Imagine that you finally found your perfect used car and it's exactly what you have been eyeing for months. It fits your lifestyle and the price tag fits comfortably into your budget. There's just one problem. The car is 9 years old and you've heard that older cars are more difficult to finance compared to used cars that are just a couple years old. If you're not able to cover the full price of the vehicle in cash, do you need to pass on the great deal you found in favor of something newer? Not necessarily. Although it can take a little more legwork, there are financial institutions that can help.

How Old is Too Old?

Used car lot
A used car lot can be a goldmine of deals, especially on older vehicles.

The good news about buying an older used car is that vehicles are being built to last longer than ever. The average used car on the road today is around 12 years old, according to Kelly Blue Book. The fastest growing segment in the "old cars" category is a whopping 16+ years. This category is expected to grow 30% by 2021. These encouraging statistics prove that when you buy a used car today, there's a good chance you'll get many more miles out of it, even if it's on the older side. You'll also save thousands compared to buying a new car or a used car that's a couple years old and just coming off a lease. 

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The challenges of buying an older car start creeping in when you move forward with applying for a car loan to finance the gently worn vehicle. Traditional financial institutions like national banks will typically not approve loans for vehicles older than 7 years since they don't see the vehicle as sufficient collateral. Some national banks will approve these cars on a case-by-case basis depending on the borrower's credit history and income. Consulting a local bank, credit union or third-party lending company will improve your odds of finding a loan for your used car

High Mileage Cars

Car odometer
The number on the odometer can matter as much as the car's age.

Another roadblock you might run into when financing a car that's getting up there in years is the number of miles on the odometer. If the car in question surpasses 100,000 miles, you'll likely encounter challenges getting a loan, especially if you're looking for a longer term loan. This doesn't mean you need to immediately rule out any car with an odometer reading that climbs north of 100,000. There are some lenders that will finance vehicles that top out at 150,000 miles. Anything above that number will likely cause you more of a headache than it's worth. 

Classic, Vintage and Exotic Cars

classic car sunset
Don't let the sun set on your classic car dream just yet.

What if the car you've set your sights on is more than just one decade old? Owning a classic, vintage or exotic car is one dream most enthusiasts share. These vehicles are also much more expensive than the typical older used car. Securing a loan for a classic car will pose its own unique challenges because most banks and credit unions don't have a strong knowledge of the classic car market. This means that they aren't able to properly assess the value of that hot rod you're itching to buy.

If you have no luck with your bank or a credit union, your next course of action will be finding a specialty lender that focuses on classic cars and will understand the true value of your purchase. Other than having to dig a little deeper to find the lender, the process of securing a classic car loan is otherwise similar to financing a regular used car. The lender runs your credit to determine your interest rate and asks for at least a 10% down payment. The biggest difference in financing a classic car is that the loan terms often stretch out to as long as 10 years as opposed to 5-7 for a regular vehicle. 

Get Financing for an Older Used Car

man in car holding keys
A credit union or 3rd party lending company may be your key to getting the car.

If you've tried financing an older or high mileage car at a national bank's local branch and were denied, there are alternative options to try. While many large banks have strict restrictions on the types of vehicles they will finance, local banks and private lenders are typically more flexible. 

Third party lending companies that are more accepting of all credit histories and lower incomes will likely be more flexible in offering loans for older or high mileage vehicles. Credit unions are another solution that can help you purchase your used car. Many credit unions are not-for-profit CDFIs (Community Development Financial Institutions) and will assist car buyers that have bad credit or low incomes and are in need of a vehicle. 

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