Classic Car Loans

Classic Car Loans from a specialty lender can usually save you a great deal of time, money and hassle when compared to trying to finance a collectible vehicle through a bank or other mainstream lender.  If you are buying a classic, exotic, or special interest vehicle, a traditional auto loan is normally not going to be the best choice for you.

Most conventional lenders are set up to make loans for new or late model “normal” vehicles that depreciate quickly, but are easy to determine a value for. These loans have relatively short terms, may require little to no down payment, and the interest rate depends greatly on the buyer’s credit score.

Classic car loans differ from traditional new or used vehicle loans in several ways. First of all, a 10-30% down payment is usually required, unlike new vehicle loans that can commonly be obtained with “zero down” with good credit. Also, a credit score of less than 700 will usually disqualify you for a collector car loan, as will a recent bankruptcy in most cases.



However, many lenders will make a classic car loan for a much longer term, up to ten or even twelve years (try finding THAT with a new vehicle!).  Of course, the interest rate increases as the term gets longer.  Most “normal” used auto loans only have a three to five year term.

Classic car loans will often require an expert appraisal.  An appraisal can cost several hundred dollars, and that cost has to be taken into account when you are thinking about collector car financing.  A good appraisal will of course go into detail about the condition of the vehicle, but also include information about the history of the vehicle (any wrecks or previous body damage that has been repaired or any historical significance of the vehicle) and the authenticity of the vehicle (is it REALLY a GTO, or a Tempest that someone has “converted” into a GTO clone by adding emblems and swapping engines?).

Some lenders may require that the collector vehicle be inspected or appraised by a particular company;  if so, then consider having the same company do your appraisal to keep from paying for two of them.  Even if it is not required for financing, it may be a good idea for insurance purposes to have an expert appraisal done.  Take a look at our page on Classic Car Insurance for more information.

Classic car loans take the current and often the expected future value of the vehicle into account.  Very few late-model vehicles will appreciate over the term of the loan, but it is common (or even assumed, in many cases) for a collectible vehicle to appreciate before the loan is paid off.  Assuming that the vehicle is not damaged and is authentic, a collectible vehicle should hold its value very well, especially in comparison to almost any late model vehicle.

Another thing to keep in mind when you are looking at financing a collector vehicle is the potential transportation costs.  If the example you want is not local to you, it may be prudent to have shipped to you (do you really want to drive your new-to-you collector car across the country?).  If you are going to incur shipping costs to get the vehicle home, you will want to consider those costs when deciding how much money to borrow.



You don’t have to wait until you have a particular vehicle picked out to get financing lined up. If you are going to be attending a classic car auction, you may want to go ahead and get pre-approved for a collector car loan so that you have a line of credit already set up, instead of scrambling around to find financing after committing to purchase a vehicle. Most lenders that offer this service will have a set time period of 30-90 days for you to make a purchase, and if that time period expires you will have to re-apply.

Some collector car financing companies will charge application fees and/or origination fees that you don’t usually see with a typical auto loan.  Make sure that you understand the terms of the loan and are aware of any fees that might be incurred.  Ask if there is any pre-payment penalty, if the loan has a fixed or variable interest rate, etc.

The last thing to consider (or should it be the first thing?) is “Can the current owner of the vehicle provide a clear title? “.  Some states do not issue a title for antique vehicles.  That may make it difficult to get a collector car loan.  If the vehicle you are looking at does not come with a title, check with your lender to see if that is acceptable or not.

Those are the main differences between classic car loans and your typical new or used auto loan.  Make sure you read the fine print and discuss all these points with your collector car loan company so that you know exactly what you are getting before you sign on the dotted line.  If you are financing a classic car, then a specialty lender will almost always be the best choice.

For a listing of companies that specialize in classic car loans, visit my Classic Car Financing Directory.


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