from the federal government, people just had excess money. And many people lined up outside car showrooms to put the surplus cash on a new car purchase.

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Toyota and for that matter, any automaker hadn’t expected such a tremendous surge in demand and were simply dumbstruck with the rise in sales after a dull year. To cope up and manage this huge demand, Toyota seems to have made a desperate decision to offer better APR deals on used cars than new ones. Toyota hopes that this tactic will just divert buyers to buying used cars.

But then you may question, why wasn’t Toyota able to ramp up production? In spite of having one of the world’s finest production capacities, why did Toyota have to resort to such strategies? Well, then here comes the tale of the great semiconductor and microchip shortages.


Not just Toyota, but the whole of the auto industry around the globe is suffering from a shortage of semiconductors. The lockdowns and shutdowns had already disrupted supply chains and caused shortages of many components. Semiconductors and microchips use silicon but silicon is also an extremely essential element used for making COVID-19 vaccine vials. As vaccine production all over the world was ramped up, silicon supplies were all diverted to vial manufacturing leaving the auto and electronics industry with little or no silicon to make chips.

Automakers were simply helpless and could do nothing but halt production. Many automakers had thousands of cars lying around their plants waiting for electronics items and microchips to come in. Many automakers even deleted a few features from their cars to manage the inventory of chips. So don’t be surprised if you find more features in a 2019 or 2020 car than a 2021 car because automakers had to delete a few features that required electronic chips.

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These factors lead Toyota to push for used cars than new ones. In some states, Toyota isn’t even offering any APR deals on its popular and hot selling cars like the Camry. Toyota is offering an APR rate of just 1.9% in some states on used Camry’s, Corolla’s, and RAV4’s while the lowest rate on new Toyota cars anywhere in the country is 2.9% percent.

Further, many dealers in California have stopped advertising lease deals. Toyota dealers have requested the company not to advertise lease schemes in order to divert those cars towards regular sales. As a result of this drastic gap between demand and supply, the prices of Toyota cars have shot up. Cash-rich buyers are ready to markups and as a result, even Toyota dealers had to resort to more strange and funnier tactics.

Many Toyota dealers were reportedly found to call their old customers to whom they had sold cars just a couple of years ago asking them if they’re interested in selling their car. Many people showed interest in this as they were getting a good price for their current car and then again got in line for a new car purchase.

On the flip side, buyers who had gone to make a new car purchase were naturally disappointed with high marked-up prices and long waiting periods. These buyers found good used models with low miles and thus settled for a used one. The lower APR rates were obviously there to lure them into buying a used car than a new one.

However, looking at things as they are now, it does make sense to buy a used car. There are plenty of good, low mileage used cars on sale and plus there’s this low APR deal. Moreover, with rising fuel prices and the government making efforts for shifting towards electrification, it would only make sense to buy a used car now and spend less and buy an EV or a hybrid a couple of years later when the infrastructure for EVs is well set up. If you’re planning to buy a car, we would highly recommend you to take advantage of the dirt-cheap interest rate offered by brands like Toyota and make a smart financial move.

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