Imagine yourself cruising down the road, wind blowing through your hair, sun shining on your face and your hands on the steering wheel of a classic beauty like the 69′ Ford Boss 429 Mustang or 69′ Chevrolet Camaro ZL1. It’s a dream for many people to own a classic car; however, a quick look on Hemmings, the largest collector car marketplace, shows that these vintage vehicles don’t necessarily come cheap.
The price of a 1969 Mustang can range from $7,500 to $485,000, with the average cost being $68,553, and the ’69 Camaro prices go up to $750,000 with an average cost of $59,522. If you don’t have the cash on hand, or even if you do but would rather finance your car, you may run into some problems when trying to get a classic car loan.
To bring your dream to reality, here’s what you need to know.
Not all auto loan lenders offer classic car loans
For a moment, step into the shoes of an auto lender. When they are determining if they offer someone a loan, they are looking at how likely the borrower is to repay the loan and interest in full, and how much of the loan can be recovered if the borrower defaults. Many lenders control the risk by setting age requirements on the cars they will finance. For example, some lenders don’t provide loans for cars more than 10 years old. Classic cars create a unique circumstance because they are old but can have a very high value. The problem is that the value can be difficult to determine, making it hard for lenders to weigh their risk.
As I said earlier, classic cars can also be very expensive, which means a large loan is required. And if the borrower defaults, the lender will need to sell the car for a price that covers the loan. Sam Olmsted, a consultant for Superior Honda, says, “To mitigate this risk, (classic car loan) lenders often require a larger down payment on classic car loans that ranges from 10% to 20%.”
Even with a bigger down payment, this loan type presents a high risk to the lender and requires the lender to have specialized knowledge of classic cars and their value.
Due to these factors, you will most likely need to seek out lenders that specifically offer classic car loans (they do exist!) to get approved.
Lenders that finance classic cars
Lightstream: This online consumer loan division of the Sun Trust Bank is a leading provider of unsecured auto loans. They specifically offer classic car loans and advertise that you can purchase “Any collector car from any seller” further stating that approval is not limited by make, model, year, mileage or loan-to-value. You can easily apply online to find out what rates you qualify for and can have the money in your account in as little as one day.
Woodside Credit: Established in 2003 for the sole purpose of financing classic cars, this lender focuses on providing low monthly payments and long-term periods. You can apply online or by calling in.
JJ Best Banc & Co.: This finance company is dedicated to helping classic car enthusiasts’ dreams come true. They have been financing cars for several decades and will approve most models made from 1900 forward. You can apply online, by paper mail, email or over the phone.
Aside from these lenders, another option is to take out a home equity loan and use it to buy your classic car. This option has some pros and cons which should be considered first but may be something to consider.
Before you apply for your classic car loan, be prepared. Here are some things to consider:
Credit is still key
Once you find a lender, ensure that your credit is in good shape to improve your chances of getting approved and getting a low interest rate. Jake Rheude, a classic car connoisseur, says he was working with a good credit score when financing a ’64 Corvette convertible which made it easy, adding “Just like most other car purchases, it’s all about credit score.”
How you use the car matters
Another factor in getting approved for a classic car loan is how you plan to use the car. If it is going to be your primary mode of transportation, that increases wear and tear on the vehicle, which subsequently lowers the car’s value. This increases the risk to the lender and may decrease your chances of getting approved. On the other hand, if you have another car you will use for most of your transportation and the classic car will be for special occasions only, lenders will likely look more favorably on the situation.
Longer loan lengths are available
Because classic car loans are often larger than regular car loans, longer repayment periods may be available from lenders to help reduce the monthly impact on your wallet. Rheude says, “I’ve spoken with a credit company that offers 96-month loans for purchases between $25k-$50k, 120-month terms for $50k-99k and 144-month terms for a purchase over $100k.”
Of course, if your loan is for a longer period, you’ll end up paying more in the long run. Olmsted adds, “Classic car loans may run 10 years or more as opposed to three to seven years for your average car. This means you’re paying much more for your car as the interest piles up.”
So while longer loan periods can equate to more affordable monthly payments, always be sure to look at the total cost of the loan to determine if it’s a deal worth making.
In summary, there are lenders that will finance classic cars, but you do need to search them out because not all auto loan lenders will. Furthermore, classic car loans will typically require a good credit score and a higher down payment than regular car loans while offering longer loan repayment periods. Approval will vary depending on the car you choose and how you plan to use it.
Get the classic car of your dreams
While getting a loan for your classic car may be a little more tricky than getting a loan for a new or used car, it is possible. Click here to get preapproved offers from leading lenders. It’s fast, and it won’t hurt your credit. You will get to see what rates you qualify for, pick the best offer and you’ll be driving your dream car in no time. Click here to compare auto lender reviews.