Whether for nostalgic reasons or to own a piece of history, many people dream of owning a classic car, however, classic car loans are uniquely different from standard auto loans and require some knowledge in order to find the best deal. Some people argue that finding your dream car is often easier than getting financing for it. However, financing does not have to be a horrendous experience as long as the buyer knows the subtle differences between a classic car loan and other car loans.
Determining the Value
Classic car loans are different, as a true value for a classic car is harder to determine, especially if the car is rare or heavily modified. Because of the difficulty in placing a value on classic cars, most lenders will not cover classic car loans. Even if a car lender will finance your vehicle loan for your classic car, the buyer may want to consider using a specialty car lender.
A value has to applied to the vehicle loan so most lenders will use a car estimating system that does not necessarily apply to collectible cars, especially restored cars or hot rods. If a customer decides to use a specialty lender then the loan application process may be sped up as the lender truly understands the value of the car. A buyer may also get a lower interest rate as well for the same reason. Additionally, a lender may offer a longer car loan; a specialty car loan can be for ten years whereas a typical car loan is three to five years. Of course, the longer the loan period, the higher the interest rate.
When applying for a classic car loan, a consumer should check their credit score as they would with any car loan. If you have claimed bankruptcy or have a low credit score, getting a classic car loan may be difficult. A buyer does not necessarily have to know what car they want to purchase before beginning the loan process as a car loan quote may allow thirty to sixty days to find and purchase a car, so a consumer can still get pre -qualified. Before applying for a loan, a consumer may want to consider saving some money to put a down payment on the classic car; some specialty loans require up to 20% down payment for the automobile. Of course, your credit rating will affect the interest rate greatly. A consumer should ensure that the buyer has the title to the car, and if you find the car before you are pre-approved for the loan, get a photocopy of the title and that may help to expedite the loan process.
Other Costs to Expect
When determining the car loan amount, some costs may arise that you may want to factor into the loan. If your automobile is not in your area, you may want to consider the travel costs that will be involved, especially if the car is located out of state. A lender may require a mechanic to perform an inspection as well. The purpose of this is to get an idea if the value of the car supports the price of the car, which can benefit the buyer as well. An inspection can cost hundreds of dollars, so a buyer may want to consider building in the price of the inspection into the loan.
A classic car is a fun investment, and a person can find a completely remodeled car or a future project car quite easily, but financing the car is another story. A consumer should make sure to find financing before setting all their hopes and dreams on one vehicle.