Typically, a bank won’t finance any vehicle older than 10 years, even if you have good credit. If you don’t have great credit, you may find it difficult to finance through a bank, even for a new car. But, banks are far from the last option when it comes to auto lending.
Other Sources of Direct Lending
Banks are a type of direct lender. This means you can go in and sit face-to-face with them to see what they can offer you. If you get financing from a direct lender, they usually cut you a check to take to the dealership, or give you a maximum limit and pay the dealer directly.
However, banks like to reserve their loans for customers with good credit, making it more difficult for someone with less than perfect credit to go in and get approved. There’s another option for direct lending, though: credit unions. But, do credit unions have a maximum age on vehicles they finance like banks?
The answer to this is a resounding maybe. Because all credit and lending situations vary, it depends. A lot of information seems to indicate that a borrower may have better luck financing a 10-plus-year-old car with a credit union.
The key to getting lending for an older vehicle from a credit union is that the car must be at book value or below, including taxes and fees. If it’s not, the borrower is responsible for paying the difference out of pocket.
Also, their credit score typically needs to be good – around 670 or higher – to do so. Unfortunately, if you’re struggling with credit issues, your chances are slim – not only for financing an older used vehicle but for getting a direct loan in general.
However, credit unions do typically offer borrowers an easier time in getting approved for loans (even on older cars), especially if they’re a member in good standing. The downside is that the borrower does have to be a member of the credit union.
Fortunately, credit union membership is easier to qualify for today than in the past. Credit union membership used to rely on something like your job or fraternal, religious, or organizational affiliation, and many still do. These days, though, some credit unions allow membership based on less strict guidelines, like where you live or work.
Car Loan Options for Older Vehicles
When you finance indirectly through a dealership, the standards for purchasing a used vehicle typically top out at 10 years. That’s not the only restriction, however. In general, used car financing restrictions include:
- Vehicles must be newer than 10 years old
- Cars must have less than 100,000 miles
- The amount to finance must be at least $5,000
These are just general guidelines, of course, and the specific age, mileage, and minimum financing amount are set by the dealer you choose and the lenders they're signed up with.
If you’ve found a specific older car being sold privately and you have bad credit, your only option may be to purchase the vehicle with cash, as financing may not be available. But, if you’re set on getting an older model car, a buy here pay here (BHPH) dealership may be the way to go.
BHPH dealers are a type of in-house financing dealership, which means they don't rely on outside sources for financing. They do the financing themselves, and, as a result, many of these places tend to not run credit checks. BHPH dealerships also usually carry older used vehicles, so your options are likely to be more varied than they'd be at a traditional dealer.
At one of these dealerships, your income is typically the most important factor in qualifying. As long as you can prove your income, provide a down payment, and keep up with a weekly, bi-weekly, or monthly payment schedule, you can usually drive away the same day.
Newer Cars May Save You Money
If you’re specifically looking to finance an older used car because you think it’s the cheaper option … well, you may be in for a surprise. Used vehicles typically cost more to finance than new cars.
This is because older vehicles are financed by borrowers with lower credit scores, have lower resale values, have more mechanical issues, have higher repossession rates, and carry higher interest rates due to increased lender risk.
New cars, on the other hand, are generally purchased by borrowers with higher credit scores, have higher resale values, and have much lower repossession rates. These factors lower the risk to lenders, and new car loans have lower interest rates as a result, which saves you money in the long run.
We Can Help With Dealer Options
If you’re not sure where to turn to finance a vehicle, no matter its age or your credit situation, CarsDirect wants to help. Our new car pages and used car pages can help you research vehicle options, and when you’re ready to find a dealership with financing options, we can point you in the right direction.
We work with an extensive network of dealerships all across the country that have the lending resources available to help people in many credit situations. Simply fill out our easy online auto loan request form, and we’ll get to work matching you with a local dealer!