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Compare car loans for retirees

How to finance a new car in your golden years.

Though retirement comes with a slew of benefits, one of the downsides is that it can be harder to qualify for a loan. While it may be more difficult to meet a lender's income requirements now that you're on a fixed income, you still have options if you're looking to finance a new car.
Name Product Filter Values Minimum credit score APR Loan term Requirements
No minimum credit score
3.9% to 27.9%
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates. Car Loans
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
CarsDirect auto loans
No minimum credit score
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Auto Credit Express Car Loans
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.

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Can I get a car loan if I’m retired?

Yes, as long as you have adequate savings or some kind of income coming in, you don’t need to be working to get a car loan. Lenders can’t discriminate based on age alone, though same may require that you be employed. For those that don’t, you can typically show your Social Security check, disability benefits, pension or other income as proof that you can afford to pay back the loan.

How do car loans work if I’m retired?

Taking out a car loan when you’re retired works just like any other loan. You borrow what you need to cover the cost of your car and pay it back with interest over a specified period — usually one to seven years. Most car loans are secured, meaning the car you’re purchasing is used as collateral. If you can’t pay back the loan, your lender can repossess your vehicle to recoup the costs.

The only difference is that instead of looking at your income from employment, your lender considers other sources like your Social Security benefits or pension. In general, the less you need to borrow, the greater your chances of getting approved. Because of this, you might want to buy a used car instead of a new one or save up for a hefty down payment so you don’t need to borrow as much.

What should I look for in a car loan?

When comparing your different car loan options, keep your budget and current expenses in mind. This can help ensure you find a loan with monthly repayments you can comfortably afford. Here are a few factors to consider:

  • Loan amount. Most lenders set limits on how much you can borrow — typically between $5,000 and $100,000. If you’re buying a used car, make sure you can borrow at least the minimum amount.
  • Interest rate. Because the interest rate makes up the majority of a loan’s cost, a lower interest rate will likely make your loan less expensive. But consider any fees and other loan terms when calculating the true cost.
  • Fixed vs. variable rates. Many lenders offer both fixed- and variable-rate car loans. Fixed rates stay the same throughout the life of the loan, while variables can go up or down depending on changes in the lending market. As a retiree on a fixed income, you may want to opt for a fixed rate so you can plan ahead and make a solid budget.
  • Fees. Beyond interest, lenders may also charge origination fees, prepayment penalties and closing fees. These charges can quickly add up if you’re not careful.
  • Loan term. Most car loans have a repayment period of one to seven years. Longer terms can cost more overall but have lower monthly payments, which can be helpful when you’re on a fixed income.
  • Required add-ons. Some lenders may require you to purchase full-coverage auto insurance or GAP insurance to protect you in case your car is totaled or stolen. This can add up to thousands of dollars in extra costs each year, so be cautious before accepting a loan that requires this.

What criteria will I need to meet if I’m retired?

Since lenders can’t judge you solely based on your age, you’ll be on the same playing field as everyone else when it comes to taking out a car loan. While some lenders may have more strict criteria, you will need meet the following points when you apply:

  • Regular source of income, such as your pension or Social Security payments
  • Fair to excellent credit
  • US citizen or permanent resident

In addition to these basic personal criteria, many lenders may also require your vehicle to meet certain age and mileage restrictions if you want to buy a used car.

How do I apply?

Applying for a car loan as a retiree is exactly the same as applying before retirement. Many lenders offer online applications, though some banks and credit unions may require you to apply in person at a local branch. To apply online, follow these general steps:

  1. Compare your options using the table above.
  2. Click Go to site and navigate to the online application.
  3. Enter information about your financial situation and income.
  4. Enter the VIN, make and model of the car you’re interested in purchasing.
  5. Submit the application.

Many online lenders can provide a decision in just minutes, while banks and credit unions can take as long as a week to get back to you.

What other ways can I finance a car when I’m retired?

You don’t necessarily need to borrow a car loan in order to finance a vehicle. Here are two other options to consider:

  • Personal loan. If you don’t want to back your loan with the car you’re purchasing, an unsecured personal loan may be for you. Since lenders rarely set restrictions on how you use your funds, you may be able to cover the full cost of your car including licensing, registration and taxes. You typically need good to excellent credit to qualify for the most competitive rates, though.
  • Car lease. Besides a long loan term, another way to keep your monthly payment low is to opt for a car lease. However, you’ll still have to put money up front to lease the car, and you won’t have any trade-in value if you decide to buy a car after your lease is up.

Compare more loan options when you’re retired

Bottom line

Being retired doesn’t have to keep you bound to your old car. Taking out a loan is no more complex than before you were retired, although you’ll have to show you can afford repayments based on your pension, Social Security benefits or other fixed income.

To learn more about how car loans work and compare lenders, check out our guide.

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