We’re no doubt preaching to the choir here, but there are lots of great reasons for buying an older used car.

If you’re nostalgic for the style of a past era, these vehicles will satisfy your thirst for vintage design. For example, there’s no denying the elegance of a classic Jaguar.

In some cases, older used cars offer performance benefits that are hard to duplicate in newer models. Case in point: With its high-revving, naturally aspirated V8 and sonorous engine note, the E39 generation BMW M5 delivers a driving experience that’s one of a kind.

Finally, buying an older used car may allow you to take a big step up when it comes to your choice of vehicle. Thanks to depreciation, older used cars are just a fraction of the cost of their new counterparts. Hardly anyone can afford a brand new Mercedes-Benz SL roadster, but one that’s 10 or 15 years old can be had for used Camry money.

While we do advise paying cash for a used car rather than financing it, we recognize that not everyone is in a position to do that. So if you are going to make your purchase with the help of an auto loan, it’s important to know that there are significant differences between financing a new vehicle and an older used car.

Because financing an older used car comes with a unique set of challenges, we’ve compiled this comprehensive guide to help you navigate the process from start to finish.

The Problem

The biggest problem you’ll face when seeking an auto loan for the purchase of an older used car is this: With many lenders, only vehicles that fall within certain age and mileage limits are eligible for financing.

When it comes to vehicle age, most traditional lenders won’t consider cars that are more than 10 years old. And as far as mileage goes, the typical lender won’t consider a vehicle that’s racked up more than 100,000 miles.

For example, at Bank of America, vehicles that are more than 10 years old aren’t eligible, nor are those with more than 125,000 miles on the odometer.

Finding the Right Lender

If the used car you want to buy is too old or has too many miles to qualify for an auto loan from a traditional lender, don’t panic. There are other choices to consider. Though their numbers are relatively limited, some lenders are happy to finance older vehicles.

Here are a few options to take a look at in your search.

Credit Unions

A credit union is a cooperative that uses pooled deposits to provide loans to its members. Credit unions are known for offering great interest rates. Many of these institutions offer lower interest rates than you’ll get at banks.

Credit unions are a great resource if you need to get an older vehicle financed. Compared to banks, many credit unions have looser restrictions regarding the vehicles that qualify for an auto loan.

Keep in mind, though, that you’ll need to become a member to qualify for a loan, and each credit union has specific membership requirements. Eligibility may be based on factors such as:

  • Where you work
  • Where you live
  • Your religious affiliations
  • Your profession
  • Your group affiliations
  • Whether you have a family member who is currently enrolled with the credit union

Service is a top priority at credit unions. These institutions take pride in going the extra mile for their members, and they may be willing to work with you to help you get the assistance you need. Check with your credit union — or with credit unions that you’re eligible to join — to see if financing is provided for older used cars.

LightStream

LightStream is an online lender that takes an unusually relaxed approach when it comes to eligibility for vehicle financing. This company doesn’t place any restrictions on the age or mileage of the vehicles that it will finance.

However, there’s a catch. While some online lenders do make accommodations for those with less-than-optimal credit, with LightStream, you’ll need good credit or better to qualify for a loan on a used car.

Wondering whether you have good credit? A credit score is one way of measuring creditworthiness. There are many scoring systems, and one of the most well-known is the FICO Score. This score usually ranges from a low of 300 to a high of 850.

According to Experian, a credit bureau, a FICO Score of 670 to 739 is considered good, and a score of 740 to 799 is considered very good. A score of 800 and above is considered exceptional.

Classic Car Loans

If you’ve got classic cars on your shopping list, you should know that some lenders specialize in financing them. Here are a few to consider:

Each of these lenders has its own guidelines when it comes to deciding whether a car qualifies as a “classic”. For example, at Woodside Credit, eligible vehicles are “collector cars at least 25 years old,” as well as “most late-model exotics (Ferrari, Lamborghini, Maserati, Bentley, Rolls-Royce, Aston Martin, etc.) and specialty vehicles such as any model year Corvette or Porsche with the exception of the Boxster or Cayenne.”

Get in touch with these lenders to see if the vehicle you’re considering meets their definition of a classic car.

One caveat: Classic-car lenders usually require proof of insurance before making the loan arrangements final, and since some classic cars don’t meet modern safety requirements, this can make them more difficult to insure.

Fortunately, there are insurers out there that provide specialized coverage for classics. You can get classic-car coverage from the following insurers:

You’ll need to get this coverage in place before entering into the final stages of your auto loan.

Personal Loans

Another option to consider when financing an older used car is a personal loan. Generally speaking, personal loans have fewer upfront requirements and can be easier to obtain than other types of loans.

However, there are a few downsides. For instance, a personal loan may have a higher interest rate than a comparable auto loan. Also, unlike most auto loans, some personal loans penalize you for paying off the loan ahead of schedule.

For these reasons, it’s important to examine the terms of any personal loan carefully before signing.

Also, while many lenders place a limit on the size of personal loans — for example, at Lending Tree, the most you can borrow is $40,000 — some do provide larger loans. For example, SoFi offers personal loans of up to $100,000.

Bottom Line

Getting an older used car financed differs from getting a loan on a new car or a certified pre-owned vehicle. But the process doesn’t have to be onerous. You just have to know where to look to get the help you need.

Whether it’s a credit union or a lender that specializes in classic car financing, there are some excellent solutions available if you’re looking to get an auto loan for purchasing an older used vehicle.

And, as always, before making a final decision, be sure to check in with the Klipnik community to see if the knowledgeable members there have any valuable insight to share on the models you’re considering.

Start the discussion at community.klipnik.com

About Warren Clarke

Warren Clarke is a writer and editor whose work has been published in outlets such as the New York Daily News and Edmunds.com. He enjoys providing car owners with information that can help enhance and simplify their lives.

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Car Buying Tips

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