When a lender finances a vehicle, the car itself acts as security for the loan. If you stop making repayments, the lender can repossess and sell it to recover the debt. The older and higher-kilometre the vehicle, the less confidence a lender has that it will hold sufficient value over the loan term to cover the outstanding balance if things go wrong. This is why age and kilometre limits exist, and why they tighten as vehicles get older.

This is one of the most commonly misunderstood aspects of older car finance. Most lenders set a maximum vehicle age at the end of the loan term, not at the point of purchase. A lender with a fifteen-year end-of-term limit would allow a ten-year-old car to be financed over five years, but not over six. As the vehicle ages, the available loan term shortens, which pushes up the monthly repayment even if the purchase price is relatively modest.

Because older vehicles carry more risk as security, lenders price that risk into the interest rate. The rate offered on a ten-year-old car can generally be higher than the rate on a two-year-old model of similar value. The gap varies between lenders, which is one reason why comparing options across multiple lenders is particularly important for older vehicle finance. The difference in total interest paid over the loan term can be meaningful.

Some lenders simply will not finance vehicles beyond a certain age or kilometre threshold, regardless of the borrower's financial profile. Others will consider older vehicles but with shorter terms, higher rates or a larger deposit requirement. The range of lender policies on older vehicles is considerably wider than for new cars, which makes knowing which lenders are likely to consider your specific vehicle an important first step before you apply