If you are looking for a car and wondering whether to buy an old or a new model, a look at the conditions of car leases may help you make the decision. With the next Motor Expo coming up in late March, prospective buyers are likely looking forward to surveying car-financing promotions in hopes of getting the best loan terms.

However, this year people seeking extra-low car-loan rates may be disappointed as rising lending rates may prevent leasing companies from offering the same kind of rates they've been peddling the last few years.

For those determined to buy a car via financing, they should buy as soon as possible. Car loan interest rates are expected to increase by at least 0.1 or 0.2 percentage points in March.

Currently, interest rates for new car loans are a flat rate of 3.3 to 3.5 per cent depending on the lender.

The rate for used cars no more than five years old is normally 1 percentage point higher than for new cars.

On the whole financing conditions for new cars are better than for used cars.

Before signing a loan contract with a finance firm, there are many factors for car buyers to consider, including the down payment, interest rate charges, as well as the monthly loan instalments.

The age and model of the car also affect loan conditions. The down-payment rate is normally between 10 and 30 per cent of the car's price, depending on the model and year.

A budget of around Bt500,000 to Bt 600,000 will get you into a new small Japanese car, such as a Vios or a bigger used car from 2001 or 2002, such as an Altis.

A 10-per-cent down payment of new car's price is approximately around 20 per cent of the price of a similar used vehicle (depending on the year), while a down payment of 15 per cent of new car's price is around 25 per cent of the price of a similar used car.

Finance companies normally grant car loans to customers if their monthly salary is twice as high as the monthly instalment.

However, if the monthly instalment is too high for a borrower, he or she can reduce it by extending the loan period.

With a 15 per cent down payment - Bt90,000 - on a Bt600,000 car, a buyer will have to pay a monthly instalment of around Bt10,000 over 48 months. If that's too steep, they can extend the loan period to 60 months which will lower the monthly payment to Bt9,000.

Buyers of new cars are given a maximum instalment period of 72 months, while buyers of used cars are offered no more than 60 months.

Leasing firms usually set a credit line of around 80 to 85 per cent of a new car's price, which requires the buyer to come up with the rest in the form of a down payment. They usually offer lower credit lines for used cars.

Hence, despite the higher up-front cost of a new car, if you take into account higher interest rates and lower credit lines, a new car buyer may be able to qualify for lower monthly instalments than used car buyers purchasing similar cars and they may have to come up with lower down payments too.

The choice comes down to what size car you want to drive.

Worse loan terms, you get bigger car for your money if you buy used, but you also buy the former owner's headaches.

Somruedi Banchongduang

The Nation