If you’re thinking about buying an older car, you may want to explore your options for financing a used car with over 100,000 miles on it. This can often be a challenge, since many lenders may not be willing to finance an older car, given the increased odds that it will have mechanical issues at this point in its life. That’s not to say, however, that high mileage refinancing is impossible. But it may come with higher interest than you would pay for a vehicle with fewer miles on it. And you may need to shop around to find a lender that doesn’t have mileage restrictions on auto loans.
Can you finance a car with over 100K miles?
Financing a used car with over 100,000 miles can absolutely be possible, but you’ll probably want to weigh your options carefully and understand the drawbacks, which we will discuss in the next section. Here are a few questions to ask yourself to determine whether financing a used car with over 100k miles is your best move.
1. How long do you plan to keep the car?
If you plan on having the car for only a few years, it might not be worth it to finance it, given what you’d pay in interest over the short term. Financially, you might be better off buying a newer car that has a lower interest rate and lower monthly payments.
2. How’s your credit?
If your credit isn’t great, you might be buying an older car because you don’t think you can qualify for a car loan for a newer vehicle. However, bad credit will also negatively impact the interest rate you get for an older vehicle. It’s worthwhile to compare costs for cars of different ages and/or with different amounts of mileage.
3. Is financing your only option?
If you currently have a car, especially one that’s worth more than the car you want to buy, you could look not only at financing but also at the merits of refinancing vs. trading in your current car. You could finance the “new” car with the high mileage. Or if you’re just looking to pay less each month, you could refinance your current vehicle. Or you could trade in your current car to buy the car you want. Ideally, that would leave you with little to no balance owed after the trade-in.
The difficulties of financing a high-mileage vehicle
Now let’s talk about those drawbacks to buying a car with 100,000 miles. First, expect that you may pay more in interest than you would for a newer car. Lenders have to mitigate their risk, and loaning money for a car that might fall apart in a few years is risky. But if you look for a vehicle that has the reputation of running well far beyond 100,000 miles, you may have a better chance of getting approved for financing.
Understand, too, that you may run the risk of this being an upside-down car loan. That is, you may take out a loan now to buy an older car, and then that car may rapidly lose its value, putting you in a situation where you owe more than the car is worth.
If you’re looking for ways to reduce what you’ll pay over the life of the loan when financing a used car with more than 100,000 miles, consider looking for a shorter-term loan. Yes, you will pay more each month, but you’ll pay less in interest because the loan will be paid off faster. That, in the long run, may save you money. You’ll also pay your loan off sooner, which means you’ll be free and clear on your vehicle. You can either continue driving it with no car payment or sell it for something else.
Research to find car models that typically last a long time
These days, many cars last far beyond that 100,000-mile benchmark, though some will last longer than others. Before buying an older car, do your homework to find a make and model that has a good reputation for withstanding time and miles. Also, research what it will cost to replace or repair parts that commonly fail after 100,000 miles. Replacing a transmission on a high-end luxury car will likely cost more than doing the same on a budget sedan, so make sure you’re factoring in all the costs you’ll have, not just your loan payments.
Test drive the car before buying
It might seem silly to recommend that you test drive before buying a car with over 100,000 miles. But in this day and age, it’s easy to order a car online and make the purchase without ever having touched the vehicle. While this can be convenient, it won’t alert you to rattles in the engine when you drive it or trouble accelerating on the highway, for example. Car salespeople are sometimes reputed to push you into buying a car before you’ve had time to really get to know the vehicle.
Here are some steps you should take while you’re contemplating your purchase of a car with more than 100,000 miles.
- Don’t allow anyone to rush you.
- Test drive the vehicle.
- Do your own full inspection to look for scratches and dings.
- Take it to a reputable third-party mechanic to give it a once-over.
- Carefully review its CARFAX report.
Take all these steps whether you buy the car from a car dealership or a third party. If you’re going to pay extra in interest for this vehicle, you want to be pretty certain it’s going to go the distance for you.
Take your time finding the best lender for financing a used car with over 100,000 miles, and don’t be shy about comparing rates. Remember: your bank or credit union may not offer you the best deal.
Lantern by SoFi:
This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)
All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.
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All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.
Student Loan Refinance:
Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).
Notice: Recent legislative changes have
suspended all federal student loan payments and waived interest charges on federally held loans until 09/30/21. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.
Auto Loan Refinance:
Automobile refinancing loan information presented on this Lantern website is from MotoRefi. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.
Secured Lending Disclosure:
Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.
Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC.