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A buyer’s order for a car is a business document that highlights key details about the dealer, buyer, and motor vehicle being sold if all parties agree to the transaction. A dealer prepares this document whenever a prospective car buyer wants to purchase a specific car off the lot.

A car buyer who signs a buyer’s order is making a formal commitment to purchase the vehicle under the terms specified in the written agreement. The buyer’s order becomes a binding agreement when all parties sign the document. Read on to learn more about a vehicle purchase order and its purpose.

What Is a Buyer’s Order?

A buyer’s order for a car — also known as the car purchase order — is a business document highlighting key details surrounding the sale and purchase of a motor vehicle. A dealer prepares this document whenever a prospective car buyer wants to purchase a specific car off the lot.

A buyer’s order may include the following information:

•   The vehicle identification number or VIN

•   The make and model of the car

•   Information about the customer or buyer

•   Information about the dealership or seller

•   An itemized breakdown of the vehicle’s sale price and related fees

•   Customer down payment details

The dealer may give you a copy of the buyer’s order before finalizing any sales agreement. A buyer’s order includes details about the parties involved in the buyer-seller negotiations. It also highlights the sale price of the vehicle and any related fees.

A buyer’s order becomes binding if and when all parties sign the document. A signed buyer’s order means the dealer intends to sell the vehicle to a customer who agrees to buy the vehicle.

Once signed, the buyer’s order cannot be canceled unless the buyer applies unsuccessfully for dealer-arranged financing. For example, dealers may cancel the buyer’s order if a financial institution does not approve the retail installment sales contract between the buyer and seller.

The Purpose of the Car Buyer’s Order

The purpose of the car buyer’s order is to put everything in writing concerning the potential sale of a vehicle. The buyer’s order provides a detailed description of the vehicle and an itemized breakdown of the vehicle’s total sale price, including taxes and fees. This captures how much you’ll spend on a car.

The business document lets a prospective car buyer see whether any add-ons or ancillary products would contribute to the vehicle’s total sale price. Ancillary products can include guaranteed asset protection or GAP insurance. The buyer’s order also lists the balance due on delivery.

Rebates, down payments, and the value of any trade-in vehicle can lower your balance due on delivery. A car purchase order may include the full details of any trade-in vehicle involved in the transaction negotiations between a car buyer and car dealership.

Recommended: What Is a Finance Charge?

4 Items You Can Negotiate on a Buyer’s Order

Prospective car buyers may negotiate the following items upon seeing the unsigned buyer’s order:

1. Vehicle Selling Price

You may negotiate the vehicle selling price upon seeing the unsigned buyer’s order. The dealer may be willing to lower the sale price if you make a compelling case for a price reduction or are simply savvy at bargaining.

2. Document Fees

You may negotiate document fees before signing a buyer’s order. Dealers may charge document preparation fees, processing fees, or customer service fees to maximize their profit in selling a new or used vehicle. However, as a prospective car buyer, you could ask for a document fee discount.

3. Trade-in Credit

You can negotiate trade-in credit before signing a buyer’s order. Some dealers may undervalue your trade-in vehicle, but you may persuade them to reconsider the appraised value by presenting market research. One of the key tips for selling a car is researching the market, and that tip can also be applied when trading in a vehicle.

4. Add-ons

You may negotiate add-ons before signing a buyer’s order. You have no obligation to buy GAP insurance or any other add-ons, but dealers may receive a kickback if they sell you ancillary products.

Recommended: Gap Insurance Refund After Refinancing

What Other Documents Are Involved in a Car Purchase?

Other legal documents a car buyer may sign include the following:

Retail Installment Sales Contract

Many buyers get car loans. A retail installment sales contract is a written agreement between the dealer and buyer outlining the financing terms of the negotiated transaction. This document may list your annual percentage rate (APR) and monthly repayment obligations on the finalized car loan financing arranged by the dealer.

Bill of Sale

A bill of sale is a legal document describing a specific vehicle and the terms and conditions of buying that vehicle from a dealer. A signed buyer’s order may constitute a bill of sale, or a bill of sale can be an additional document issued after all parties sign the buyer’s order. The differences between a vehicle purchase order and bill of sale are highlighted below.

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Buyer’s Order vs Bill of Sale

What’s the difference between a buyer’s order and a bill of sale? A buyer’s order and bill of sale in some cases, can be the same document, but differences can vary across states.

One of the differences between a buyer’s order and a bill of sale is that the buyer’s order may have a comprehensive line-item breakdown of the transaction, including the base price of the vehicle, down payment, and sales tax.

A bill of sale, meanwhile, typically lists the purchase price of the vehicle without including an itemized breakdown of the costs or credits.

However, it may be more detailed. Some state Department of Motor Vehicles (DMVs) may require or recommend a bill of sale whenever a motor vehicle transaction occurs in the state.

Similar to a buyer’s order, a bill of sale can include the following information:

•   A full description of the vehicle being sold

•   The date of sale

•   The name, address, and signature of the person buying the vehicle

•   The name, address, and signature of the person selling the vehicle

•   The purchase price

•   The vehicle identification number

Other Car Financing Options

While many dealers offer car loans, there are other car financing options you may consider:

Bank Car Loans

Bank car loans can help you buy a new or used car from a dealer without having to sign a retail installment sales contract at the dealership. The way how a car loan works is you borrow money from a lender, purchase a vehicle from a seller, and then repay the loan over a set period under the terms and conditions of a loan agreement. Commercial banks can provide you with direct loan financing and a promissory note for buying a new or used car.

Private Party Auto Loans

A private party auto loan can provide you with financing to buy a used vehicle from a private seller. The seller may offer this kind of loan, or you can do a search for other options. You may find personal loans you can use for this kind of auto purchase.

Leasing vs Buying

When considering the option of leasing vs. buying a car, you could finance a vehicle through a standard three-year contract with a leasing company. Car leases typically include lower monthly payments than new car loans, but again, you’re renting vs. purchasing.

Recommended: Does Financing a Car Build Credit?

The Takeaway

A buyer’s order is one of the documents you may encounter when shopping for a car. It includes key details about the transaction negotiations between you and a car dealer, as well as information about the car itself. You can further negotiate the vehicle selling price and other items before signing a buyer’s order, or you can walk away without signing anything.

A signed buyer’s order can serve as a binding agreement once you’ve agreed to the details and have secured financing.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is a buyer’s order?

A buyer’s order is a business document that a car buyer can sign if interested in buying a vehicle from a dealer. It highlights key details about the car dealer, car buyer, and the motor vehicle for sale. It also includes information about the sale price of the vehicle and becomes legally binding if all parties sign it.

How does a buyer’s order work?

A car dealer produces a buyer’s order whenever a consumer expresses interest in buying a particular vehicle. A buyer’s order describes the vehicle and itemizes the expenses that would become binding if all parties sign the document. Prospective buyers can negotiate items on the buyer’s order before signing the document or can walk away.

What other legal documents are involved in the purchase of a car?

You may sign a retail installment sales contract and bill of sale if you buy a vehicle from a dealer using dealer-arranged financing. A buyer’s order could constitute a bill of sale if signed by all parties, or a bill of sale could be an additional document issued after all parties sign.

What are the steps of the car buying process?

Among the key steps of the car buying process are setting your budget, looking at lenders, getting preapproved for a car loan, and then shopping around for a vehicle. Once you decide on a car and a price (a buyer’s order is typically involved), you’ll need to execute the paperwork, obtain car insurance in most U.S. states, and register your vehicle.

Photo credit: iStock/Denis_Dryashkin

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SOALR-Q225-027

If you fall behind on your auto loan payment, your lender may repossess your car. That means the lender can seize your vehicle to recoup some of the money it loaned you.

The bad news? It’s a double whammy. You no longer have a vehicle, and repossession can hurt your credit score. The good news? You may be able to get your car back, either by reinstating your car loan or through a process called redemption.

Here’s a look at the difference between these two strategies and how to know which, if either, is an option you can pursue.

How Car Repossession Works

When you take out a loan to buy a car, your lender will typically use your vehicle as collateral to secure the loan. That means that your lender has the right to take the vehicle away if you miss payments and default on the loan, also known as car repossession. The lender will usually sell the vehicle at auction in order to recover some of the money it loaned you.

Your loan contract will specify terms for repossession, defining what it means to default on your loan and laying out the consequences. In some cases, defaulting may mean missing just one payment. However, your lender will likely warn you that you’ve missed a payment and try to collect before repossessing your car. If the lender fails to collect and you’re in default, it can come and take your vehicle at any time and without warning.

Your car can also be repossessed if you fail to have proper insurance for your vehicle. Because your lender uses your vehicle to secure your loan, it has a vested interest in protecting it. If you allow your auto insurance policy to lapse, your lender may view that as a risk and use it as a reason to repossess your car.

What Is Reinstatement?

Reinstating your car loan is when you can make up any overdue payments, including covering the costs of the car repossession, and get your vehicle (and your loan) back after it’s been repossessed.

Reinstatement essentially restores the loan to its original state, allowing you to resume making payments on it as normal.

How Reinstating a Car Loan Works

If your car has been repossessed, all is not lost. You may be able to get it back by reinstating your loan.

Typically, you do this by bringing your loan up-to-date with a lump-sum payment that covers all past due payments, fees, and late charges.

Your right to reinstatement might be built into your loan contract, or state law may require your lender to allow it. To find out if your state allows reinstatement, contact your state attorney general’s office or the state consumer protection agency.

If reinstatement is allowed through your loan agreement or state law, you can contact your lender to request a reinstatement quote, but do so as soon as possible. Your lender is then required to send you a notice within 15 days with the amount necessary to make your loan current. But be ready: At that point, you may have as little as 10 to 15 days to reinstate your loan at that amount.

Note, too, that if the terms of the reinstatement notice aren’t feasible for you, your lender may be willing to negotiate.

When You Can’t Reinstate an Auto Loan

If your loan contract or state doesn’t specify your right to reinstate your auto loan, you may have to seek other options, such as redemption.

What’s more, be aware that even if you do have the option of reinstating your auto loan, you have only a limited amount of time to do so.

And if you don’t pay the necessary amount to bring your loan current under the terms of your reinstatement notice, or if your car is sold, you may forfeit your right to reinstatement.

Recommended: Refinancing With Bad Credit

When Redemption Is an Option

If you can’t reinstate your loan, another option may be loan redemption. When you redeem your car, you buy it back from your lender in a lump-sum payment. That likely will be more expensive than reinstating your loan, but it is more likely to be an available option.

Every state allows some form of redemption, and you typically can exercise this right until the lender sells the car. State laws differ in how long a lender must hold on to a car before selling it, how the lender can sell the vehicle, and how the lender has to notify you of your right to redeem.

Bear in mind that redeeming your car can be a costly process. You may have to cover costs, such as repossession expenses, towing charges, attorney’s fees, and late fees. As with reinstating your loan, the terms of redemption may be negotiable.

Reinstatement vs. Redemption

The following chart summarizes some of the differences and similarities of reinstatement and redemption.

How Long Does a Repossession Stay on Your Credit Report?

An auto repossession typically harms your credit report and will likely remain there for seven years. Like bankruptcies and collections accounts, repossessions are serious red flags for lenders if you are seeking credit in the future.

What’s more, failing to pay your auto loan on time can have its own negative impact on your credit score. Your lender can report you as delinquent on your loan for each month your payment is 30 or more days past due. This, too, can drag down your credit score, potentially for years to come.

Recommended: Refinance Car With Same Lender

The Takeaway

When your lender repossesses your car, it doesn’t necessarily have to leave you stranded. Reinstatement and redemption provide options for getting your car back, though the process can be costly.

It’s generally far better to avoid repossession in the first place. If you find your auto payments are becoming untenable, consider refinancing your auto loan to help make your monthly payments easier.

Refinancing before you fall behind on payments typically has a minimal effect on your credit score. Note that refinancing after a repossession can be difficult.

Another option that may be available to you is to trade in your vehicle for a less expensive car with cheaper payments.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is redemption?

Redemption is the process by which you buy back your repossessed car, paying off the balance of your loan and any other fees and penalties.

What is reinstated repossession?

Reinstated repossession occurs when you pay off your past due auto payments, fees, and penalties to restart your auto loan.

Why might you choose to redeem your car?

You may choose to redeem your vehicle if reinstatement is not an option, your loan is nearly paid off, you have equity in the car that you don’t want to lose, or you want to lessen the effects of repossession on your credit score.

Why might you choose to reinstate your loan?

You might reinstate your loan for many of the same reasons that you would choose to redeem your car, including if your loan is nearly paid off, you have equity in the car that you don’t want to lose, or you want to lessen the effects of repossession on your credit score.

What do you need to do to redeem?

Notify your lender immediately that you want to redeem your loan, negotiate the terms of the agreement, and make your payment within the specified period.

What do you need to do to reinstate?

Find out if your lender or state law allows reinstatement. If so, notify your lender immediately that you wish to pursue it. Negotiate terms if necessary, and make all payments swiftly, within the specified time period.

Photo credit: iStock/welcomia

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q225-026

If you’re buying a new or used car, you may find a better deal or more options in another state. While purchasing and financing a car in another state is possible, the process can be more complicated than buying a vehicle closer to home.

Knowing the steps involved and how to prepare in advance can make it easier to finance a car out of state. Here’s a guide to how the process works.

Can You Finance a Car Out of State?

If you find a car you like in a neighboring state, you might have wondered, can I finance a car in another state? The good news is, yes, you can finance a car out of state. However, individual states have different car title and license fees, as well as different tax laws. If you’re financing a car out of state, you’ll need to find out the regulations involved. Check with your state’s Department of Motor Vehicles (DMV).

Recommended: Does Financing a Car Build Credit?

What You Should Know Before Buying a Car Out of State

If you’re thinking about buying a car in another state, consider these factors:

Sales Tax

Some states, like Montana and New Hampshire, don’t charge sales tax on vehicles. However, unless you register the car in that state, you can’t take advantage of the savings. You pay sales tax in your home state — where you register the vehicle — not the state where you buy it.

For example, if you live in Vermont and buy a car in New Hampshire, you’ll still owe the 6% sales tax charged by Vermont. However, New Hampshire residents pay no taxes on a car they buy in Vermont.

Title and Registration

You need to register the vehicle in your own state, but first, you need to get it home. If you’re buying a car from an out-of-state dealership, they’ll typically take care of the title and registration paperwork as part of the transaction. They should give you a temporary registration so you can drive the car back to your state, where you can do the vehicle registration.

However, if you’re buying a used car from a private seller, you’ll likely need to handle the paperwork yourself. You can apply for a temporary registration at your DMV. Be sure to look up the process ahead of time so you’ll know what’s required.

Recommended: Smarter Ways to Get a Car Loan

Safety and Emissions

If your state requires a safety inspection, the out-of-state dealer you’re purchasing the car from should be able to do it. You’ll also have to make sure the car meets your state’s emissions requirements. These requirements vary by state. Look up the emissions regulations in your area. The dealer should be able to do both the testing and inspection for you.

Private Sales

Buying a car from a dealer is the easiest way to purchase a car out of state, since they take care of most of the paperwork. However, if you buy a car from a private seller, you’ll need to work with your state’s DMV as well as the DMV in the state where you’re buying the car to ensure you carry out the sale correctly, including the registration and car title process, plus the sales tax. You may also need to take the vehicle to an inspection station for safety and emissions testing if those are requirements in your state.

Recommended: Auto Refinance Calculator

How to Finance a Car Out of State

These are the steps to take to finance a car out of state.

1. Do Research

You can shop around online to find the car you want to buy. If it’s a used vehicle, look at the car’s vehicle history report, which you should be able to access via the National Motor Vehicle Title Information System using the vehicle identification number (VIN). A vehicle history report could alert you to potential red flags such as past accidents or flood damage to the car. In addition, always try to see a car in person, if possible, and have it inspected by a mechanic before you agree to buy it.

2. Understand the Car’s Value

When financing a car out of state, look up the car’s fair market value with Kelley Blue Book or Edmunds. When calculating the total cost of the car, be sure to factor in your state’s sales tax plus licensing and registration fees.

3. Contact the Dealer or Seller

Contact the dealership and let them know which car you want to buy. They may be able to put a hold on the vehicle to give you time to get there. If the car is being sold by a private owner, arrange a day and time for you to see and inspect the car.

4. Get Car Insurance

Contact your insurance company and let them know about your plans to buy a car out of state. Then, start the process to take out a policy on your new car (you’ll need car insurance before you register the vehicle). Ask your agent if you’ll be covered by insurance while driving your new car home.

5. Get Preapproved for an Auto Loan

Shopping for an auto loan can help you compare and find the best rates and terms for your needs, and getting preapproved for a car loan can help facilitate the sales process when you buy the vehicle.

Preapproved car loans give an estimate of the amount you can borrow, along with an estimated interest rate. You can show this information to the dealer when you sit down to negotiate the deal.

Later, if interest rates drop or you build your credit score, you may want to consider an auto loan refinance, which might save you money down the road.

6. Finalize the Transaction

When you reach an agreement with the dealer for a car loan, you can sign all the necessary paperwork to buy the car. The dealer can make any title and temporary registration arrangements for you.

Recommended: What to Ask When Refinancing

Pros and Cons of Financing a Car in Another State

There are some advantages and disadvantages to financing a car out of state. Weigh the pros and cons before you cross state lines to make your purchase.

One benefit is that you might find a better selection of cars in another state, especially if the inventory is limited in your own state.

Also, you could save money by buying a car elsewhere. Car prices vary by region. You might find the car you’re looking for at a cheaper price in another state.

However, there are drawbacks. Buying and financing a car out of state is more complicated. You may need to put in significant time researching how to find the right vehicle. In addition, there’s more paperwork to do. A dealer can take care of most of it if you’re buying a new car, but you’ll have to do it yourself if you’re purchasing a vehicle from a private seller.

Finally, there might be other costs, such as travel or shipping expenses, that could make the transaction more expensive.

Here’s a side-by-side comparison of the pros and cons of financing a car out of state.

Recommended: No Income Verification Car Loans

The Takeaway

Buying and financing a car out of state can be complicated, but if you can purchase the car for a lower price, it may be worth it. Just be sure to do your research in advance to make sure you’re complying with your home state’s regulations for the car title and registration, as well as any taxes involved. Getting preapproved for a car loan could help make the financing process easier and smoother.

And in the future, you may want to consider car loan refinancing, which could lower your payments, shorten your loan term, or extend the length of your loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can you finance a car in a different state?

Yes, you can finance a car in another state. However, you’ll need to register the car in your home state, so be sure to get a temporary registration from the dealer that you can use when you drive the vehicle home. Also, it’s worth noting that you’ll need to pay the taxes required in your state, and not the state you’re buying the car in.

What are the disadvantages of financing a car out of state?

Financing a car out of state typically involves more paperwork than buying a car in your own state. It might also be more expensive if you have to pay to ship or transport the car to your home.

Can you finance a car from another country?

Yes, you can finance a car from another country, but it’s more complex than domestic financing. Lenders may require higher credit standards, international documentation, and import regulations compliance. Some international auto dealers offer financing options, or you may need to secure a loan through a bank or third-party lender.

Photo credit: iStock/AleksandarNakic

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q225-025

Consumers may consider a 144-month auto loan to finance the purchase of classic and exotic cars. Such vehicles could carry a sales price above $100,000. Auto loans with 12-year terms may make it easier for consumers to buy ultra-luxury brands like Aston Martin, Ferrari, and Lamborghini.

Buying a six-figure car is a personal choice, and getting a 144-month auto loan to finance that car might make sense for some borrowers. Car loans can have repayment terms as low as 12 months and as high as 180 months or 15 years.

However, longer terms may include higher interest charges and lower monthly payments compared with shorter terms. For example, getting $100,000 in auto loan financing at 6% interest would cost $975.85 monthly under a 12-year term and $1,657.29 under a six-year term.

It might make more sense to get a shorter term if you can afford a higher monthly payment.

That’s because consumers with 12-year auto loan terms may end up paying tens of thousands of dollars in interest over the life of the loan. Below, we highlight some of the pros and cons of getting a 144-month car loan.

Getting a 144-Month Auto Loan to Buy Your Car

Getting a 144-month auto loan to buy your car could be an option if you’re looking to own a classic or exotic car brand. Lenders may offer 144-month auto loans to finance ultra-luxury vehicles with retail prices above $100,000.

As mentioned earlier, getting $100,000 in auto loan financing at 6% interest would cost $975.85 monthly under a 12-year term and $1,657.29 under a six-year term. If you need $100,000 in car loan financing and cannot afford monthly payments above $1,000, the 144-month auto loan might be right for you.

Lenders generally charge interest when financing six-figure vehicles. If you need $100,000 in car loan financing and could afford monthly payments up to $2,000, a shorter term might serve you better. Loans with shorter repayment terms usually have lower interest costs than loans with longer repayment terms.

Paying interest over the life of a loan can add up. If you get a $100,000 car loan with a 6% interest rate and 12-year term, you may pay $40,522.43 in total interest over 144 months. You may pay $19,324.79 in total interest over six years if you get similar financing on a 72-month loan term.

When to Consider a 144-Month Loan

You may consider a 144-month car loan at any time, particularly if you’re interested in buying a six-figure car. The way car loans work is that lenders give borrowers financing in order to buy a motor vehicle.

Here are some factors to consider:

•   Car loans with 12-year terms are scarce, but private lenders may offer them when financing classic or exotic vehicles.

•   Getting a 144-month loan to finance a high-mileage used car could be difficult, although some lenders may be willing to finance such vehicles.

•   A private party auto loan can provide you with financing to buy a new or used vehicle from a private person selling a car.

•   Lenders may have general car loan requirements that ask borrowers to provide proof of income and proof of identity when applying for financing.

Can I Get Financing for an Exotic Car for 144 Months?

Yes, creditworthy borrowers may be able to get financing for an exotic car for 144 months. Some lenders even offer 180-month car loans to help consumers purchase vehicles worth $200,000. You may need a steady income, a base FICO® Score above 700, and an established credit history to qualify.

Can I Get a 144-Month Auto Loan on a 10-Year-Old Car?

Creditworthy borrowers can get a 144-month auto loan on a qualifying 10-year-old car. Some lenders may require the vehicle to be a 10-year-old Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, Lotus, Maserati, McLaren, or Rolls-Royce.

Getting a 12-year car loan on a 10-year-old economy car can be difficult but not impossible. Economy cars are generally small vehicles with more affordable price tags than luxury or premium vehicles.

144-Month Car Loan: Pros & Cons

The table below highlights some of the pros and cons of 144-month car loans:

Pros of a 144-Month Auto Loan

Some of the pros of a 144-month auto loan:

Investment

A 144-month auto loan can help consumers buy exotic vehicles as an investment. Exotic vehicles may appreciate greatly in value over time, according to Bugatti. This means owning an exotic vehicle may help you build wealth, which can partially or fully offset the cost of a 144-month loan.

Cost

Even if you can afford to buy an exotic car without borrowing money, paying that cost up front can deplete your savings. A 144-month auto loan would spread that cost over 12 years. Minimizing your upfront costs may preserve your savings or allow you to invest your savings elsewhere.

Affordability

A 144-month auto loan can promote affordability in the exotic car industry. The monthly payment on a 144-month auto loan would be substantially lower than buying the same vehicle on a 72-month repayment schedule.

Cons of a 144-Month Auto Loan

Here are some of the cons of a 144-month auto loan:

Lack of Options

Obtaining a 144-month auto loan may require purchasing a classic or exotic vehicle with a sales price of $100,000 or more. Such restrictions can leave you with a clear lack of options, particularly because exotic cars represent a small niche of the overall auto industry.

Depreciation

An economy car financed by a 144-month auto loan could potentially depreciate over the 12-year repayment period. Some lenders may offer 144-month car loans on non-exotic vehicles, and those vehicles historically experience significant depreciation over time.

144-Month Auto Loan Credit Unions

Some credit unions may offer 144-month auto loans on new and used vehicles. Some of these credit unions may finance economy vehicles under $40,000.

144-Month Auto Loan Lenders

Lenders of 144-month auto loans can include credit unions and private finance companies. Some of these lenders may specialize in the financing of classic and exotic vehicles.

Lenders may offer secured and unsecured auto loans. A secured car loan uses the financed vehicle as collateral, whereas an unsecured car loan has no collateral requirement. Lenders may repossess your vehicle if you default on a secured auto loan.

Recommended: Refinance Commerical Auto Loan

Alternatives to a 144-Month Auto Loan

Here are some alternatives to a 144-month auto loan:

Buying the Car With Cash

Instead of borrowing funds from a lender, buying the car with cash is an option for consumers who have sufficient money in the bank. One of the advantages of purchasing the car outright is that it gives you 100% equity in the vehicle and the certificate of title.

Refinancing the Car

If you already have a 12-year auto loan, you may qualify for auto loan refinancing. Refinancing pays off the original loan agreement and replaces it with new loan terms. Borrowers can refinance auto loans almost immediately.

Here are some auto refinance factors to consider:

•   In terms of when to refinance a car loan, the right time for you to refinance may be whenever you can secure a lower interest rate or whenever you need a lower monthly payment

•   The pros and cons of refinancing a car are something you may consider when evaluating whether to seek an auto refinance loan

•   The cost to refinance a car may include several fees that can be a dealbreaker for some consumers

•   Refinancing can help borrowers get a lower interest rate, but refinancing may also cause a borrower’s credit score to dip from a hard pull credit check

The Takeaway

Getting a 144-month auto loan has certain advantages and disadvantages. The 12-year repayment schedule may feature an affordable monthly payment, but borrowers may also pay high interest costs over the life of the loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can you finance a car for 144 months?

Yes, you can finance a car for 144 months if you meet the lender’s minimum eligibility requirements. These lenders may require that you have steady income and strong credit. Some lenders may require the financed vehicle to be a classic or exotic car.

Does refinancing your car loan for 144 months make it cheaper?

Refinancing your car loan for 144 months could potentially replace your existing loan agreement with a more expensive loan product. Refinancing may generally offer you a lower monthly payment but could also increase your burden of debt in some cases. Refinancing for a lower monthly payment in some situations may cause you to pay more cumulative interest over the life of the refinanced loan term.

Should you use a 144-month auto loan to refinance your car?

Replacing your existing car loan with a 144-month auto refinance loan might not be right for you if you can afford higher monthly payments. Loans with longer terms may carry higher interest rates and lower monthly repayments compared with loans that have shorter terms.

Photo credit: iStock/Georgijevic

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q225-010

Probably the last thing on most car buyers’ minds when they walk into a dealership is the thought that they might die before they manage to pay off their loan fully. What happens to a car loan when someone dies is that the lender may demand repayment from a surviving spouse or repossess the car.

Unexpected deaths happen, and that’s why auto loan paperwork may contain a death clause that explains what happens to a financed car when the borrower dies. Below, we outline the potential consequences that can occur if a car loan borrower passes away before repaying the auto loan debt.

What Happens to a Financed Car When Someone Dies?

A car loan is usually a short-term debt. In 2024, the average car loan term is 68 months for a new car and 67 months for a used car, or close to six years, according to Experian data. Many borrowers may not expect to meet their demise during their loan repayment period, but it does happen. As mentioned above, lenders may demand repayment from a surviving spouse or repossess the vehicle if a car loan borrower dies before repaying the debt in full.

What Is the Car Loan Death Clause?

Lenders rely on the obligations borrowers agree to in their loan documents to help keep transactions on course. The car loan death clause is any language in a car financing contract that reinforces your obligation to repay the debt.

A car retail installment sale contract may highlight the merits of obtaining optional credit life insurance. If you buy and maintain life insurance on your car loan, the insurance company may pay off your remaining loan balance if you die unexpectedly.

How the Car Loan Death Clause Works

Alive or dead, when a borrower stops making car loan payments, a lender may decide that the unpaid debt is in default.

And because a car loan is usually a secured loan, with the car serving as collateral, the lender might move to repossess the vehicle to recover its money.

But that isn’t the only remedy a lender can or will use when a borrower dies. As long as timely payments continue, there are several scenarios in which the car could remain with a family member or friend — perhaps by transferring the loan to their name or auto refinancing the remaining balance with a new loan.

Who Could End Up Making the Payments?

Depending on the laws of where you live, several factors can go into deciding who’s responsible for making loan payments after a car owner dies. Here are a few possibilities:

A Co-Borrower or Cosigner

If your name is on a car loan as a co-borrower or cosigner, you can expect the lender to hold you responsible for continuing payments. Liability for the loan falls to you, and you would be expected to pay the principal and any finance charges on the car loan.

That means the lender can take steps to recover the money if you fail to make payments on time. If you want to keep the car — and protect your credit — you may have to do a little legwork to take the deceased’s name off the loan and change automatic payments to a different bank account.

Recommended: Can a Cosigner Become the Primary?

A Surviving Spouse in a Community Property State

In community property states, spouses are jointly responsible for any debts they take on after their marriage. So, even if you aren’t a cosigner or co-borrower, the lender could come to you looking for payment.

There are at least nine community property states, according to the IRS:

•   Arizona

•   California

•   Idaho

•   Louisiana

•   Nevada

•   New Mexico

•   Texas

•   Washington

•   Wisconsin

If you aren’t sure about the status of your spouse’s car loan, you can contact the lender for information.

A Surviving Spouse or Other Beneficiary

A surviving spouse who isn’t in a community property state and whose name isn’t on the car loan isn’t responsible for the loan. So, it may be your choice whether to assume payments if the car goes to you after probate. This is also true for any other beneficiary whose name is not on the loan.

How Does Probate Affect a Financed Car?

Probate is the legal process that may ultimately determine who is responsible for a financed car when the owner dies. Probate is generally the first step in settling an estate’s financial issues. It protects both creditors and beneficiaries. The rules may vary a bit from state to state, but here are some basics:

Assets and Liabilities Are Combined

When a person dies, their assets and liabilities — everything that makes up their net worth — pass on to their “estate.” That might be a home, investments, a car, and other valuables. Or it might be just a car, a small savings account, and some random possessions. You don’t have to be rich to have an estate. In this context, it just means what you own and what you owe.

The court-supervised probate process typically applies only to assets that were solely owned by the deceased at the time of death. If there’s a cosigner or co-borrower on the car loan, remember, the payments would become their responsibility. But if the deceased was the only one named on the loan, the car would likely be a probate asset.

Debts Are Paid and Assets Are Disbursed

The probate court will put an executor or administrator in charge of making sure the estate’s debts are all paid and the assets are disbursed to the appropriate beneficiaries. But working through all of that can take a while, so the executor or administrator may use the estate’s money to pay ongoing bills — including car payments — until the estate is eventually settled.

That doesn’t mean the car will automatically go to an heir at the end of the probate process, however. At some point, the executor might find it necessary to liquidate all or some of the estate’s assets to pay off the deceased’s remaining debts (credit cards, bank loans, etc.) And that could include selling the car — especially if it’s worth substantially more than the remaining loan balance.

On the other hand, if there is enough money left after other debts are paid, the estate might be able to pay off the car loan in full. If that’s the case, a beneficiary may receive the car at the end of the probate process without having to take on any payments. (The car title can’t be transferred until probate is finished.)

Finally, if the car is still available but the estate can’t pay it off, a friend or family member who’s willing to cover the loan balance may be designated as the car’s legal heir. Or, if no one is interested, the estate might just allow the lender to repossess the car. The lender would then sell the car to recover its loss and return any leftover funds to the estate.

Repossession of a Car After Death

It’s unlikely a lender will automatically repossess a car after learning of a borrower’s death. But if the family stops making timely payments — maybe because they can’t afford it or the obligation gets away from them in their grief — the lender may take steps to recover the money it’s owed.

Involuntary Repossession

The lender could decide to repossess the vehicle and put the proceeds toward the outstanding loan balance. And if the sale doesn’t cover the balance, the lender may continue to pursue payment from a co-borrower or cosigner, or a surviving spouse in a community property state.

The lender can’t force the surviving spouse in a non-community property state or other heirs to pay off the remaining debt, but it could choose to file a claim against the estate in probate court.

Voluntary Repossession

Then there’s voluntary repossession of car after death. Of course, you don’t have to wait for the lender to force the issue. If no one wants to take responsibility for the car — by making the payments or selling it to pay off the loan — the family may ask to have the car picked up through voluntary repossession.

What Are Some Car Loan Payment Options?

If you learn you’ve inherited a financed car, you may have a few options to consider:

Credit Insurance

If the car’s owner purchased optional credit insurance when he or she signed for the loan, you may not have to make any more payments, even if your name is on the loan. Credit insurance covers all or some of the remaining balance when the borrower dies.

The Estate Pays Off the Loan

To avoid tension with other beneficiaries, you may want to discuss whether the car loan will be fully repaid along with other debts when the estate is being settled, and how that might affect your overall inheritance.

Refinancing the Loan

If you’re taking over repayment and your name isn’t on the original loan, the lender will likely want you to refinance into a whole new loan. If your credit is a little shaky, it might help to enlist a cosigner with good credit to improve your chances of getting a better interest rate.

Sell the Car to Repay the Loan

Do you even need this car? If you thought you wanted the car, then changed your mind, It may make sense to sell the car to repay the loan. Selling the car may be right for you if the resale value is greater than the outstanding auto loan balance.

Recommended: How to Sell a Car You Still Have a Loan On

How to Assume a Car Loan After the Owner Dies

If your name isn’t on the existing auto loan but you want to legally take possession of a vehicle after the owner’s death, there are a few steps you can follow to make sure things stay on track.

Be Sure the Lender Gets a Copy of the Death Certificate

If the car is part of the deceased’s estate, the executor generally will take care of this step. If that isn’t you, you may want to follow up to be sure the lender knows the car owner died, but payments will continue.

Find Out If Someone Is Making Payments

If loan payments stop, even temporarily, the lender could decide to repossess the car. Check with the loan’s cosigner or co-borrower, the estate’s executor, or anyone else who might be covering the payments to ensure the loan is up to date. Or contact the lender about making payments.

Transfer the Title

If you’ll be taking over responsibility for paying for the car, it’s a good idea to have the car transferred to your name as soon as possible — and the lender may require it. Once you’re sure the car is legally yours, you can contact your state’s Department of Motor Vehicles for information about the documents you’ll need and the fees you’ll have to pay.

Contact Your Insurance Agent

Don’t forget to add the car to your auto insurance policy as soon as possible. Your agent can help you determine what coverage is required, or you can research and shop for a new policy online.

Find the Best Way to Pay for the Car

Unless the owner purchased credit insurance or the estate pays off the car, you’ll likely have to find a way to cover the cost. Even if the lender allows you to take over the car loan, you may want to consider other options.

If the balance owed isn’t too high, you could decide to simply pay off the entire loan amount.
Or you might want to refinance to secure a new loan with a lower interest rate or lower monthly payment. Refinancing a car loan with a 650 credit score is possible.

Recommended: When to Refinance Your Car

The Takeaway

Auto loan debts generally need to be repaid even if the borrower dies with an outstanding balance. Lenders have no obligation to forgive the unpaid debt, and they may have the right to repossess the vehicle. Anyone who inherits a deceased borrower’s car loan debt may have the option of refinancing the loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What happens to a car loan if the borrower dies?

When the owner of a financed car dies, the loan doesn’t disappear. And, unfortunately, deciding who can legally inherit the car or assume the loan payments can sometimes take months or longer. Meanwhile, unless the owner purchased credit insurance, the lender will expect the monthly payments to continue, or it may repossess the vehicle.

Are you responsible for loan payments if you inherit a financed car?

If you expect to inherit a financed car and you hope to keep it, you may want to do some research into the probate process to be sure things go as smoothly as possible. If you think you’ll be making payments, this also may be a good time to look at your refinancing options, so you can be sure you’re getting the best loan possible.

Who pays the car loan if the borrower dies unexpectedly?

The borrower’s estate may pay off the car loan if the borrower dies unexpectedly. An insurance company may pay off the loan if the deceased borrower had active credit insurance coverage on the car loan. A surviving spouse, in some cases, may be responsible for repaying the deceased borrower’s car loan. Any cosigner or co-borrower on the loan may also assume responsibility for repaying the debt.

Photo credit: iStock/nortonrsx

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q225-009