SoFi

A cosigner may become the primary borrower on a car loan through reaching an agreement with the lender or refinancing the car loan. However, it can become a complicated matter.

Typically, a cosigner has been added to a car loan application to improve the odds of approval, thanks to, say, a favorable credit score. However, the cosigner doesn’t usually have ownership of the vehicle that the loan is funding.

Below, learn more about how a cosigner may become the primary borrower on a car loan.

What Is an Auto Loan Cosigner?

An auto loan cosigner is an individual — usually a friend, partner, or family member — who cosigns a primary borrower’s auto loan contract. A creditworthy cosigner can help a primary borrower get approved for auto loan financing. The cosigner doesn’t have ownership of the vehicle but agrees to accept financial liability if the primary borrower falls behind on loan payments.

Why would a primary borrower seek a cosigner? A primary borrower with bad credit may need a creditworthy cosigner to get approved for a car loan. Or a primary borrower with good credit may need a cosigner with excellent credit to qualify for a lender’s lowest annual percentage rate (APR).

If you have bad credit, no credit, or fair credit, a creditworthy cosigner may help you get approved for car loan financing. The cosigner is legally responsible for meeting the financial obligation of the loan if the primary borrower doesn’t make the payments. If payments are made late or the primary borrower defaults on the loan, this can damage the credit scores of both parties.

If you are more than 30 days past due or delinquent on your car loan payment, lenders may report the delinquency to all three major credit bureaus.

Ways a Cosigner Can Become the Primary Borrower

As a cosigner, you’re financially guaranteeing that the loan payments will be met on time and in full. If the primary borrower wants to explore how you, as cosigner, may become the primary person on the loan, talk to your current lender. This may involve refinancing the car loan. More information about refinancing is found below.

Recommended: What Should Your Average Car Payment Be?

Can a Cosigner Take Possession of the Car?

If you have the car, you may be wondering: Can a cosigner take my car? If the primary borrower isn’t keeping up with loan payments, the cosigner cannot take possession of the auto. While a cosigner has a financial obligation to the lender, they have no legal ownership or right to take possession of the car, unless they were specifically added to the car. In other words, a cosigner is typically on the vehicle’s note (making them liable for the payments) but not the car title (which indicates ownership).

Therefore, you can’t repossess the car from a primary borrower who isn’t paying their debt. (However, if you were a co-borrower, it’s possible that you could jointly own the vehicle with the other borrower.)

Can a Cosigner Sue the Primary Borrower for the Entire Amount of a Loan?

One option that’s available: A cosigner does have the right to sue the primary borrower to recover the funds spent making loan payments. It will then be up to the court to decide whether to award any damages to the cosigner. If you’re considering whether to sue, take court costs and the fee of hiring a lawyer into account.

Recommended: What Happens to a Car Loan When Someone Dies?

What Happens When a Cosigner Sues the Primary Borrower?

As a cosigner, you may decide to file a lawsuit to recover the funds you paid toward the car loan. If you had the primary borrower sign a separate agreement where he or she agreed to meet the payments, your lawsuit could potentially also have a focus on breach of contract.

Plus, if the lender sues you, then you can file a suit against the primary borrower to claim that they, not you, should satisfy the lender’s payment requirements. But all this requires time, energy, and probably money. There aren’t guarantees that you’d win. If you lose, you could face owing legal expenses and the loan’s remaining debt and fees.

The Rights of the Primary Borrower on a Car Loan

The primary borrower has the ownership rights to the vehicle. The cosigner does not, unless they were specifically added to the title. This is the case whether the borrower bought the car from a dealership or from a private seller using a private party auto loan.

The Rights of the Cosigner

When cosigning a loan, the person is taking on responsibilities rather than rights. The cosigner is responsible for making payments if the primary borrower doesn’t, and this doesn’t give the cosigner rights to the vehicle. As noted above, cosigners do have the ability to sue the primary borrower, and the court will decide the outcome.

Can a Cosigner Be Removed from a Car Loan?

It’s possible to remove a cosigner from an auto loan. One of the simplest ways to proceed is to ask the lender whether the loan comes with a cosigner removal option that can be exercised when the primary borrower can qualify for the loan by themselves or other conditions have been met.

If this is a possibility, the lender may require the cosigner to sign a release form. If the relationship between the primary borrower and cosigner is a good one, this may be a simple process. After all, being taken off a loan can help the cosigner because they would no longer be responsible for the car payment. If it’s part of a contentious divorce or other situation where the relationship between the two parties is now poor, this process may be more complicated.

Ending a Cosigned Car Loan

Other ways exist to end the existence of a cosigned car loan. Here are the most typical:

•   Pay off the loan

•   Refinance

•   Voluntary surrender

•   Sell the car

Here’s more information on each option:

Pay Off the Loan

If the cosigner is financially able and willing to help the primary borrower make payments, then this can be the most straightforward approach. Once that debt is paid off (either through regular payments or in a lump sum), then the cosigning situation automatically ends.

Refinance

If the primary borrower successfully goes through the auto refinance process on their own merits, then the cosigned loan would be replaced with the new one. This is one of the more typical ways to remove a cosigner from a vehicle loan.

Recommended: Pros and Cons of Car Refinancing

Voluntary Surrender

If the primary borrower can’t make payments, the lender has the option to repossess the vehicle. This can come with plenty of costs and, if the primary borrower can’t pay, the lender can come after the cosigner. Willingly giving up the vehicle can save time, money, and hassle.

Sell the Car

If the primary borrower struggles to make payments and refinancing is not a viable option, then selling the vehicle can be worth considering. The borrower could sell the car, pay off the cosigned loan, and use whatever is left to purchase a more affordable vehicle.

Auto Refinancing Options

If you’re considering the auto refinance process and its typical timeline, here’s more about how auto refinancing works. Steps include:

•   Collect the documents you’ll need, including information about your vehicle, the current loan, auto insurance, and your income and employment details.

•   Shop around, compare rates, and consider refinancing with the same lender if your current lender offers terms that are right for you.

•   Apply for the auto refinance loan with the lender of your choice.

•   Seek a cosigner if you’re interested in refinancing your auto loan with a cosigner.

•   Once the loan is approved, the lender will pay off the old loan and future payments go to the new one under the new rate and terms.

Recommended: Financing a Car Out of State

The Takeaway

Cosigning a loan comes with plenty of responsibility: You are on the hook for the loan, though you won’t have ownership of the vehicle unless you were specifically added to the title. You may be able to become the primary borrower on the loan if this is your goal, depending on the loan’s fine print and the other party involved. One option could be refinancing the loan and becoming the primary borrower and having the title transferred to you.

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

Does a cosigner’s name go on the title of a car?

In most cases, the cosigner of a car loan does not have their name put on the vehicle’s title unless they are specifically listed as a co-owner. However, this can vary by jurisdiction, so it can be wise to do your research.

If the borrower defaults, can a cosigner take ownership of a car?

If the borrower defaults on a car loan, the cosigner becomes liable for payments but does not take ownership of the vehicle unless their name was on the title. This scenario is an important consideration before agreeing to be a cosigner. This default situation could be remedied by the sale or voluntary surrender of the car.

Can a cosigner remove themselves from a car loan?

A cosigner can be removed from a car loan, but the primary borrower must usually be involved in the process. Typically, the loan will need to be refinanced or paid off, or the car can be sold. In some instances, the lender might grant a cosigner release which would keep the loan open. Check with the lender to determine what options are available.

Photo credit: iStock/Miljan Živković

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-011

The annual percentage rate or APR on a car loan indicates how much it costs to borrow money to buy a car. It includes both the interest rate and fees. The lower the annual percentage rate for cars, the cheaper it is to borrow money. Knowing how to calculate APR on a car loan can help you compare loans and determine which option is best for your budget.

Some lenders may offer 0% APR financing. Others may offer subprime auto loans with the APR well into the double digits on a new car loan. Below, learn all about calculating auto loan APRs so you can make the best choice for your needs.

What Is APR?

APR is the total annual cost to borrow money, including interest and fees, represented as a percentage. It also accounts for any dealer fees, rebates, or costs incurred by the borrower when obtaining any loan, including an auto loan.

Sometimes a loan’s APR and interest rate may get mixed up since they’re both expressed as a percentage. The key difference is that a car loan interest rate is simply a percentage of the principal (the amount borrowed), whereas the APR accounts for fees and additional costs of borrowing money, as well as the interest. For example, the interest rate for a car loan might be 7%. But once various fees and costs are factored in, the APR might be 7.25%.

APR is a better metric for gauging the cost of borrowing than the interest rate alone. Even if two lenders offer the same interest rate and repayment term on a loan, the difference in their fees and extra charges will be revealed in the APR. Comparing APRs can help you find the right auto loan financing or auto loan refinancing for your needs.

Calculating Your Car Loan’s APR

Knowing how to calculate APR for car loans can be of use when assessing financing options.

Lenders are generally required by federal law to disclose the APR and other loan terms before a borrower signs the loan agreement. Still, preparing beforehand can help you determine how a car loan aligns with your budget and financial goals.

Here’s how to calculate APR on a car loan:

1. Gather Key Information

Before diving into the actual arithmetic of how to calculate APR for car loans, you’ll need to collect the following information:

•   Principal. This is the amount of money borrowed. When you’re calculating car loan APR, you can think of car loan principal as the price of the car minus your down payment and the value of a trade-in vehicle (if you traded one in).

•   Interest rate. This represents the percentage charged on top of the principal each year. In your DIY calculation, this may be an estimated value. The best interest rate on a car loan can be as low as 0%.

•   Loan term. This is the length of the auto loan, usually expressed in months or years. Borrowers can have long-term auto loans greater than 84 months or short-term auto loans as low as 12 months. The typical length is five or six years, or 60-72 months.

•   Fees. Any additional costs, such as origination fees, are factored into the APR, so you’ll need to know what those are, too.

•   Taxes. Applicable state, county, and city sales taxes can be rolled into a car loan.

2. Run the APR Equation

Once you have the details above, the following formula can calculate the APR for a car loan:

APR = [(I/P/T) x 365] x 100

•   I = Interest, taxes, and fees

•   P = Principal

•   T = Term (in days)

For this example APR calculation, say the interest amount, fees, and taxes have a combined value of $10,000. The principal is $25,000, and the loan term is 60 months (or 1,825 days).

APR = [($10,000/$25,000/1,825) x 365] x 100

APR = 8%

Some lenders may provide an auto loan calculator to crunch the numbers for you. Typically, you input the borrowed amount, interest rate, loan term, and other information to get APR and monthly payment estimates.

Other factors may impact APR with car loans, but this formula can offer a ballpark figure for your reference.

How Do Auto Lenders Calculate APR?

The method for figuring out what APR to offer on a car loan can differ among lenders. But while the loan terms and approval are ultimately up to the individual lender, these are some key APR components that may be considered:

Down Payment

The amount of money you put down for an auto loan could help secure a lower interest rate and a lower APR. Trading in your old vehicle can be a convenient way to fund a car loan down payment. You can check online sites like CARFAX® or Autotrader® to get an estimate on your trade-in’s value.

Vehicle Age and Condition

If you’re buying a used car, lenders can evaluate a car’s manufacture date, mileage, and general wear and tear when calculating car loan APR. Typically, newer cars fetch lower rates than older vehicles. Some lenders may be unwilling to finance a high-mileage used car purchase.

Loan Term

Loans with longer terms may have higher interest rates than loans with shorter terms. If the lender allows, paying off a car loan early can reduce the overall amount of interest you’d pay during the life of the loan.

Personal Financial Situation

Auto lenders could consider personal financial information, such as how long you’ve been employed and your debt-to-income ratio (DTI) when calculating what APR to offer you. Lenders generally like to see a DTI below 36%, though some may be willing to lend with a figure of up to 50%.

Credit History

A borrower’s credit report may play a large part in the APR of the loan he or she can get. Buyers with excellent credit could even qualify for 0% APR financing on a new car purchase.

Fixed vs Variable APR

Lenders can offer fixed- or variable-rate financing.

Fixed-rate auto loans have consistent payments for the entire loan term, meaning that you can project how much interest you’ll pay each month.

Alternatively, the APR for variable-rate loans can fluctuate as the interest rate changes according to index changes. The APR could increase or decrease over the life of the loan. If you’re unhappy with the APR on your car loan, you may explore auto refinancing or find someone to take over your car loan.

Recommended: Auto Refinance Calculator

Average Auto Loan APRs for Different Credit Scores

Are you concerned about whether you can get subprime auto loans for bad credit? Fret not: There are some auto loan financing options available to borrowers with poor credit scores between 300 and 579.

Your credit score, however, may impact your chances of getting a favorable car loan interest rate and APR. Borrowers with super prime credit had an average new car loan rate of 5.08% compared with 15.43% for borrowers with deep subprime credit in the third quarter of 2024.

While interest rate isn’t as comprehensive as APR, it’s the major component in APR and can illustrate how much rates may vary by credit score. Using data from Experian® (one of the big three credit bureaus), here’s a breakdown of average auto loan interest rates by credit score and car type:

Having a solid credit score can help reduce the overall cost of borrowing money. Checking your credit score beforehand can help you know where you stand before approaching lenders for an auto loan.

When they’re looking at car loan applications, lenders may use a FICO® Auto Score that places greater emphasis on previous auto-loan management and risk than a regular FICO Score does. If you’ve stayed current on car payments for the past seven years, your FICO Auto Score may be in better shape.

Other traditional creditworthiness factors like repayment history and number of accounts are still important, too.

Recommended: Refinance Car With Same Lender

The Takeaway

Understanding how to calculate APR on a car loan is useful when you’re evaluating financing options. It gives a more accurate picture of the cost of borrowing, because it reflects not only the interest rate assessed but also the fees that will be charged. Knowing how lenders calculate APR can help you negotiate and secure the car loan financing that suits you best.

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

Is a 0% APR car loan worth it?

Your personal circumstances may dictate whether a 0% APR car loan is right for you. A 0% APR car loan includes no interest charges, but borrowers who accept 0% APR financing on a car may not qualify for certain discounts or bonus cash rebates. A car manufacturer’s cash rebate can reduce your auto loan borrowing costs. Also, only certain prospective buyers may be offered this deal, and only for specific vehicles.

How does auto refinancing affect your car loan APR?

Refinancing your car loan may provide you with a lower APR and/or lower monthly payment. If you accept and get approved for an auto refi loan, your new lender would pay off your original car loan, and you’ll be responsible for repaying the refi loan over a set term. Refinancing a car loan with bad credit may be possible if you have sufficient income.

Does a down payment lower your APR?

Making a down payment on a car reduces the amount of money you need to borrow to finance a car purchase. Lenders may offer a lower car loan interest rate if you make a sizable down payment vs. no down payment on a car. A sizable down payment can also help avoid a scenario known as an upside-down auto loan, which means that you owe more money than the car is worth.

Photo credit: iStock/hirun

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-023

If you’re shopping for a used car, you may come across vehicles that have rebuilt titles. A rebuilt title is assigned once a car that had a salvage title is repaired and is now considered drivable.

Cars with rebuilt titles are often considerably cheaper than cars with clean titles. However, they also carry risks and, as a result, can be more difficult to finance than other types of used cars. Here’s what you need to know about getting a loan for a rebuilt title car.

What Are Rebuilt Car Titles?

Your car title is the legal document that proves you’re the owner of the car. Brand new cars start with a clean title. Later, if the car is in an accident or otherwise sustains damage (perhaps due to a flood, fire, or hurricane) that renders it undrivable, it may receive a salvage title. This means the car is no longer safe to drive and cannot be registered.

However, a salvage title doesn’t necessarily signal the end of the line. In some cases, salvage title vehicles may be repaired and rebuilt. If the repaired vehicle passes inspection and is declared safe to drive, it can then receive a rebuilt title.

You may purchase rebuilt title cars and register them in your name. You may see both salvage and rebuilt titles referred to as “branded” titles. A branded title indicates there’s something unusual about the title.

Buying Cars With Rebuilt Titles

A major advantage to buying a rebuilt title vehicle is price. These cars can be 20% to 40% less expensive than a similar car with a clean title. However, you’ll need to weigh that savings with increased risk. The car’s troubled past can mean that it will need additional (and potentially costly) repairs in the future.

Before buying a car with a rebuilt title, it can be a good idea to find out why the car was branded salvage in the first place. For example, if the car was completely flooded, it can run a higher chance of having mechanical issues in the future. And, you may end up dealing with other issues, such as fried electrical wires or mold. In some states, these vehicles must be branded with a flood title.

You can learn about a rebuilt title car’s history by visiting the National Motor Vehicle Title Information System website VehicleHistory.gov, as well as other vehicle information websites, like Carfax. It’s also a good idea to have a trusted mechanic and body specialist thoroughly inspect the car before making a purchase decision.

Selling Cars With Rebuilt Titles

If you’re thinking about selling a car with a rebuilt title, you’ll need to make sure it’s properly repaired and passes your state’s rebuilt title inspection. Once it passes, you can put it up for sale.

Keep in mind, however, that a rebuilt title car is generally worth much less than its clean titled counterpart. It may be more difficult to sell the car, and potential buyers may attempt to use the rebuilt title to their advantage to negotiate a lower price.

To get the most money out of a car with a rebuilt title, you’ll want to make sure that the vehicle is in the best shape possible, both under the hood and on the exterior. Touching up any cosmetic damage can also boost your chances for a sale.

Financing a Car Loan With a Rebuilt Car Title

If you’re looking to get a loan for a rebuilt title car, you may come up against some challenges. Why are most lenders against financing rebuilt car titles?

The main reason is that lenders are in the business of managing risk. They may see a rebuilt title car as more likely to break down and lose value in the future. If a car doesn’t run and is costly to repair, the borrower may default on the loan. If that happens, the lender will need to repossess the vehicle and sell it to recoup their losses. If the car doesn’t run, they may not be able to collect much money on a sale.

While large banks generally won’t provide financing for a rebuilt title car, you may have success with a smaller bank, credit union, or online lender.

To increase your chances of getting approved for a rebuilt title car loan, it’s a good idea to obtain (and present) a mechanic’s statement that the car has been thoroughly rehabilitated and is in excellent — and safe — running condition. You’ll also likely need to bring along a statement from your auto insurance carrier, indicating that they are willing to insure the vehicle. Finally, it helps if you have good credit, since this further mitigates risk for the lender.

Recommended: Reinstate Car Loan After Repossession

Benefits of Financing Rebuilt Car Titles

The main advantage of financing any type of used (or new) vehicle is that it allows you to buy and have access to a car without having to pay the full price upfront. The way car loans work is that you get the purchase price of the car upfront, then pay that money back (plus interest) in monthly installments over time.

When you are financing a rebuilt title car, you have the added advantage of a lower initial price tag, which means your loan size will be smaller.

Financing a rebuilt title car can also be a good way to build credit, provided you use your loan responsibly and make all of your payments on time. A strong payment history can have a significant  — and positive — impact on your credit score. Better credit, in turn, can give you access to financing (whether for a car or a mortgage) with attractive rates and terms in the future.

Recommended: Does Financing a Car Build Credit?

Risks of Financing Rebuilt Title Cars

There are also some downsides to financing a rebuilt title car. One of the biggest is finding a lender that is willing to offer a loan for a rebuilt title car.

Once you do find one, you can run into another thorny issue: high interest. Lenders generally charge higher rates for rebuilt title cars than they do for clean title cars simply due to the higher risk involved.

Also, keep in mind that financing a rebuilt title car involves risk for you, too. These cars generally have a higher chance of future problems and, as a result, can lose value quickly. If the car loses value faster than the loan is paid off, you could end up with an upside-down car loan, meaning the car is worth less than what is owed on it.

Recommended: What Should Your Average Car Payment Be?

Refinancing a Car Loan With a Rebuilt Car Title

If you are able to secure financing for a rebuilt title car, refinancing might be an option for you down the road. When you refinance, you pay off your old loan with a new loan, ideally with a better interest rate and/or preferable terms.

You might consider refinancing your auto loan if your initial loan came with a high interest rate, the monthly payments have become unmanageable, and/or you’ve built your credit score (qualifying you for a lower interest rate).

That said, it may be just as difficult, if not more so, to find a lender willing to offer a refinance loan than it was to find financing it in the first place.

Recommended: Pros and Cons of Car Refinancing

Requirements for Refinancing an Auto Loan

Requirements for refinancing an auto loan will vary by lender. Typically, however, each lender will have rules about:

•   Time left on the loan: Lenders will often want you to have paid at least six months into the loan and have at least six months left to go on it. This shows that you have an established history of payments, while giving them enough time to profit off interest.

•   Amount of money left on the loan: Refinancing is essentially taking out a new auto loan. Typically, lenders don’t want to offer small amounts, since they won’t be able to make as much money from them.

•   Mileage and model year: If you bought a rebuilt title car with significant mileage — or you’ve racked up mileage since you bought it — you may not be able to refinance it. Lenders often have caps of 100,000 to 150,000 miles. Model year can also be a factor. Generally, lenders won’t refinance a car that is more than 10 years old.

•   Credit score: As with any loan, your credit score will impact whether or not you are able to refinance your used car. If you’ve built your credit score since your original auto loan, however, you might be able to score a lower interest rate on a refinance.

Recommended: What to Ask When You are Refinancing

The Takeaway

Buying a rebuilt title car involves a certain amount of risk. Depending on the car’s history, it may be more likely than other used cars to experience mechanical issues down the road.

If you’re able to find a rebuilt title car you like and it passes inspection from an independent mechanic, it could end up being a great deal. In addition, you may be able to find a lender willing to finance (or refinance) the car.

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 rebuilt title car?

Yes, just keep in mind that it can take some digging to find a lender that offers loans for rebuilt title cars. Also, interest rates can run high compared to loans for clean title cars.

What are your loan options for cars with a rebuilt title?

Loan options for cars with a rebuilt title are limited, but some lenders do offer financing. These include credit unions that finance rebuilt titles, specialty lenders, and subprime auto loan providers. Interest rates are often higher due to the vehicle’s diminished value and perceived risk, and a larger down payment may also be required. You could also consider a personal loan for car financing.

Can you refinance a car loan for a rebuilt car title?

Refinancing a car loan for a rebuilt title is possible but challenging. Lenders often view rebuilt titles as high-risk, leading to stricter requirements and higher interest rates. Some specialized lenders may offer refinancing options, but you’ll need strong credit and documentation proving the vehicle’s roadworthiness and value.

Photo credit: iStock/choochart choochaikupt

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.

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-Q225-020

Banks, credit unions, and private lenders may be willing to finance a 10-year-old car, but it can require some time and effort to find the right fit.

Auto loan borrowers can also refinance their existing debt on a 10-year-old car. Refinancing pays off the original loan agreement and replaces it with new loan terms. Below, learn how some banks and private lenders may offer financing on decade-old used cars.

Refinancing a Car That Is 10 Years Old

Auto loan borrowers can typically refinance an old car, including one that is 10 years old. Banks, credit unions, and private lenders may have certain requirements that a borrower and used vehicle must meet to qualify for an auto refinance loan.

Some lenders may require the payoff amount on your current auto loan to be between $3,000 and $7,500 to be considered for refinancing.

Private lenders may offer auto loan refinancing on 10-year-old vehicles that have less than 100,000 to 125,000 miles on the odometer. Lenders generally have minimum eligibility requirements for refinancing, and some lenders may offer auto refinance loans on vehicles older than 10 years, including classic or antique cars older than 20.

Refinancing may help you lower your auto loan interest rate or lower your monthly payment. Lenders may originate or service auto refinance loans as a risk-based business decision.

Banks, in particular, are for-profit companies that make money by selling loans and charging interest. Lenders may refinance an older car if they determine it’s worth the risk.

The pros and cons of refinancing a car are something you should consider when evaluating whether to seek an auto refinance loan. Refinancing can help borrowers get a lower monthly payment burden, but refinancing may also cause a borrower’s credit score to dip from a hard pull credit check. Also, refinancing can involve fees that, when you do the math, could make the savings on refinancing less than you expected.

Will Banks Finance a 10-Year-Old Car?

Some banks may finance a 10-year-old car. Commercial banks may have requirements for financing or refinancing used vehicles, such as not being older than 10 years or having more than, say, 125,000 miles on it.

Every bank can set its eligibility requirements when offering to finance high-mileage used car models. Banks may be less willing to finance used vehicles older than 10 years vs. credit unions, but some are willing to take on that risk.

Recommended: When Is a Car Loan Finalized?

Will Private Lenders Finance a 10-Year-Old Car?

Private lenders may finance a 10-year-old car. Online financing marketplaces, for example, may help you find financing to buy used vehicles 10 years of age or newer. These lenders may, like some banks, require the used vehicle to have less than 125,000 miles on the odometer.

In addition to online lenders, private lenders can also include friends or family members who may lend you money for buying a car.

What Is the Oldest Car That I Can Finance?

Some lenders, whether they are banks, credit unions, or online businesses, may be willing to finance antique or classic cars older than 20 years old. A private party auto loan can provide you with financing to buy a used vehicle; that means the individual selling the car could extend you a loan.

Recommended: Loan for Rebuilt Title

Things a Lender Looks for When Financing a 10-Year-Old Car

Here are some things a lender looks for when financing a 10-year-old car:

Age of Car

Auto loan lenders may consider the age of the car when deciding whether to approve financing for it. Some lenders may offer financing on used vehicles up to 10 years old. Certain lenders, including some credit unions, may offer financing on vehicles more than 10 years old, including classic and antique cars over 20 years old.

Mileage

Auto loan lenders may consider the current mileage on the car when deciding whether to approve financing for it. Some lenders may offer financing on used vehicles with less than 100,000, 125,000, or 150,000 miles on the odometer.

Minimum and Maximum Loan

Some lenders may offer car loan financing options ranging from $7,500 to $150,000 on used vehicles. Lenders within these ranges may provide borrowers with a loan amount equal to 100% of the vehicle’s National Automobile Dealers Association (NADA) retail value.

Some lenders may offer loan amounts exceeding 100% of the vehicle’s listed NADA retail value. For vintage car collectors, private lenders may offer financing up to $800,000 on classic cars.

Where Can You Get a Loan for a Car Older Than 10 Years?

Here are some options for where you can get a car loan on a vehicle older than 10:

Private Lenders

Private lenders may offer financing on vehicles older than 10 years. Some private lenders, for example, specialize in collector car financing. Lenders of classic car loans may provide financing up to $800,000 on vintage cars, such as a classic Mercedes-Benz Roadster from the 1950s, if you’re in the market for such a luxe vehicle.

Banks

Banks may offer financing on older used cars that have been driven more than 100,000 miles. Such banks may also offer financing on classic vehicles manufactured decades ago. Every bank can set its own eligibility criteria, but some are willing to offer financing on vehicles of any age.

Credit Unions

Credit unions may offer financing on older used cars up to 10 years old and beyond. What’s more, some may offer classic car loans on vehicles aged 20 and older.

Financing 10-Year-Old Car Requirements

Lenders may set the following requirements when financing a 10-year-old car:

Credit Score

Some of the major credit scoring models, including VantageScore® 4.0 and base FICO® Scores, range from 300 to 850. Some lenders may require that borrowers have base FICO Scores of 661 or greater to qualify for financing on a 10-year-old used car.

Financing data from Experian shows that deep subprime borrowers with credit scores between 300 and 500 received used car loan financing at an average (and steep) rate of 21.55% in the third quarter of 2024 vs. a rate of 7.41% for those with a super prime rate of 781 to 850. This shows that consumers with bad credit may qualify for used auto loan financing, but consumers with good credit may qualify for better rates of interest.

Cosigner

Consumers with bad credit or no credit may need a loan cosigner to qualify for financing on a 10-year-old used car. A cosigner accepts liability and agrees to make any necessary payments if the borrower defaults on the loan. However, the cosigner does not have any claim to the car itself unless they are added to the title.

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

Down Payment

Consumers in some cases may be required to make a down payment to qualify for financing on a 10-year-old used car. Some lenders may require consumers with bad credit or no credit to make a minimum down payment equal to $1,000 or 10% of the vehicle’s purchase price, whichever is higher.

Fees

Some lenders may require borrowers to pay origination and documentation fees to secure financing on a 10-year-old used car. An origination fee is an administrative fee that some lenders may charge for processing your loan application. Some lenders may also require borrowers to pay a prepayment penalty fee if they pay off their auto loans early.

Recommended: What Should Your Average Car Payment Be?

The Takeaway

Car loans may provide you with funds to finance or refinance an older car. Some banks, credit unions, and private lenders may offer this kind of funding, sometimes with requirements about the exact age and mileage of the auto. A 10-year-old vehicle with an existing car loan may qualify for refinancing if the vehicle is in relatively good condition.

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 refinance a 10-year-old car?

Borrowers with an existing loan on a 10-year-old vehicle may refinance their debt if they meet the eligibility criteria. Lenders may require the borrower to be creditworthy and the vehicle to have less than, say, 100,000 miles on the odometer. The outstanding balance on the borrower’s existing car loan may also have to be between such amounts as $3,000 and $7,500 to qualify for refinancing.

Do private lenders refinance 10-year-old cars?

Yes, private lenders may refinance 10-year-old cars. Online financing marketplaces, for example, may help you find financing to buy used vehicles that are no more than 10 years old. These lenders may require the used vehicle to have less than 100,000 miles on the odometer or a somewhat higher figure.

Do banks refinance 10-year-old cars?

Yes, some banks may refinance 10-year-old cars. These banks may require the payoff amount on your existing auto loan to be within a certain range. Banks may also have general car loan requirements that require borrowers to provide proof of income and identity.

Photo credit: iStock/DMP

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-024

Getting approved for a car loan typically requires proof of income, but not everyone has a traditional 9-to-5 job or a steady paycheck. Whether you’re self-employed, between jobs, or have other forms of income, qualifying for a car loan without standard income documentation is still possible.

No income verification car loans may offer a solution for borrowers who have the financial resources to make monthly payments but lack conventional income proof. While they can provide a path to car ownership, no doc car loans may come with higher interest rates or stricter terms.

Here’s what you need to know about no income verification car loans, including what they are, how to get one, and resources you may need to get a car with no income.

Can I Get a Car Loan With No Income?

It is possible to get a car loan without traditional income, but it typically requires proving to the lender that you can still meet your financial obligations.

Instead of pay stubs or W-2 forms, lenders may accept other forms of income verification, such as bank statements, alimony or child support payments, Social Security benefits, retirement distributions, or investment income.

A strong credit score, low debt-to-income ratio, or offering a larger down payment can also help improve your chances of approval.

Challenges With No Income Verification Car Loans

Getting approved without income can be more challenging and may come with stricter loan terms. Lenders take on more risk when borrowers lack a steady paycheck, which means they might charge higher interest rates or require a cosigner.

It’s important to carefully review the loan agreement and make sure you can afford the payments before moving forward. Being honest about your financial situation and exploring multiple lenders can help you find the best option.

Recommended: Are Auto Loans Secured or Unsecured?

How to Get a Car Loan With No Proof of Income

Because lenders want reassurance that you’ll be able to pay back a car loan, if you have no proof of income, you may need to go one of these routes to get loan approval:

•   Cosigner

•   Cash-out auto refinance

•   Leverage good credit scores

•   Other income sources

Here is more information about each of these strategies:

Cosigner

When you have limited income or can’t prove your income, a car loan cosigner might be the right solution to get car loan financing. A cosigner is someone who agrees to share the responsibility of paying the car loan and, if the cosigner’s financial and credit scores are acceptable to the lender, this may lead to loan approval even when you can’t verify your own income.

Cash-Out Auto Refinance

You may apply for a cash-out auto refinance if you already have a car loan. This lets you borrow against the equity in your car to get cash for another purpose. A cash-out auto refinance, for example, may give you financing to cover medical bills or home repairs.

Good Credit Score

Lenders generally look at two main factors when deciding whether to approve a car loan: income and credit scores. If one of these two factors is acceptable to a lender, this may help to overcome some of the challenges with income. A good credit score can also help you secure a good interest rate on a car loan.

Other Income Sources

Perhaps when you say you have “no income,” you’re referring to job-related income. And, although individual lenders have their own requirements for their car loans, there are other forms of income that they’ll likely consider. These can include retirement or pension income, disability and Social Security income, and money from investments, including rental properties.

If you’re self-employed, even part-time, you can often use this income to qualify.

You can list child support and alimony, too, although you aren’t required to disclose these types of maintenance support income.

If you aren’t sure whether you’ll meet the guidelines for a particular lender, then requesting an auto loan preapproval can help. In this process, the lender will let you know what potential offer they’re likely to make, including the amount they’d be willing to finance. This is a conditional offer, but preapproval estimates can still provide helpful benchmarks for you as you seek to get an auto loan.

How to Refinance a Car

Here are tips if you want to know how to refinance an auto loan:

•   Ahead of time, you’ll want to find out whether a lender offers no income verification auto refi loans and whether you’ll meet their requirements.

•   Determine what the refinance costs might be.

•   Check to see whether your lender charges a prepayment penalty, because refinancing pays off the original loan early and replaces it with a new debt.

•   Refinancing using the same lender is a possible option to consider.

•   You may find auto refinancing that’s right for you by shopping around and comparing rates.

•   Borrowers may refinance for a lower interest rate, lower car payments, or extra proceeds from a cash-out auto refinance.

Recommended: Refinance a Car With Bad Credit

Where to Get a Car Loan With No Income

If you’re seeking a car loan with no income, consider starting with credit unions, online lenders, or buy-here-pay-here dealerships. These institutions may offer more flexible approval criteria compared to traditional banks.

Online lenders often cater to non-traditional borrowers and may accept alternative proof of income. Credit unions, known for their member-friendly approach, might be more willing to work with applicants who can demonstrate financial stability through savings, benefits, or other assets. Buy-here-pay-here dealerships may offer financing directly, though often at higher interest rates, so it’s important to examine terms carefully.

The Process to Get a Car Loan With No Income Verification

The process to get a no doc car loan can be challenging. You may begin the process by searching for a lender that offers car loans with no proof of income. You may need to present proof of identity and proof of residence. Borrowers may not need proof of income if a creditworthy cosigner brings proof of income to the table.

Some lenders may offer no income verification car loans if you have assets or cash that doesn’t come from a job. Not all lenders will be open to making this type of loan and those that are may have different requirements and processes.

Recommended: When Is a Car Loan Finalized?

The Takeaway

There can be significant differences between getting a car loan with no income whatsoever and getting a no income verification car loan—with each person’s financial situation driving the situation. Someone might get loan approval when they aren’t currently employed if the person has other income sources. This can be true when buying a car and when refinancing one.

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 no income verification car loan?

A no income verification car loan is a type of auto financing where traditional proof of income, such as pay stubs or tax returns, may not be required. Lenders may instead consider alternative documentation like bank statements or asset information.

Can I get a car loan if I don’t have a job?

Yes, it’s possible. Lenders may approve applicants who are unemployed but have other sources of income or financial support, such as retirement funds, disability benefits, alimony, or significant savings.

What are the risks of getting a no income verification car loan?

These loans may come with higher interest rates, stricter repayment terms, or larger down payment requirements. Borrowers should be cautious and ensure they can make consistent payments to avoid repossession or credit damage.

Photo credit: iStock/Orachon Paksuthiphol

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.

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.

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

SOALR-Q225-007