What to Know About Financing a High-Mileage Used Car?
08 May, 2025
Synopsis
If you are looking to finance a high mileage used car, you may have to make some special considerations as lenders may pose restrictions due to high-risk of such cars.
High-mileage used cars incur higher loan cost and affect your eligibility as they involve higher maintenance, depreciate quickly, result in low loan-to-value ratio, etc.
You can boost your profile while applying for a High-Mileage Used Car Loan by negotiating with the lender, seeking a certified seller, and boosting your eligibility.
As a budget-conscious buyer, a used car is an economical choice. Getting the car financed further reduces the financial burden. While comparing models, among the various components, you might consider mileage. Generally, a high-mileage car is a good deal to get more with limited fuel usage. However, financing a high-mileage used car requires understanding certain nuances that differ from typical Car Loans. Discover everything you need to know about High-Mileage Used Car Loans in this guide.
How is Financing a High-Mileage Used Car Different?
High-mileage cars cover longer distances on lower fuel consumption but may incur potential maintenance issues over time. Hence, the risk interest of lenders is triggered. Here's what works differently with financing a car with high mileage:
Higher Depreciation
High-mileage cars generally go through rapid depreciation compared to other cars. They are more prone to wear and tear, which increases the perceived risk of recovering the loan amount for lenders.Cost of Maintenance
As you manage the cost of fixing the mechanical issues and other maintenance costs incurred on high-mileage cars, your ability to repay the High-Mileage Used Car Loan amount is compromised.Lower Loan-to-Value
As there is an increased risk with high-mileage used cars, lenders may offer a lower loan-to-value ratio. This means, they may finance a lower percentage of the buying price. As a result, you are required to make a larger down payment.Typical Mileage Limits
Many lenders impose restrictions on the type of car they can finance. They also determine your eligibility for the loan amount and interest rate based on the car's model, make, and value. A car exceeding the mileage threshold and age criteria may not qualify.Increased Interest Rates
In case your High Mileage Car Finance application is approved, you may incur a higher interest rate. Lenders do this to offset the risks associated with the maintenance of a high-mileage car.
Tips to Get an Affordable High Mileage Used Car Loan
If you want to secure favourable terms while seeking High-Mileage Car Finance, consider these practical tips:
Negotiate the Purchase Price
When you buy the car, get the best value for it to reduce the borrowable amount. Negotiate with the seller based on its condition, depreciation, and other factors.Improve Your Credit Score
A higher credit score can help you gain the trust of the lender and boost your loan application. Hence, check your credit history and fix any discrepancies before applying.Evaluate the Total Cost
Consider all expenses, including the interest rate, insurance and maintenance and check how you fare with your financial situation to plan your loan application practically.Boost Your Income Sources
If you feel like your current income is low enough to manage the potential EMIs for the loan, create new income sources through investments and ventures to boost your eligibility and offset the risk of the High Mileage Car Finance.Opt for Certified Pre-Owners
Check everything you need to about the car's condition to ensure it is in good condition to sustain long-term use. Buy from certified pre-owners who can help you with the assessment with quality assurances and warranties to build the confidence of lenders.
Apply for Xpress Pre-Owned Car Loan online
How to Apply for a High-Mileage Car Loan?
Once you are ready, you can proceed to apply for a High-Mileage Used Car Loan. Here are the simple steps involved in the process:
Compare Lenders
You can research and compare loan providers based on the simplicity of their loan process, their reputation, customer service, and loan offers.Check Eligibility
Once you shortlist your desired lender, you can check if you qualify for the used car loan for your high-mileage car.Check Loan Terms
If you are eligible, check how much down payment you need to make along with the interest rate, EMI amount, and loan tenure.Fill Application Form
If you are satisfied, fill in the application form with details such as your name, address, income, vehicle information, etc.Complete Documentation
Attach documents to support the information in the application form. They include your identity proof, address proof, vehicle-related documents, etc.Wait for Approval
If you meet the eligibility criteria, the lender will approve your application and contribute to purchasing the used high-mileage car after you make the down payment.
Finance your High-Mileage Car with HDFC Bank Xpress Pre-Owned Car Loan
Now that you know the fundamentals and a solution to combat the challenges behind a High-Mileage Used Car Loan, you can take the right approach. The key is to put in the time to review the vehicle, get documents in order, boost your eligibility, and then apply. If you feel you're ready and are looking into good loan options, look no further than HDFC Bank Xpress Pre-Owned Car Loans. Get through the loan process hassle-free with a simplified and quick process today!
FAQs
Can I finance a 10-year-old car?
Most lenders would not approve a Used Car Loan application for a 10-year-old car. However, some lenders may offer an exception if you can negotiate based on your income and credit history.
Why is the interest rate high on used Car Loans?
Used Car Loans, especially for high-mileage models, have higher interest rates because lenders consider them to be more risky and rapidly depreciating.
What is the maximum repayment tenure of a Used Car Loan?
Typically, the maximum repayment tenure of Used Car Loans is 24 to 48 months, depending on the lenders' terms.
Apply for Xpress Pre-Owned Car Loan online
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit at sole discretion of HDFC Bank Ltd. Other charges and taxes as applicable. The offer is unconditionally cancelable without prior notice. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
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