Classic cars are more than just a nostalgic nod to the bygone era; they’re timeless treasures, holding a special place in the hearts of many. Owing one, however, presents a set of challenges and restraints that’ll dent a significant hole in your pocket. And so, options like classic car financing exist, offering an alternative to emptying your savings account. But, really, how hard is it to finance a classic car, especially considering the unique factors involved? Well, with careful planning and the right knowledge, you’re just some steps away from owning a slice of automotive history. Luckily, this guide will walk you through exactly that, highlighting essential steps (and tips) to finance a classic car.
By definition, classic cars are vehicles aged at least 25 to 30 years, often admired for their historical and cultural significance, enduring charm, and captivating designs. And so, these collector’s items tend to appreciate over time, making them valuable investments for enthusiasts. On the other hand, classic car financing bridges the gap between aspiration and ownership, offering auto loans specifically designed for purchasing classic (or vintage) automobiles. Now, a number of established, quite reputable lenders specialize in these markets, offering flexible rates, discounts, and long-term loan terms especially tailored to the unique needs of classic car buyers. By understanding the unique value proposition of classic cars, these lenders base their expertise on several underlying factors – including vehicle age, condition, historical significance, and rarity – to help you land the best possible financing deal.
Of course, gathering information is key to financing a classic car. However, before determining your budget and the potential loan amount that you might need, it is recommended that you assess your financial situation. Ideally, most lenders require a professional appraisal to evaluate the car's condition on several points, including condition, rarity, and historical significance, to obtain its market value. So, ensure you choose a qualified appraiser specializing in classic cars. Luckily, Exotic Car Trader does the job for you, offering a curated list of exotic classic cars, all appraised and ready for an exchange of hands.
Unlike traditional auto car loans, classic car loans follow unique characteristics, making them distinct and specialized. Generally, classic car loans come with higher interest rates due to the car’s unique nature and perceived risk. Similarly, classic car loans equip longer loan terms, too, spreading the overall cost over several years (up to 15, in fact) for greater long-run finance management. However, a trade-off between longer loan terms and interest costs exists, meaning higher total costs incurred for longer loan terms. So, ensure the repayment schedule aligns with your budget for greater financial management. Other important considerations include interest rate discounts, down payment requirements (typically 10 – 20%), and maximum loan amounts, all of which vary between lenders. More importantly, your creditworthiness can be important in securing favorable loan rates and terms. Ideally, borrowers are required to have a good-to-excellent credit rating to qualify for favorable loan terms.
Upon gathering relevant information and understanding important loan terms, borrowers may seek options that work best for their unique needs. On the one hand, we have alternative financing options like leasing, personal loans, and home equity loans, which can be flexible but may equip higher interest rates. On the other hand, we have specialized lenders offering tailored classic-car-specific loans designed to meet the unique demands of classic car owners. Some reputable and top classic car financing companies include Woodside Credit, LightStream, J.J. Best Banc & Co., and Digital Federal Credit Union (DCU). While choosing the lender, it is important to compare the varying loan terms, interest rates, and overall customer satisfaction. So, borrowers interested in financing unsecured, small-to-medium loan amounts may look into LightStream, which is known for its competitive rates and same-day funding. But, for those looking to finance expensive classic cars (worth up to $2,000,000) with longer loan terms (up to 180 months), options like J.J Best and Woodside Credit are worth considering.
With the lender finalized and the car chosen, borrowers may proceed to negotiate the loan terms that align with their financial situation. Likewise, seeking comprehensive insurance coverage is a plus, too, as it helps protect your investment from mishaps like theft or damage. Some reputable companies offering attractive insurance packages include Hagerty, American Collectors Insurance, State Farm, and Grundy, which are known for their specialized classic car insurance policies.
To finance a classic car, it is imperative to follow a set of rules, including planning, thoroughly researching, and understanding the market's unique (and demanding) aspects. By implementing these steps, borrowers may navigate the complexities surrounding classic car loans and become one step closer to owning their dream car. Need help figuring out where to start? Well, you have stumbled upon the right place. At Exotic Car Trader, discover a carefully curated portfolio of exotic classic cars, ranging from century-old vintage cars to modernized ’69 Camaro Restomods, passionately awaiting new ownership.
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