Regardless of how good your credit may be, classic car loans are not as easy to find as conventional car loans. In fact, most lenders don't even know what they are. Classic cars are generally much older or more valuable than cars that are financed with a typical used car loan. Many lenders simply don't know how to deal with them. You may be fortunate enough to walk into your local bank and secure a loan for a classic car, as it does happen from time to time. However, most of the time if you want to finance a classic car, you need to look to alternative sources for your funding.
Classic Car Finance Options
Companies like J.J. Best Banc & Company and Haggerty Company have been financing classic cars for many years, and are generally regarded as two of the premier classic car lenders in the industry. Both lenders offer extremely attractive interest rates on classic cars, exotic cars as well as vintage vehicles and motorcycles.
These types of kind companies understand how the valuing of a classic car is much different than the valuing of an ordinary car. They know that desire and emotional attachment are very important factors in determining the values. They are also aware that a no pricing guide or handbook is applicable when determining values for classic cars. In short, they understand that the classic car is worth as much as someone wants to pay for it. When applying for a loan to buy a classic car, this is the most important consideration.
Classic and Exotic Cars
Depending on the make and model, history and popularity of the chosen exotic automobile, classic car prices could range from unbelievably cheap to outrageous. This is why an intelligent buyer should consult a specialty car lender, as these organizations are adept at determining the proper value of any exotic car of your choice.
It is understandable that classic and exotic cars are much revered by enthusiasts, as the value of such automobiles rise each year due to their limited existence. The pride of ownership is also undeniable, and is a great source of investment for the knowledgeable classic car collector.
Conventional auto loans usually offer a maximum of 5 to 7 years, whereas specialty lenders offer classic car loans of up to 10 years. A higher interest rate is to be expected for such loans with an extended period. Lenders that specialize in exotic car loans understand the fact that most classic cars carry a hefty price tag and present such loan terms as an option for the potential buyer.
The requirements are usually the same as when applying for a conventional auto loan, and should be given attention before deciding to make a classic car purchase. Your credit score should be favorable and present an average or good rating. Records of pending lawsuits, bankruptcy or a bad credit score may disqualify you for an exotic car loan application.
Most specialty lenders require at least a 20 percent down payment, based on the determined value of the classic car. It would be wise to save enough money to make a higher than 20 percent down payment, to lessen the amount of monthly payments and interest rates imposed on your loan. The vehicle papers and titles should be secured before making a purchase, to better facilitate and speed up the application process.
Getting the Best Rates for Classic Cars
When you decide to finance a classic car with companies like the ones described above, you approach the application process in pretty much the same way as you would any other type of car loan application. You submit an application, and wait to either be approved or denied for the loan.
Therefore, it is important to try to get the best rate that you can. One way to get these lenders to offer you a better rate is to simply offer a larger down payment. Classic auto lenders are just like any other bank or lender. They base interest rates off their perceived risk with each customer. If you alleviate some of that risk by offering a substantially larger down payment, classic auto lenders will generally reward you with a lower interest rate.
Before you do anything, figure out your budget for your financing. You should either calculate the lump sum you are willing to pay or the maximum amount for a monthly payment that you can pay. Make sure you include taxes and fees in your budget.
Research Your Vehicle
Find out all about the history of the vehicle you want to buy. Although you do want a basic knowledge of the original history, it is the recent history of sales prices, appreciation and resale value that is most important to your loan.
If you have a strong idea of what your car is worth, and what it is likely to be worth in the future based on past sales, you are in a stronger position to seek a loan.
Can You Wait?
If you can wait to acquire the classic car, then think about this option. If you can save for an additional year and then buy the car without financing, you may save yourself a lot of stress and worry.
Speak with other classic car owners, classic car dealers, or check on classic car websites to see which lenders specialize in financing for classic cars. Hot rod financing and classic car financing are considered a special type of loan, and not every lender may provide loans for classic cars.
Some lenders that specialize in classic car financing include Putnam Leasing, Premier Financial Services, Woodside Credit, LLC., USA Auto Funding LLC., Gettysburg Financial, Classic Auto Loans, Capital Bank Motor, Automobile Association, Alliance & Leicester PLC, and many more. Look for the company closest to your location and contact them for information on the classic car loans that they offer.
Find the Car
If you already know which car you want and where to get it, then you can collect all the information you need to apply for financing. Otherwise, find the car that interests you and a dealer or person that is selling. Once you have this information, you can put in an application for a loan.
Other Forms of Financing
You may want to see about using the money in a retirement plan or borrowing against your home equity to purchase the classic car, as these loans may offer better interest rates than those that are specifically for classic cars. The financing for a classic car is based off of the fair market value of the car, and even with great credit you may still find rates to be quite high when compared to other loans.
Most advisors will tell you to avoid debt if it is for luxury purchases. Most loans are for cars and housing you will use now. You also do not want to submit multiple loan applications, as this can affect your credit and cause it to fall. You do not want to show you are overextending yourself.
Consider an Inspection
If you are unable to find the terms you think you should find for your vehicle, consider an expert inspection. You may find that the car value is not as valuable as you thought. On the other hand, you may get third party confirmation of the high value of your vehicle and have supporting documentation to offer a lender in order to negotiate better terms.
Another way to get them to be more competitive with the interest rates is to simply inform them that you're rate shopping - especially, if you have excellent credit. Once the lender knows you may not accept the first rate that they throw at you, they will be more inclined to offer you a lower interest rate. However, this usually only works if you have excellent credit, so be careful when you issue the challenge.
Remember that there may be more costs to be incurred in purchasing a classic car, such as freight or travel fees, and inspection fees that may cost hundreds of dollars, especially, if the car is to be purchased from another state.