The Freedom of the Open Road
For generations, driving has symbolized independence in America. The ability to get behind the wheel, choose your own destination, and set your own pace has long represented freedom. For older adults — whether entering retirement or well into it — that independence takes on new meaning. A vehicle is not just transportation; it is the connection to family, healthcare, travel, and daily life.
Yet, buying a car after 60 looks quite different than it did at 40. Needs change. Priorities shift. Market dynamics are evolving. Today, retirees face an auto market defined by high prices, complex financing choices, and fast-changing technology. And for many older buyers, the car they purchase at 70 or 75 could be the last new vehicle they buy.
At Aurelius, we believe car buying is no longer just a consumer decision — it’s a financial planning moment. A well-chosen car can enhance retirement security, preserve independence, and protect cash flow. The key is to approach it with strategy, not impulse.
Financing Comes First: Should Retirees Pay Cash or Finance a Car?
One of the biggest mistakes retirees make is assuming the only options are to pay cash from their portfolio or take out a simple dealer loan. Both can be shortsighted. Selling investments can trigger capital gains taxes, bumping retirees into higher Medicare brackets through IRMAA surcharges. Meanwhile, financing without a strategy may create unnecessary monthly strain.
There are creative financing strategies available — and older buyers are in a strong position to take advantage of them.
Cash vs. Portfolio Preservation
For some, writing a check from savings seems simplest. But that choice may be costly if it forces taxable withdrawals or accelerates RMDs (required minimum distributions). In many cases, it makes sense to leave assets invested and use low-interest financing instead.
For example, if your portfolio is consistently returning 6% but an auto loan offers 3.5% APR, financing may actually preserve wealth over time. The real question is: does this loan align with your retirement budget and liquidity needs?
Portfolio-Based Lending Options for Car Purchases
Portfolio loans or lines of credit — borrowing against investments without selling them — are increasingly attractive. Interest rates often run lower than consumer auto loans, and borrowing doesn’t trigger capital gains. Payments can be structured flexibly, with interest-only options in some cases. This approach keeps investments growing while freeing cash for the purchase.
At Aurelius, we frequently evaluate whether a portfolio line of credit might work better than tapping taxable accounts. Used prudently, it avoids liquidity shocks and tax surprises.
Home Equity and Lines of Credit
For homeowners with significant equity, a HELOC (Home Equity Line of Credit) can sometimes offer competitive rates. The trade-off, of course, is putting the house at risk — something we approach cautiously with clients. But for disciplined borrowers, leveraging home equity for a major purchase like a car can make sense, particularly when combined with tax deductions.
Manufacturer Incentives and Captive Financing
Carmakers are competing fiercely for buyers, especially as EVs slow in sales. Ford, Volvo, Lexus, and Genesis have offered rates as low as 1.9% APR (or even no interest) for qualified buyers. These incentives can be attractive, though they sometimes limit negotiating room on the sticker price. You might also forgo a cash discount to get that low rate. Still, for retirees with excellent credit, manufacturer-backed financing often beats cash.
Credit Union Auto Loans
One of the most underappreciated tools in the retiree’s financing toolbox is credit union auto loans. Credit unions are member-owned, not-for-profit institutions, often offering more favorable interest rates and fewer fees than traditional banks or dealership lenders. Membership rules vary (sometimes based on geography, employer, or community affiliation), but many older Americans qualify through local institutions.
For example, Hanscom Federal Credit Union currently offers new and used car rates as low as ~5.49 % APR over terms up to 48 months. Meanwhile, Digital Federal Credit Union (DCU) shows auto loan rates starting at 5.49 % for terms up to 48 months, and up to 5.99 % in longer terms such as 72 months. What these credit unions offer beyond competitive rates is flexibility in underwriting, member-friendly lending policies, and a more personalized experience. When considering auto financing, retirees should always compare the local credit union offers side-by-side with manufacturer incentives or other loan sources—and work with their Aurelius advisor to evaluate cost, terms, and strategic trade-offs.
The New “One Big Beautiful Bill” Deduction
The recently passed One Big Beautiful Bill Act (OBBB) created a powerful new tax benefit for car loans. From 2025–2028, buyers can deduct up to $10,000 in qualified auto loan interest annually, provided the car is new, assembled in the U.S., and for personal use. This deduction is “above the line,” meaning no need to itemize.
For retirees weighing financing versus paying cash, this provision is a game-changer. Even if the loan rate is higher than expected, the tax deduction can tilt the math in favor of financing. An Aurelius advisor can run side-by-side projections to illustrate the after-tax cost of financing versus liquidating investments.
Key takeaway: Financing isn’t just about affordability — it’s about tax efficiency, liquidity management, and aligning payments with your broader retirement income plan.
Best Car Buying Options for Retirees in 2025: Buy, Lease, or Wait?
With financing strategy in place, the next question is: what to buy? The traditional choice between new and used has expanded to include hybrids, plug-in hybrids, and fully electric vehicles (EVs). Each has pros and cons, particularly for retirees.
- Buying New: Delivers reliability, warranty protection, and the latest safety tech. But depreciation hits hardest in the first 3 years.
- Certified Pre-Owned (CPO): Offers savings of 25–30% versus new, while retaining warranty coverage. A strong option for retirees who drive fewer miles annually.
- Leasing: Provides access to newer cars at lower monthly costs. Works well for low-mileage retirees but creates perpetual payments.
The choice often comes down to control and predictability. Retirees value peace of mind — and that means choosing ownership or financing options that won’t disrupt monthly budgets.
Hybrids: The Retirement “Sweet Spot”
While EVs dominate headlines, hybrid vehicles have quietly reemerged as the most practical option for many retirees. They combine strong fuel economy, lower emissions, and reliability without the infrastructure challenges of all-electric cars.
Top hybrids like the Toyota Prius, Honda Accord Hybrid, and Hyundai Sonata Hybrid deliver 40–50+ mpg. Hybrid SUVs offer a few more creature comforts while still getting 30+ mpg. Want more space? The largest hybrid SUV on the market by maximum cargo volume is the Toyota Grand Highlander Hybrid, offering 97.5 cubic feet of space. Want performance? Mercedes Benz has their AMG C63SE with an electric motor and gas engine that combine to produce nearly 700 horsepower, around 3 second 0-60 times, with all wheel drive and incredible fuel economy. If the price doesn’t bother you, what’s not to like? Motorsports are a testing ground for automotive innovation and hybrids have been a part of Le Mans since 2012 and Formula One since 2014, For retirees who may take long trips or want to minimize fuel costs, hybrid efficiency translates directly into monthly savings. Maintenance tends to be lower than gas-only vehicles, and hybrids now often last well over 200,000 miles.
Hybrids also align with retirees’ values:
- Cost savings protect fixed incomes.
- Predictable ownership costs reduce financial stress.
- Lower emissions reflect a desire to leave a lighter footprint.
- Reliability ensures fewer surprises late in retirement.
While EVs may eventually become mainstreamed, hybrids offer a bridge solution: eco-conscious, cost-efficient, and proven. For many older Americans, they’re the pragmatic choice.
Car Features Older Drivers Should Prioritize
Car technology has advanced dramatically in the past decade. But which features actually matter most for older drivers? The answer comes down to independence, confidence, and comfort, says a recent report from Consumer Reports:
Safety and Assistance
Modern driver-assistance systems — automatic braking, blind-spot detection, and lane-keeping assist — reduce the mental and physical strain of driving. They act as second sets of eyes and ears, extending the years seniors can safely remain on the road.
Visibility and Navigation
Adaptive headlights that pivot with the road, high-visibility digital dashboards, and multiple backup cameras address age-related vision decline. Clear, audible GPS navigation reduces stress and keeps drivers focused.
Comfort and Accessibility
Power-adjustable heated seats, large door openings, and higher seat positions make it easier to get in and out of vehicles. These ergonomics are not luxuries — they’re enablers of independence.
Simplicity in Controls
Older drivers prize large knobs, intuitive menus, and push-button starts over complex touchscreens. Automakers who prioritize simplicity alongside sophistication are winning loyalty from retirees.
Familiar Tech Ecosystems
Smartphone integration via Apple CarPlay or Android Auto lets drivers use familiar apps, reducing learning curves and frustration.
Taken together, these features allow retirees to stay behind the wheel longer — safely, comfortably, and confidently.
Car Insurance Tips for Retirees and Families
Car decisions don’t stop at the purchase. Insurance strategies matter too — especially for multi-generational households.
- For adult children living at home, it may make sense to keep the car insured on the family policy for cost savings. However, a younger driver with a poor driving record may cause the balance of the cars and insureds in a households to endure high rates. Shopping around makes sense in those insurance sticker shock cases. With that, a young driver with their own vehicle and insurance with companies like Progressive who offer plugin monitoring devices help to lower rates as safer driving histories take hold.
- For grandchildren, ownership should be clear: if the grandparent owns the car but the grandchild drives it independently, liability exposure rises. Co-titling or transferring ownership may be safer, per above Also with younger drivers, the liability upon the assets and estates of wealthier parents and grandparents should be considered as well.
- For older drivers, usage-based insurance programs (like Safeco RightTrack or Travelers IntelliDrive) reward safe habits with discounts of 20–30%. They also provide feedback, helping seniors adjust driving patterns.
As risk specialist Jan Riggsby of USI Insurance Services in Bedford, NH notes: “The best way for older drivers to save on insurance is to avoid a claim. That means choosing vehicles with safety tech that helps drivers prevent accidents before they happen. It also means understanding your limitations as you get older so it might make sense to avoid rush hour and nighttime driving.”
The Psychology of Car Buying in Retirement
Cars carry emotional weight. For some retirees, downsizing from a luxury SUV to a midsize crossover feels like a loss of status. For others, it represents liberation — less clutter, lower cost, fewer worries.
At Aurelius, we see car buying as more than a transaction. It’s a reflection of how retirees see themselves in this new phase of life. The healthiest approach combines practicality with pride: buying a car that fits the body, the budget, and the identity — without creating financial strain.
Avoiding Scams and Pitfalls
As car prices rose sharply during and after the pandemic, so did scams. Fraudulent listings on online marketplaces, fake “escrow” services, and misleading dealer fees have cost buyers billions.
Older Americans are particularly targeted by sophisticated online scams that use fake VIN reports or “phantom” vehicles that don’t exist. Aurelius advises clients to verify all private sellers, avoid wiring funds, and insist on seeing and inspecting the vehicle in person.
Even legitimate dealerships may employ aggressive tactics — markups, “mandatory” add-ons, or extended warranty pitches. The antidote is preparation: know your target model, understand invoice pricing, and secure financing in advance if possible,
Checking pricing of a vehicle these days is easier than ever with the online resources available. TrueCar offers prenegotiated pricing for new cars and a used car marketplace. Robust new and used car marketplaces are offered through Cars.com and CarGurus. Want pricing on what your car is worth if you are trading or selling, go to Kelly Blue Book or Edmunds. They are also good price checking sites for buying a new or used car. If you’re buying a used car, make sure you check accident history at Carfax. Don’t trust a dealer with fair pricing on a trade in, or don’t want to muddy the pricing negotiation on a new vehicle? Many sellers have had good experience with Carvana. Buying a dream classic? Auction and collector affinity sites such as Bring a Trailer and Hagerty have a lot of information and inventory, as well as watch functions to select.
Research and Haggle
Being forearmed with research before you walk into a dealer can save you lots! Generally:
- Models in need of a refresh or being retired often price lower, and garner more incentives, such as rebates and low financing rates. As well, leftover prior year models are often heavily discounted.
- Before discussing a trade in or financing, decide on what you want and negotiate a cash price first.
- Once you negotiate a price, don’t discount leasing as an option. There are cases where the combination of the cash down, monthly payments and residual buyout at the end of the lease equal that sweet cash price you negotiated. The mileage allowance on the lease does not matter, as you are looking at it as simply a different way of buying that car. Also with a lease, if you buy a car that is a lemon, or you simply don’t like it, you can either sell it at the end of the lease term and buy out the lease (at some cases pocketing a sum) or turn it in to the manufacturer or leasing company. Or, you can buy out the residual value and keep it.
- Don’t allow the sales person to add options to the deal, such as extended warranties, accessories or protection/detailing services. After you structure a deal, you can then ask for sweeteners such as extended warranties, free loaners during service, etc.
The car buying marketplace has flipped to a buyer’s market again, back from the pandemic days of supply shortages and substantial dealer markups. You are reading this as a savvy consumer because you weren’t that gal or guy agreeing to a $20k markup on a $30k Ford Maverick pickup in 2022, at the height of the shortage mania. You recognize that a car is a commodity, a consumable, not a piece of art. If you can’t get your price, walk away and wait a bit.
Integrating Car Buying Into the Retirement Plan
Ultimately, car buying is a financial planning decision. It intersects with:
- Cash flow projections — how payments or withdrawals affect lifestyle.
- Tax planning — capital gains, deductions, and Medicare surcharges.
- Risk management — insurance coverage and liability exposure.
- Legacy goals — whether to plan for gifting vehicles to children or grandchildren.
When viewed holistically, buying a car becomes another step in steering retirement with intention. A car is both an asset and an expense — one that depreciates but supports independence and connection.
Driving Forward
Buying a car after 60 doesn’t have to be overwhelming. With the right financing strategies, a focus on hybrids and practical features, and guidance from a financial advisor, retirees can make decisions that align with both lifestyle and wealth.
At Aurelius, we believe that financial planning is about more than markets. It’s about helping clients make confident, informed choices in everyday life. Choosing the right car — financed the right way — is one of those choices. Done well, it preserves not just wealth, but the freedom of the open road.
Schedule a meeting with your Aurelius financial advisor to review what financing options make sense for you – and your portfolio.
Disclosures
Aurelius Family Office, LLC (“AFO”) is an SEC-registered investment adviser. Registration does not imply a certain level of skill or expertise. This communication is for informational purposes only and is not intended to provide specific investment, legal, tax, or other professional advice. Investments involve risk of loss. AFO is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice. For information regarding AFO’s services, fees, conflicts of interest, and related matters, please review our Form ADV at https://adviserinfo.sec.gov/firm/summary/323016. Visit us at https://aurelius.net/.
