Can I Refinance an Old Car?
Refinancing a car loan can be an effective way to alleviate cashflow problems in your monthly budget. You can experience a variety of financial benefits, including lower monthly payments and a lower interest rate. Not only can this infuse additional money into your budget each month, but it can potentially save you a lot of money over the lifetime of your car loan.
If you have an older car, you can still refinance it, but the process may not be as simple as when you refinance a newer vehicle. Many lenders will offer auto refinancing for older cars, but there are often specific requirements that must be met which don’t exist when you refinance a newer car. This is due to the fact that lenders take on a certain amount of risk anytime they offer financing, and older cars are depreciating assets that typically don’t hold their value well. This increases the risk for lenders in the event that you’re unable to make your payments.
Factors Impacting Your Ability to Refinance an Old Car
Lenders will generally consider the following factors when determining whether to offer refinancing for an old car:
- Credit score – In general, the higher your credit score, the more likely you are to qualify for refinancing when you have an older vehicle.
- Age of the vehicle – Older cars pose a greater risk to lenders since they are more likely to have a lower resale value. In general, lenders often won’t offer refinancing to vehicles over 10 years old.
- Vehicle mileage – Vehicles with higher mileage are viewed as riskier by lenders since they are more likely to have mechanical issues which require expensive repairs. This not only makes it more challenging to make your monthly payments, but it also lowers the value of the vehicle. In general, most lenders set mileage limits between 100,000 and 150,000 miles.
- Negative equity – Negative equity occurs when you owe more money than the vehicle is worth. Refinancing a car is always challenging when you have negative equity, but this is especially true when the vehicle is older.
Can I Refinance Classic Cars?
Classic cars are a unique type of older vehicle, as they are often valued by owners as a collector’s item. It’s often possible to refinance a classic car, but as with other older vehicles, it may be more challenging than refinancing a newer car.
While classic cars may hold value to some people, they are still considered a depreciating asset due to their age. This may make it more challenging to get the best possible rates when refinancing a classic car.
Determine the Value of Your Older Car Before Refinancing
It’s important to research the value of your car before trying to refinance an older vehicle. This information will help you to better gauge your chances of getting approved for refinancing and the types of interest rates you can expect. Understanding these details will help you determine whether it’s worth trying to refinance your older car.
There are several factors which will impact the value of your older car:
- Vehicle age – Since cars are depreciating assets, your car will generally lose value each year and the older it is, the less value it will hold. There are certain exceptions to this, such as when you own certain classic cars that have held their value or even appreciated in value due to their desirability.
- Vehicle mileage – In general, the more miles on your vehicle, the less it will be worth.
- Vehicle make and model – Certain types of vehicles hold their value better than others, such as when a model is in high demand.
- Vehicle condition – The condition of your car plays a significant role in its value. In general, well-maintained vehicles that are in good condition will be worth more than the same car of the same year that is in worse condition.
- Features and options – Vehicles with more luxury features and options will typically be worth more than the basic models of the same car.
- Rarity – If you own a rare or limited addition vehicle, it may increase the value of the car.
- Accidents and damage – A car with an accident history, especially one that has sustained significant damage, will typically be worth less than a car that has been well maintained and hasn’t been involved in an accident.
You can get a general sense of your vehicle’s value by using online tools such as Kelley Blue Book, Edmunds or NADA. Keep in mind that his will be a ballpark estimate. The factors discussed above will determine whether the actual value is slightly higher or lower than the estimate provided by these online tools.
iLending Can Help You Refinance Your Older Car
If you’re looking to refinance your older car, iLending can help. You’ll benefit from our exclusive You First Approach™ which makes car loan refinance easy and hassle free.
The core component of our You First Approach™ involves giving you the customized service necessary to get the best possible refinance terms. To accomplish this, you’ll work with a loan consultant who will talk to you about your goals for refinancing. Based on this information, your loan consultant will compare loans from our network of over 50 nationwide lenders to identify the best solutions that address your specific goals. Your loan consultant will discuss these options with you and answer any questions you may have before recommending the right loan for your needs.
After you’ve decided on a loan, our team will take care of everything for you. We’ll fill out all paperwork and follow up with your existing lender to ensure your current loan is paid off properly. This approach provides a smooth process every step of the way, allowing you to enjoy a hassle-free car loan refinance experience.
On average, customers save $133/month when they refinance a car with iLending. This money can make a huge impact on your life, helping you pay down other debts, make improvements to your home, save for a big purchase, take a needed vacation, or simply make it easier to pay your bills each month.
Apply now to get the car loan refinance process started.
What would you do with an extra $148* in your pocket?
