Impact of Aging Vehicles on Car Financing

Image by GettyImages; Illustration by Bankrate

“I would never purchase a new car unless I won the lottery,” confesses Bankrate editor Natasha Cornelius, who owns a 2011 Jeep Patriot. Her car has been paid off since 2016, and her insurance only comes out to be around $53 after discounts. 

Like her, many Americans are holding on to their vehicles longer than ever. The average age of passenger cars on U.S. roads is projected to reach 14.1 years in 2025, according to research by Hedges & Company.

What does this mean for drivers, especially those who are looking into financing a car today? Whether you’re thinking about keeping your old car or buying a used one, aging vehicles affect loan eligibility, interest rates and insurance costs — and can even change how long you’ll be allowed to borrow.

Cars are aging on U.S. roads 

The average vehicle on American roads is older than ever, and several key trends are driving this shift. 

• New cars are increasingly expensive
  

  The average new car price came out to be $48,799 in May 2025, according to Kelley Blue Book data. Even if the timing is right for a new car, it can cost a lot of money that most people don’t have in savings. And without a steady income or good credit, it can be nearly impossible to qualify for such a large loan amount.

• Reliability has improved
  

  With advancements in the auto industry, owners feel more comfortable keeping vehicles far past 10 years. This hasn’t changed lenders’ perspectives, however, and many will only finance vehicles less than 10 years old.

• Supply chain disruptions
  

  A car is made up of around 30,000 parts — all sourced from different places around the world. Lingering effects from the pandemic, including shortages and production delays, have reduced new car inventory in recent years. This has pushed more drivers to extend the life of their current vehicles.

• Lifestyle changes
  

  With COVID-19, some industries saw as much as a 40 percent increase in remote work, and remote work means fewer commutes. Drivers are putting fewer miles on their cars and, with less wear and tear, many see little reason to replace their vehicles as frequently as before.

Why vehicle age matters for auto loans 

While older vehicles are becoming more common, financing them isn’t always easy. Age and mileage restrictions, higher interest rates and shorter loan terms can all make it harder, and more expensive, to borrow.

1. Age limits on underwriting

Vehicle prices remain high, and older cars are starting to make up a larger share of the market. Without financing, purchasing a reliable used vehicle becomes much harder. For many drivers, it can also mean delaying replacement or relying on cash purchases.  

Many lenders set strict age or mileage cutoffs for vehicle loans, often capping eligibility at 10 years old or 125,000 miles. If the car exceeds these limits, you may struggle to qualify for financing at all. Even when used auto loans are approved, lenders may shorten the term length or increase other restrictions to mitigate risk, adding to your costs as a borrower.

2. Loan rates skew higher

Used vehicles, especially older models, are considered riskier collateral by lenders. The older the car, the more expensive the loan can become in terms of annual percentage rate (APR). As a result, buyers financing these cars often face higher interest rates compared to new or low-mileage vehicles. 

For borrowers with less-than-perfect credit, this risk is compounded. High rates can significantly increase monthly payments or the overall cost of the loan, making affordability a challenge even on older, seemingly budget-friendly cars. 

3. Shorter repayment periods

Lenders typically limit loan terms for older vehicles, with maximum repayment periods shrinking to 36 or 48 months. That means even if you finance a car at a manageable price, the condensed loan timeline can result in much higher monthly payments compared to financing a new vehicle over 60 to 72 months. 

Shorter repayment windows can strain household budgets, particularly for buyers already stretching to afford a replacement car. Understanding these term limits upfront can help you prepare for the real cost of financing and avoid payment shock. You can also use an auto loan calculator to estimate how much your monthly payment will be based on the loan terms offered to you.

How to finance an older vehicle smartly

Even if you plan on shopping for a used car, the lasting impacts of the COVID-19 pandemic and new tariffs have made prices surge. There simply aren’t as many vehicles available as there is demand, which makes it more difficult to find the right car.

If you’re in the market for a high-mileage or older used car, these strategies can help:

• Get preapproved before shopping: Being preapproved for an auto loan allows you to shop like a cash buyer.
• Shop multiple lenders: Know your lender’s max car age limits before buying a vehicle, and use credit unions or online lending platforms in addition to dealerships.
• Consider a personal loan: If auto lenders are unwilling to finance an older car, consider taking out an unsecured personal loan instead.
• Keep the loan term short: Older cars depreciate quickly, so it’s best to stick with shorter loan terms of 60 months or less so you avoid becoming upside down on your loan.
• Invest in inspections and car condition reports: Being thorough and getting a used car inspection may help you make a case with lenders and negotiate prices.

Why some drivers are sticking with older cars 

Buying a new car is fun, but the most financially savvy tactic may be simply sticking with the car you already own — and managing your auto loan well. Many consumers are intentionally avoiding new car purchases — and their reasons go beyond just cost. Here’s what Bankrate staff and contributors had to say about keeping their older vehicles.

“The car was paid off 18 years ago… insurance is cheap”

Benét Wilson, lead writer for the Credit Cards Team at Bankrate, drives a 2006 Honda Accord she inherited in 2022. She sees no reason to switch when her car is paid off and insurance is cheap.

“The car was paid off 18 years ago! My insurance is cheap because I only have liability on it.” And despite its older features, Wilson doesn’t feel like she’s missing out.

“My car has a CD player in it. I bought a Bluetooth converter on Amazon that uses my radio frequency so [I] use my iPhone for podcasts, music and calls. I have a phone holder so I can use Apple Maps. I learned how to drive a car before rearview cameras were a thing, so I don’t miss that. The car also has a cigarette lighter adapter I can use to keep my phone charged, so I’m good.”

Benét Wilson, Writer

“I’m likely to keep driving it until the wheels fall off”

Pippin Wilbers, editor for the Loans Team at Bankrate, owns a 2004 Honda Odyssey that’s been in his family since 2006.

“I’ve been fairly lucky with the car in that, aside from an oil leak, it hasn’t had any expensive, serious issues. However, it’s certainly developed quirks over time — for example, the motors in the power windows gave out, so my wife rigged up a pulley that lets me lower and raise the driver’s side window. She also had to disconnect the interior lights and radio so they’d stop draining the battery.”

Wilbers continues to weigh the pros and cons of getting a new vehicle, and whether it’s worth an added expense.

“My wife and I have been saying “We should probably replace the Odyssey soon” for the last five years or so. A couple factors have kept us from biting the bullet. One is that I mostly just use it for errands when my wife’s using the other, newer car, and it works just fine for that.”

Pippin Wilbers, Editor

“I’m very close to trading in”

David Swann, an analyst at Bankrate, drives a Chevrolet Tahoe Z71 from 2011. For Swann, a trade-in might be worth it considering the repair costs on his current vehicle.

“Recently [the vehicle] has become very troublesome — I had to fix a coolant and AC leaking issue that cost me a bit over $1,300. I only expect it to get worse. Last year something similar happened when the engine mount broke and then cost upwards of $500.”

For Swann, the biggest obstacle against buying a new car comes down to cost.

“I’m very close to trading in — I very much agree with the unaffordable sentiment around the car market (my wife and I are expecting in September), and I have been looking for a reliable midsize to large SUV for us to replace mine. Everything just feels too expensive.”

Bottom line

With record-high car prices, tighter lending standards and better vehicle durability, it’s no surprise that Americans are keeping their cars longer — or choosing to buy older ones. 

While it can be harder to finance an aging vehicle, it’s not impossible. Know your lender’s restrictions, shop around and consider alternatives like personal loans or buying in cash. And if your current car still runs reliably and doesn’t cost a fortune to maintain, holding onto it might be the smartest financial move you make this year, especially if you choose to refinance your current auto loan at a lower rate.