Can I get car finance if I’m over 50? What about insurance?
Can I get car finance if I’m over 50? What about insurance?
3 May 2022 Concept Car
Are you over 50 and afraid that you won’t be able to secure car finance? Then we’ve got good news for you.
Your age should, generally speaking, not be a reason not to get approved.
There are a few caveats and in some respects, yes, trying to get a car loan when you’re no longer 30 can be hard. But the times when youth was everything and age was considered a deficit are long over.
So why is it that we still see so many over 50s walk into our showroom who believe they stand no chance of a fair deal?
Read on to find out all the answers – and how you can find the car finance that’s best for you.
Do older people still really need a car?
This is something we hear all the time: Older people should accept their age, sell off their car and simply take public transport. Also, what do they really need their car for?
To us, this doesn’t make sense whatsoever.
For one, over 50s are by no means “old”. As we’ll discuss in a second, they are usually the best drivers and remain so until they’re 65-70. That’s a pretty impressive track record.
Also, even 70+ year old drivers can safely navigate difficult traffic situations thanks to innovative safety and navigation features.
And the point about “not needing a car” is equally bizarre. In fact, as reported by Saga Newsroom, “Having a reliable car is a key concern whether they need it for commuting, shopping or for leisure.”
These may not be the things younger drivers consider important. But they are just as valid as needing a ride back home after a night at the clubs.
When it comes to cars, age is not just a number.
Another claim we often hear from so-called experts is that “age is nothing but a number”. This, we find, tends too much into the other extreme.
Even if that were true, it’s a pretty important number. A car depreciates the older it is until its 10th-12th birthday. After that, its depreciation flatlines. And once it gets really old, it turns into a classic and suddenly becomes sought-after (and expensive) again.
The same applies to your own age when it comes to financial aspects:
Mortgages are extremely age-sensitive. If you’re looking for a house, you’re already considered old once you’re over 45. The reason is that mortgages are extremely high and you may take a long time to pay them off. Add a 25 year lease to your age and you’ll understand why some lenders are apprehensive lending to over 50s.
Car insurance, on the other hand, can actually become quite a bit cheaper once you’re older. Insurance premiums are at their lowest for those over 50, Experience and a no claims bonus can add up to truly remarkable reductions. Once you’re over 70, meanwhile, the risk of an accident rises again – and so do premiums.
Do car finance lenders also appreciate experience?
Well … no.
Car finance falls somewhere in between the extremes of the markets for car insurance and mortgages.
Car loans do not take a quarter century to pay off. Usually, you’re debt-free after somewhere between 4-8 years. That’s still a long time. But it is short enough for dealers or banks to calculate the risk. And mostly, it’s pretty acceptable.
It can be harder to get a loan if you’re older – but it really depends on a wide range of factors. Age in itself is not usually the deciding one of those.
Accordingly, many older drivers report that they already bought three new cars between the age of 50-70.
Car loans for those over 50 have another important advantage
Whether or not banks prefer to lend to older people or not is debatable. What we do know is that car finance, despite the high sums involved, is different from buying a big plasma television or another expensive tech gadget.
The main reason is that the car itself is a security for the lender.
Although cars depreciate, they do hold a certain value over time. This holds especially true during the current pandemic. With the supply for automobiles set to lag behind demand for quite a while, even a complete default on a car loan doesn’t need to be a disaster.
The bank can simply claim the vehicle and sell off the car in question at an auction to limit its losses.
This is far less true for other comparable items. It means that car finance has remained a dynamic and fairly age-independent market for years.
What do lenders usually consider for older car finance applicants?
Let’s take a look at what a bank or dealership will consider when pondering your car loan application:
Your income: If you’re over 50 and employed, this will typically not be different than for any other driver. And why should it be?
The closer you come to your retirement age, the more things will change. But not too much. If you apply for car finance at 69 and plan to retire at 70, questions will be asked. But even that must not be the end of the line (we’ll get to that in a second).
Your outgoing: i.e. how much you’re spending. More precisely, the relation between how much you’re spending and how much you’re earning is key here.
Your assets / securities: Your income doesn’t need to be sky high. But you will have to compensate for low earnings in some form. Having savings on the bank is one way to do this. Owning a few valuable items is another. You can then sell these off if you’re in need of cash.
The value of the car: Obviously, the more expensive a car is, the longer you’ll have to pay it off, the higher the interest and the monthly instalments, and the higher the risk of a default.
As you can see, the age of the driver is not usually something lenders consider. That said, here are a few age-related points to consider when it comes to car finance.
Over 50s will often have a wider source of income.
Planning for your pension doesn’t start at 25. But neither does it start at 65. Many people in the UK are preparing for their retirement as early as possibe. Rightly so. Because your pension is most likely not going to be enough to shoulder the burden of a car loan.
A smart way of doing this is to expand your source of income. Creating passive income through investments is one way of doing this, buying shares another. Buying value-sustaining raw materials like gold is another good idea.
Most of these approaches requires a bit of capital to get started. Which is why people only get going after a certain age.
A recent news report confirms this: More and more over 50s are supporting the start-up scene in search of lucrative business ventures. This means that, very often, older drivers may actually be safer borrowers.
Paying off a loan once you’re older may be better than paying cash.
The older we get, usually, the more we appreciate the benefits of cash. Paying for something in cash is the most transparent transaction imaginable: The money you’re holding in your hands is an amount you actually have, and after you’ve spent it, you know exactly how much remains on your account.
Also, it won’t cost you any interest, which is a massive benefit, as interest payments for many borrowers exceed the actual cost of the vehicle.
That said, paying in cash has a big disadvantage, especially for those after a certain age: it really eats into your savings. Assets, after all, aren’t just important when applying for a loan. They’re also important as an insurance against sudden financial shocks.
Loans, in this regard, are more expensive, but safer. You only pay a certain amount each month and can always rely on the safety of your assets in case of an emergency.
Can I also get a car loan as a pensioner?
This one is a little more tricky than the question about car finance for over 50s. (in some cases, the two groups may overlap.)
The reason is that income is typically lower for pensioners, who only receive a sort of “wage” equivalent.
That said, just how high your pension is, obviously depends on your income while you were working. Also, as we mentioned, you could have prepared yourself and created other sources of revenue. In fact, those additional sources of income may be the very reason why you could safely stop working.
In many respects, nothing really changes when you’re on a pension. Car finance depends on how much you can afford to pay each month and the risk of, at some point, not being able to pay anymore. As long as these two points are covered, there’s no reason why you shouldn’t be able to get great car finance.
Over 50s Car Loans at CCC
At Concept Car Credit, we believe that driving should be open to as many people as possible. That’s why we look at your personal situation instead of setting up fixed rules which make it hard for you to find a great car.
If you’re over 50 or even a lot older, let’s talk. Get in touch now so we can discuss your options with you. There’s no need to be afraid of a bad credit score, as we usually don’t even pay it a lot of attention. Instead, we focus entirely on how to make a deal work.
Our friendly team is looking forward to hearing from you.
Call us at 0800 093 3385.
Or use our contact form for a free offer.