Financing a Classic Car or Collector Car

 

Financing a classic car can be tricky, to say the least. Once you have found the Corvette of your dreams, you have to find a way to pay for it. A classic car loan is not the same as the typical used car or new car loan. Most conventional auto lenders do not deal with cars over a certain age, or with greater than a specific mileage, since they cannot easily assess the value of a classic car or collector car. Let's face it - book value of a car more than 30 years old may be hundreds of dollars, whereas the street value may be hundreds of thousands of dollars.

 One of the advantages of using a lender who deals in classic cars is that they understand your needs as a car collector.  They understand that you may not drive the car daily, however you may on ocassion pull it out of the garage for a quick spin around the block, or even take it a car show from time to time. They may also allow you to finance the car for a longer loan term, such as 8 or 10 years vs. the typical 5 - 6 years for a traditional car loan. This is due to the fact that you are not likely to drive this car often, thereby racking up fewer miles, and you will probably plan on keeping this car for a much longer period of time as a show piece, not a mundane driver.

The first step to take, as with any loan, is to check your credit score to ensure you have a score worthy of a loan. If your score is too low, your chances diminish significantly. Additionally, ensure you have at least 20% of the purchase price available in cash to use as a down payment. Most specialty loans require some down payment, so have cash available when you apply. You typically have 30 - 60 days to find the car of your dreams before making the purchase, so if the car you want gets sold first, you have some time to find another.

You will also need to ensure the car is inspected (more on this subject here) by a specialty service before it is appproved, as many lenders require this before making the loan. This ensures it is an authentic collectible, and not some doctored clone that is worth much less money. This protects you and the lender from any potential fraud or harm. Additionally, make sure the seller has an issued clean title, as some states do not issue titles for collector cars. Without an actual title, most lenders will not loan any money on that car.

If you have the cash to buy the car upfront, you may still consider financing as an option, since the collector car market is heating up faster than the stock market. If your car appreciates, as many have, by as much as 15% per year, you can still beat the returns you would get on the stock market if you get a good interest rate.

These are just some of the things to consider when financing a classic car. Be sure to check out the lenders below to see if what rates they can offer you for your next collector car purchase. Happy hunting!