Ultimate Guide to Classic Car Loans

Everything you need to know about loans for purchasing a classic car

For many of us, owning a classic car is the ultimate dream. But a quick look on Hemmings, the largest collector car marketplace, shows that these vintage beauties don’t come cheap.  If you don’t have the cash on hand, you’ll need financing. But classic car loans operate under different rules than standard auto loans.

Ready to make your dream a reality? Follow these simple steps to your next classic car loan.

1. Decide the type of loan you want

Depending on your needs and preferences, there are plenty of options from which to choose.

Classic car loans

The first thing to understand is that not all auto loan lenders offer classic car loans.

Let’s step into the shoes of an auto lender. When evaluating a loan application, lenders examine a borrower’s credibility (their likelihood to repay the loan in full), as well as the potential loss 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 challenge these standards. They are old, but their age makes them worth more, not less. Many classic cars are run-down but could be worth a fortune with a little work. In short, the value of a classic car can be hard to determine. This makes it a challenge for lenders to evaluate the risk profile of a borrower.

Because classic cars tend to be very expensive, they require large loans. If the borrower defaults, the lender will have to sell the car for a price that covers the loan. But the resale value of classic cars is inconsistent. To mitigate this, classic car lenders often require larger-than-average down payments — often 10-20%.

Even with a bigger down payment, classic car loans are still high risk. They require the lender to possess specialized knowledge of classic cars and their value. Due to these complications, you should seek out lenders that specifically offer classic car loans to get approved.

Lenders that finance classic cars

Lightstream. This online consumer loan division of the Sun Trust Bank provides unsecured auto loans. They offer classic car loans, declaring that they’ll facilitate the purchase of “any collector car from any seller.” And Lightstream loan approval is not limited by make, model, year, mileage, or loan-to-value. You can apply online to find out what rates you qualify for. Once approved, you can have the money in your account in as little as one day.

WoodsideCredit. 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. JJ Best Banc & Co has spent several decades financing classic cars, and will approve most models from 1900 forward. You can apply online, by paper mail, by email, or over the phone.

If you want to work with someone who knows what it’s like to buy a classic car, you may want to work with a lender who specializes in the market, such as Lightstream. Your loan officer will understand the market and can offer competitive terms tailored to your classic car.

“Once approved the loan process works in a very similar to a normal car loan,” says Tom Joslin, director of marketing at J.J. Best Banc & Co., a classic car financier. “Our approval process can usually be completed in five minutes or less, paperwork is easy to complete and overall the process is very quick and easy from approval to funding.”

Personal loan

If you don’t want to use your classic car as security and you have good credit, a personal loan may be a great option. However, your interest rate will typically be higher than that of a classic car loan. Also loan amounts Personal loan lenders usually may also offer smaller loan amounts than an auto loan.

Applying for a personal loan can be a great option best if you’re just a little short of the purchase price and you plan to pay it off quickly.

Home equity loan

If you have equity in your house, you may be able to get a low-interest home equity loan to finance your classic car. What’s more, the interest you pay on such a loan is tax-deductible, which could save you even more money.

The biggest drawback to using a home equity loan for your classic car you could lose your house if you default on the loan.

Conventional auto loan

A regular lender may approve a loan for your classic car, but the terms may not be in your favor. Because they’re not geared toward classic cars, a conventional auto loan for an older car may have a short repayment period and a higher interest rate.

You may also get denied outright because the bank doesn’t finance cars past a certain age. Also, the loan officer may not understand the classic car market.

2. Make sure your credit is in order

As with any loan, the lender will want to make sure you’re not a borrowing risk. If you have good or excellent credit, you’ll have a better chance at getting approved, and at a more favorable interest rate. “Classic car financing requires better credit and some experience with previous car loans,” says Joslin.

So, if your credit score is in the poor or average range, you may want to work on improving your score before applying for a classic car loan.

For starters, check your credit score using a free credit reporting service like Credit Karma or Credit Sesame.  If you find that your score needs some work, find out what’s holding it back and determine ways to build your score.

For example, pay down credit card balances, make on-time payments, and correct errors on your credit report.

3. Calculate the costs of a classic car loan

Owning a classic car costs more than just the price tag of the vehicle. Insurance, maintenance, and restoration costs can add up if you’re not careful. Classic car loans also typically require a larger down payment, ranging from 10 to 20 percent.

If this isn’t your first rodeo, you’re likely aware of the costs associated with owning a classic car. But different makes and models may have different costs that you should be aware of. Do some research beforehand to make sure you can afford the ongoing costs you’ll be facing.

4. Apply

Once you’ve carefully compared your loan options, put your credit in order, and calculated the costs, it’s time to apply for a loan. If you’re applying with a lender who specifically offers classic car loans, you may be able to score a longer repayment term, up to 10 years. This can be helpful if the sale price for the car is high.

Avoid choosing a long repayment period if you can afford a shorter one. Shorter repayment periods often come with lower interest rates, and you’ll also pay less interest over the life of the loan. Use SuperMoney’s loan offer engine to check what rates you qualify for and how monthly payments vary by the length of your term.

Next steps

If you already have your eye on a classic car loan, start by comparing rates and terms of leading auto loan providers. Once you’ve found one you like, look to see if you can get pre-approved for an offer. This process doesn’t affect your credit score and can give you a good idea of what your options are.

Once you’ve found a lender, reach out to see if they offer classic car loans. If they don’t, move on to the next best offer. If they do, start on the other steps to make sure you’re in good shape financially.

As you take these steps, you’ll be on your way to getting the car of your dreams. What’s more, you’ll be able to take that path with peace of mind knowing that you’ve done it the right way.

Other considerations

Whether you’re financing your vehicle with a classic car loan, a home equity loan, or a personal loan, here are some things you should consider:

Credit is key

Once you find a lender, getting your credit in good shape will improve your odds of getting approved and getting a low interest rate. Jake Rheude, a classic car connoisseur, says his high credit score made financing a ’64 Corvette convertible easy. If your credit is poor or fair, consider a secured loan or a home equity loan instead of a classic car loan.

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 will be your primary mode of transportation, that increases wear and tear on the vehicle, which 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 the classic car will be for special occasions only, lenders will look more favorably on your request.

Longer loan terms 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 mean more affordable monthly payments, always seek out the shortest loan term that you can reasonably afford.

FAQ on Classic Car Loans

Will banks loan on classic cars?

Since classic cars are generally much older than the average vehicle purchase, they may not qualify for a traditional auto loan. In order to secure funding through a loan — should you need it — to buy your slice of automotive history, you may have to find a lender that provides classic car loans.

Does Capital One finance classic cars?

No, Capital One Auto Finance only finances new and used cars, light trucks, minivans and SUVs that will be used for personal use. Vehicles must be 7 years old or newer and have an established resale value.

What is considered a classic car?

The Antique Automobile Club of America defines classic automobiles as vehicles that are older than 25 years old. A car that is 50 years old or older is officially an “antique,” and most clubs and organizations make the distinction between classic, antique, and vintage automobiles.

How old of a car will banks finance?

Typically, a bank won’t finance any vehicle older than 10 years, even if you have stellar credit. If you don’t have great credit, you may find it difficult to finance through a bank, even for a new car. But, banks are far from the last option when it comes to auto lending.

Do classic cars need an inspection?

Classic vehicles are subject to an annual vehicle safety inspection. In some states, antique vehicles operated exclusively between sunrise and sunset are exempt from the normal lighting requirements but must have their original lighting equipment.

The next step?

While getting a loan for your classic car may be trickier than getting a loan for a new or used car, it is possible. Ready to get started? Click here to get pre-approved offers from leading lenders. You can see what rates you qualify for, pick the best offer, and start driving your dream car in no time. Or if you want to do more research first, compare auto lender reviews here.