Although it is easy enough to assume that any given vehicle is eligible for financing – they are an asset after all, right? – In reality this is far from normal practice. Lenders will want to minimise their exposure to certain levels of risk and in the eyes of a financier, certain cars pose more risk than others when it comes to the borrower paying back the debt in full. Of course, restrictions vary from one lender to the next, plus your own personal circumstances may play a part in things as well. For a general overview of cars which have financing restrictions, continue reading.
First however, it’s important to realise why financiers view particular vehicles as a risk in deciding whether to issue a loan. The reason for this is because of the difficulties that would come in trying to resell a vehicle that has been the subject of a default loan, or delinquency. Lenders will usually take possession of the vehicle in such circumstances and the prospect of being left to hold scrap metal is something that hardly appeals to the majority of them.
Every state has its own register outlining vehicles that have been written-off. What’s more, it is common practice for prospective car buyers to check such registers before forking out their hard earned. Even if the write-off is deemed repairable, financiers would be hard pressed to offer finance for an asset that is unlikely to be on-sold in the future for any meaningful capacity other than scrap value.
Although there is generally more flexibility and discretion with this category as opposed to written-off vehicles, restrictions on financing for older cars are still commonplace. If by the end of the loan the car will be at least 12 years old, you may encounter some resistance from the financier to support the loan.
This is even more so if you were taking on a long term lease. For example, up to five years. In cases like this, you may want to shorten the term of your loan to a couple years. You might be wondering, how do collectors or vehicle enthusiasts secure some of those classic gems? Well, as with most things, if your credit history is in good shape, and you’re able to put forward a reasonable case for making repayments on the loan, there are always financiers at hand.
Since imports are vehicles registered abroad instead of locally – with many having their own specifications and operating conditions not aligned with Australia – they can be a tough ask for lenders to fund. This is a case where the specific vehicle of the vehicle will need to be judged on its own merits, rather than a blanket rule applying across the board. As a general tip however, imports sold by private sellers are much less likely to get the tick of approval. However, despite the above, recent regulatory changes allowing the import of vehicles could set the scene for a shake-up in this area, so it will be one category to watch closely for developments.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.