Yes, it is possible to finance a car that is 10 years old, but it will not be through a national bank. If the car is at a dealership, they will know this and try to convince you to use their in-house financing. Avoid it if you can! They interest rates are quite high, even if your credit is good.
In general, large lenders will not approve a loan for a vehicle that is more than seven years old or that has more than 100,000 miles. If you have a long term relationship with a small regional lender–either a bank or credit union–then you may be able to finance the vehicle through them. Even then, though, you may need to turn to alternative lenders to get the financing that you need.
Financing a Car That’s Classic…or Just Old?
If the car is simply ten years old, chances are it isn’t a classic. If you want to finance a classic or vintage car, there are specific lenders that specialize in this. A few of them include JJ Best, Woodside Credit, and Hagerty. Typically they will have one of their representatives actually inspect the car, and in some cases appraise it. The interesting aspect with financing such a car is that, unlike a regular car, a classic car typically appreciates in value. In fact, research firm Historical Automobile Group International found that, in the last 10 years, classic car investments outperformed gold. Their index includes a number of vehicles out of reach of average consumers, but most classics either hold their value or appreciate slightly over time. This means you can opt for extended financing terms without worries about negative equity.
Hemmings, one of the most respected names in classic car buying and selling, has a great article on classic car financing here. If you’re trying to figure out which of today’s production cars might one day be classics, check out our piece on modern collectibles.
Auto Loans for 10 Year Old Vehicles That Aren’t Classics
If you’re hoping to finance a vehicle that isn’t a classic, but is simply a decade or more old, then tracking down the right lender can be a bit more difficult. You can start your search at a local credit union. Credit unions are known to have looser lending guidelines than traditional banks. If you are still turned down, you should look online for a specialty lender. Many of these specialty lenders look at your current circumstances and are more willing to deal in non-traditional loans, like for a car that is 10 years old. There are a few things that you need to be prepared for, though. The first is that specialty financing is going to carry a higher interest rate. This is due to the higher risk associated with older cars. The second is that your repayment time will be shorter. Depending on the lender and your credit score, you will have between 18 and 30 months to repay the loan no matter the price of the car. This is also due to the risk of default associated with older cars.
The Buy Here Pay Here Option
Buy here pay here lots will typically finance vehicles this old, but only the cars they already have on the lot. If you already have your eye on a specific car, they won’t be of much help. What’s more, these “BHPH” dealers are really meant for people with grave credit problems. That means they charge very high interest rates, and the terms they offer are quite restrictive in terms of payment schedules, repossession policies, and the like.
You are better off sure shopping your loan around to several regular lenders. Your credit score may dip a little from the hard pulls of your credit report, but it is worth it to find the lowest APR and best repayment terms possible. If the car has a lot of miles, you want to see our article about buying cars with 200,000 miles or more.
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