If you’re considering buying an older car, you may want to explore your options for financing a used car with more than 100,000 miles on it. This can 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.
That’s not to say, however, that high-mileage financing is impossible. 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.
Finding a car loan that can be used to finance a used car with over 100K miles is not easy. Below, we highlight the drawbacks of high-mileage auto loans.
Key Points
• While obtaining a loan for a used car with over 100,000 miles is feasible, it can be more difficult.
• Lenders often have mileage caps, typically between 100,000 and 150,000 miles, and may be hesitant to finance vehicles exceeding these limits.
• Opting for a shorter-term loan may result in higher monthly payments but can reduce the total interest paid over the life of the loan.
• Before purchasing a high-mileage used car, it’s essential to conduct a comprehensive inspection. This includes test-driving the vehicle, checking for visible damages, and obtaining a CARFAX® report to review the car’s history.
• When financing a high-mileage car, it’s important to assess potential maintenance costs and the vehicle’s expected lifespan to ensure that the investment aligns with your financial goals.
Can You Finance a Car With Over 100K Miles?
If you’re looking for a car loan, financing a car with over 100K miles can be difficult, but not impossible. Some lenders may help you finance a car with more than 100,000 miles, but you’ll probably want to weigh your options carefully and understand the drawbacks.
Here are a few questions to ask yourself to determine whether financing a used car with over 100K miles is right for you:
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 the purchase with a loan, given what you’d pay in interest over the short term. Financially, you might be better off buying a newer car if you qualify for good interest rates on an auto loan.
How’s Your Credit?
If your credit isn’t great, you might be buying an older car because you think you won’t be able to qualify for a car loan for a newer vehicle. But borrowers with bad credit may qualify for new and used car loan financing, although bad credit may negatively impact the interest rate you get.
Borrowers with any credit score can qualify for auto loan financing. Comparing costs for cars of different ages and/or with different amounts of mileage can help you find the right car financing deal for you.
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 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. If your current car has a lien on it, you may consider auto loan refinancing for a lower monthly payment rather than buying a used car with over 100K miles on it.
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The Drawbacks of Financing a High-Mileage Vehicle
First, expect to pay more in car loan finance charges for a high-mileage used car 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. If you look for a vehicle that has the reputation of running well beyond 100,000 miles, though, 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.
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Shorter Loan Terms
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 may pay less in interest because the loan will generally be paid off faster compared with long-term auto loans. That, in the long run, may save you money.
Some lenders may penalize you if you pay your car loan off early. Whether you have a short-term or long-term loan, paying off your car loan in full gives you 100% equity in the vehicle.
Shorter loan terms can put you on a faster path to gaining 100% equity in the car you own. What happens when you make the final car loan payment? You become free and clear on your vehicle. You can either continue driving it with no car payment or sell your car 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.
You may 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.
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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 any possible rattles in the engine when you drive it or trouble accelerating on the highway, for example.
Car salespeople have the reputation of pushing you to buy 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.
Consider Refinancing Your Current Vehicle
As mentioned above, refinancing your current vehicle before purchasing a high-mileage car can be a smart financial move. If you can secure a lower interest rate or better loan terms on your existing vehicle, it may free up cash flow or help build your credit profile — both of which could help you afford repairs or maintenance on a car with over 100,000 miles.
Refinancing first can also give you a clearer picture of your overall financial standing before taking on the potential risks of an older vehicle.
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The Takeaway
Financing a used car with over 100,000 miles is possible. Some lenders may also refinance car loans for borrowers with high-mileage vehicles. Refinancing may provide borrowers with a lower interest rate or lower monthly payment.
If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.
FAQ
Can you finance a vehicle that has over 100K miles?
You may find lenders that are willing to finance a car with over 100K miles on it. Although some lenders may finance high-mileage vehicles, be aware that they may charge higher interest given the increased odds that it will have mechanical issues at this point in its life.
Should you buy a used car with over 100K miles?
If you plan to keep the vehicle for many years and know this model is one that typically runs smoothly far past 100K miles, then buying a used car with over 100K miles on it may be right for you.
How old can a car be if you want to finance it for 60 months?
It may depend on the lender. But typically, many won’t finance a car over 10 years old or with more than 100,000 miles, though there are some lenders who will. Credit unions and online lenders may be more likely to provide funding.
Photo credit: iStock/kate_sept2004
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