CAN YOU GET A HIGH-MILEAGE AUTO LOAN

Posted by Malini Somra on October 2nd, 2019

Your mileage is one major criteria that your lender will consider before agreeing to finance your auto loan. On the average, you can still get refinancing for a car with mileage of around 100,000 miles or more but anything above 120,000 miles might be crossing the threshold of what your lender may want to handle.

100,000 miles is a benchmark but with improvement in technology, cars of nowadays can now go well beyond 120,000 and even 200,000 miles. If you are in the market for a high-mileage car, then this is more like a good news for you.

Before you buy a high-mileage car, you need to put the following into consideration;

•              Consider How Long You Want to Keep the Car: If you want to keep the car for few years, then it is good to go for a short loan.
•              Avoid Negative Equity: Negative equity is also known as “upside down” on your loan. This happens when the amount you owe on the car is more than the current market value of the car. Hence, avoid buying a car that is likely to depreciate faster than the duration of your loan. In order to prevent this, go for shorter loans and make a sizeable down payment.
•              Bad Credit: If you have bad credit, then it is economical and good for you not to go for long term loans. People with poor credit that wish to buy a high-mileage car are advised to get a short term loan in order to offset the lending risk that may be associated with their condition.

It is possible to get a high-mileage auto loan but you have to be calculative on how to offset the tear and wear that may be associated with this kind of cars. As depreciation in value will set in, cost of repairs, maintenance, and services will also come into play and as a result of this, the way to go is to keep the loan term as short as possible so that you do not keep struggling to get positive equity on your loan.

The main thing to guard against when you buy a high mileage car is having a negative equity or going upside down. Hence, the way to go is to keep the loan term as short as possible so that you are done with paying the loan before the car starts to depreciate and you will need to be paying more on repairs and maintenance. This might not be the best for you.

If you go for a long term loan when you apply for a high-mileage loan, it might become difficult to achieve positive equity and you can easily go upside down. To avoid this, you can make a significant down payment so that you can keep the loan amount smaller, keep the loan term shorter, make the monthly payment affordable, and also keep interest rate as low as possible. This will help you to easily achieve positive equity when you apply for a High-mileage auto loan.

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