Answers to common questions retirees have about getting a car—and alternatives they may not know about.

With many retirements spanning 20 years or more and cars lasting about 16 years on average, it’s no surprise that many retirees find themselves needing a new car. If someone doesn’t have cash set aside to cover the purchase price can they get financing on fixed income? Can you use retirement savings? Here are answers to common questions about buying and financing a car as a retiree.

Can I borrow from my 401(k) to buy a car?

If your 401(k) plan allows loans you can borrow funds to pay for a car. However, it may not be the best choice because you could:

• incur fees
• lose out on potential investment earnings
• deplete retirement savings sooner than anticipated

For many retirees, there are better options for buying a car than borrowing from retirement funds.

Can I buy a car with only social security income?

It is possible to buy a car with only social security income. If you were a high earner during your working years, your monthly benefit could be as much as $5,108 in 2025. However, the average monthly benefit for retired workers is $1,976. Your ability to pay for a car solely with social security income depends on your benefit amount as well as your expenses for other things like housing, medical care, prescriptions and food.

Choosing a certified pre-owned car rather than a new car can help lower transportation costs for retirees on a fixed income. Another option is leasing which can get you in a car without needing a down-payment.

Can retirees get financing for a vehicle?

Yes, retirees can get auto loans! Like anyone applying for a vehicle loan, you’ll need to show proof of income and have a credit score acceptable to the lender.

If you plan to finance your vehicle, getting pre-approved for an auto loan allows you to go shopping with confidence and knowledge of what you can afford.

Alternatives buying a car as a retiree

The cost of a car goes beyond the purchase price. According to AAA, the overall cost of owning a new car in 2024 was $12,297. Insurance, fuel, registration and maintenance all add to an auto owner’s out-of-pocket expenses. While the costs might be a barrier to ownership for retirees, not having a car doesn’t mean being stuck at home.

Retirees can redirect their transportation dollars to rideshare services like Uber and Lyft.

Consider the cost of car ownership— roughly $2,000 per month—in relation to paying for local rides. If the average ride is $25, you could take 80 rides at the same cost as buying a car. If you take fewer than 80 trips per month, you’d save money. And, if you want to take a long trip you could rent a car.

Also, many Area Agencies on Aging offer low-cost rides. For example, RideLink in Kent County provide rides for adults 60 and older for just $3 per trip.

Have more questions?

At Consumers, we love helping members, including retirees. Give us a call at 800.991.2221 or visit us in person at one of our locations.

 

All loans subject to approval. Rates, terms, and conditions are subject to change may vary based on credit worthiness, qualifications, and collateral conditions.