Can I Refinance an “Older” High-Mileage Vehicle?
When it comes to refinancing older vehicles with high mileage, it’s not impossible, but it does make it a little more difficult.
When refinancing any vehicle, the major factor for the vehicle itself is its loan to value. This is a way of looking at the remaining loan amount versus the value of the actual vehicle. This is also where the phrase “my car is too upside-down” comes from. Meaning, the vehicle has a much greater remaining loan amount than the actual cash value of the vehicle, thus having a high loan to value.
Calculating Your Loan to Value
Loan to value is simple to calculate, using NADA or Kelly Blue Book you can search the VIN of the vehicle and adjust the mileage of the vehicle to determine the cash value. Once you have the vehicle’s cash value, you can then divide the cash value by the remaining loan amount. A good rule of thumb is anything over 135% Loan to value will have a tougher time getting approved, and anything under 135% should meet most Credit Unions requirements. This does not apply to Banks, they typically require a lower percentage, closer to a range of 90%.
Loan to Value Equation:
Remaining Loan Amount = $25,000
Cash Value of Vehicle = $20,000
Loan to Value = 125%
