Financing a Used Car

2 BIG questions:

1. How old is the car?!

If you are buying a used car from a dealer then, for raising finance, pretty much the same rules apply as when financing a new car. However, much depends on the age and model of the car you are buying.

New or nearly new cars are easy to finance because the lender has a good idea of its value. The older it gets, the less certainty the lender has because the condition of the car has a huge impact on it’s value - and they want to be sure that, even if you fail on the payments, they will get their money back by selling it.

So... some examples:

A one year old, low mileage car purchased from a main dealer will attract lenders because its value is easy to establish.

A ten year old, high mileage car worth less than a thousand pounds will be almost impossible to finance because it may quickly become worthless - unless, that is, you can get a personal loan (say from a bank) not attached to the vehicle.

But this may not apply to all ten year old cars. A Ferrari, for example, would be an exception - if you can afford it!

But the general rule is, the older the car, the harder it gets - particularly beyond 5 to 7 years.

2. Who are you buying from?!

Buying from a dealer will make the question of finance simpler, particularly if you wish to part exchange an older car as a deposit. But, of course, the dealer is more expensive than a private seller.

Buying from a private seller tends to restrict you to personal loan (say, from your bank) which, in the seller’s eyes, makes you a cash buyer.

Click on the following box which you think applies most to you, or click on the borrowing method you prefer.

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