Auto Financing for Older Cars

lower collateral value and higher default rate.

depending on the car, try a credit union, or if its a classic Hagerty, Woodside, JJ Best, Putnam Leasing.

 

In the past I've used Woodside without any problems. The last car I bought was through my credit union, no problems as well.

 

Its funny because you would think they'd realize the depreciation curve is in their favor so the buyer would be less likely to be upside down and default after a couple years. They woould more likely be in a position where they could sell it instead.

 

They probably simply don't distinguish between a car guy buying a nice 6 year old car and your more typical buyer of a car that age that is buying a beater used car.

I would bet the typical person buying an old beater would have a poorer credit history so they figure just eliminate the whole thing.

 

Yep, try a credit union...

 

If it is at a dealer, Capital One finances up to 7 years old...

1. What are your basic auto financing requirements?

Basic requirements to qualify for our Blank Check program include the following:
Minimum loan amount is $7,500.
Vehicle you are financing must be no older than 7 years and have less than 70,000 miles.

 

It seems the sweet spot for a cash buyer would be 8-10 years old. The car would still be "new enough" not have major body corrosion and usually have less mileage than one older. Yet any dealer stuck with a 2003 model knows that they cannot get financing for anyone regardless of credit history. Obviously the exotics might be a different story as you can get leases or financing for them. It is the non-exotic nice cars that suffer the most in this.

It does seem to make sense as you look at older nice cars still worth $20-40k (think V12 Mercs, Maseratis, Jaguar "R" models, etc), they seem to take a pretty good hit at 7 years. Most are realistically 25% or less of original MSRP at 7 years old regardless of mileage. By default most are sold to cash buyers, and most who have have $40k cash sitting around would just buy a bit nicer one that is two years old and $70k, financing the remainder.

Kind of a Catch-22 when it comes to selling an older car.

There are several cars made in the mid-2000's that will be prime candidates for a cash buyer at 8 years old to get good value. Such as:
2005 Lotus Elise (this car will be in the teens in 2013)
2007 Maserati Quattroporte Automatica
2007 Jaguar XKR
2006 Porsche Cayman S

 

Mine as well...........

Up here if you want to get paper bought on an older car you had better have "gold balls" and a solid down payment, as well as your own financing contacts in most cases. My F+I department can only finance 2006 + newer vehicles (and about 20% of those applications get multiple declines and the deals fall apart).......of my 125 used pieces in inventory, only about 10% are older than 2006. If you can write the cheque for $20K to buy an older car, you can also get bought on a new one with $5K down...........so most people who have the means don't usually buy older stuff. That's how the banks look at it.

I have a couple of leasing companies that will do older European and/or collectible type of exotic cars, but my client base accessing these services doesn't need to borrow the money, they just want to because it makes financial sense, if you get my drift. It's more of a pure personal based credit decision, than an asset/security based credit decision.

The basic formula goes like this.....want to lease a 1980 512BB you plan on acquiring for $100K....no problem.......your FICO is 700+.....you have $30-35K cash down, we depreciate the cap cost ($70K +/-) by 1.5% a month over 36 months and you pay 7.95%.........if you're earning a 20% ROI on your money in your own company, why draw it out and pay tax, then lose the ROI as well ? Lease it........we used to be able to get anyone financed on older cars 3 years ago, but that has now stopped.

 

Thats a cool chart

 

Drive Financial will also finance cars older than 7 years. They have really high rates though.

 

I know somebody who will make loans for older/newer cars etc. as long as you have investments 2x worth the loan amount with lower than market value interest rates... shoot me a PM and I'll give you their info.

 

So how do people finance older Ferraris? I'm sure I have seen ads offering such a thing.

 

The local credit union I deal with is writing my new 2004 cs. They normally max at 7 years, allowed me 8 based on relationship. They said they would go 9 but with a much lower LTV and at a bit over 3%, I'm going to finance it all and keep cash earning more than that in other investments.

 

JJ's best bank will finance anything with a set of wheels. Id try them. If not you'd better start investing.