If you are in the market for a used car with a lot of miles on it, finding a good loan can be tricky. Many banks and credit unions do not like to loan money to people interested in older cars with many miles on them, because they represent a higher risk for the company. That’s because cars with over 100,000 miles are more likely to have serious mechanical issues, and the surprise cost associated with such issues can overtax a person’s budget, leading to default, simply meaning the buyer does not pay their loan off. Not only does this damage the borrower’s credit, it means a lot of money lost for the lending institution itself.
While it is still possible to get an auto loan for a high mileage vehicle, the interest rates are usually higher than average and the terms are normally capped at four to five years, instead of seven to eight years on newer cars. This helps to counterbalance the risk of financing an older vehicle, and it makes it very important to research the car models you are interested in very carefully. You want to be sure that you are getting a vehicle with a sound reputation for surviving up to 200,000 miles of real-world use. The last thing you want is to to finance a car for 60 months, only to have it “conk out” after only three years.
What are the Mileage Limits?
Mileage limits on used vehicles vary from one lender to another. However, the vast majority of major banks have a cap of 70-75,000 miles. They simply will not approve you for a vehicle that has more miles than this. A few banks and credit unions are extending their caps to 100,000 miles, as they understand that vehicles last longer these days than they ever have before, but such high caps are relatively rare. For cars with more miles, you will probably need to contact a vehicle specialist and discuss your options.
Private party purchases are not supported. If you would like to finance a vehicle from a private party, your only option is typically a bank or credit union. If your credit isn’t good, this could be difficult. A dealer-purchased vehicle may be your only real option.
Get the Most for Your Money
Since you are looking at higher mileage cars, you probably are trying to get the most car possible for the amount of money you have. Do some research on models you are interested in to find out how many miles they typically last. Some cars last well over 200,000 miles, while others start to have problems before they’ve even accrued 100,000 miles. Of course, this is particularly important if you will be getting a loan for the car. For example, if you bought a car with 95,000 miles that normally has trouble before 100,000 miles, the lender is going see this as a very high risk lending scenario. You could potentially be left with a broken down car that is worth nothing, yet you still would have to pay the monthly payments from the loans. Lenders are not in the habit of forgiving your remaining loan balance, even if your car has gone kaput.
Other Tips Before You Buy
Make sure to test drive any car before you become serious about buying it. During the test drive, make sure everything about the car works as it should. Remember that most higher mileage cars do not typically come with any sort of warranty, even if the car is purchased from a car dealership. This makes it extremely important to go over the car with a fine tooth comb before signing on the dotted line. Also, make sure to consult the Kelley Blue Book value of the car you are interested in to make sure you are paying a fair market value for it.