How to Get a Classic Car Loan

Learn Where to Get a Classic Car Financed

Classic Convertible Car
••• Getty Images/Dennis Gerbeckx

Are you a classic car enthusiast on an average car budget? Do you drool over cars at classic car trade shows and always fantasize about driving one of your own someday?

A classic car loan could be the answer to your car show addiction. If you love vintage or exotic cars, you have more than likely dreamed of owning one.

You are probably also very aware of a painful truth: classic cars can be expensive – very expensive. Here’s a question that surprisingly few classic car dreamers ever ask themselves though: Why not finance through a loan? That’s right. How about considering a classic car loan? There are plenty of lenders out there. A lot of people pay for their set of wheels this way. Why shouldn’t you?

Here’s the fact that you probably won’t surprise you: Getting a loan for a classic car can be a bit tricky. You could try your local bank or credit union, the one that you have your home mortgage with or the lender that has financed all of your regular vehicles. And you may get lucky. I would suggest starting there.

But you are likely to discover that they’ve never written a loan for the purchase of a classic vehicle and have zero knowledge of the classic and exotic car market.

Find a Specialty Lender

Fortunately, as with insurance, there are several lenders out there that specialize in the financing of classic cars and other exotic vehicles. And, to be honest, they may be your only option. Companies such as JJ Best Banc & Co., Woodside Credit, andDupage Credit Union all specialize in classic, antique and exotic vehicle loans. There are lots of others, too. Check online or ask your friends who have financed their dream cars. Classic car loan companies are a great way to go for several reasons.

First and foremost, they understand that what you are buying is not merely a “used car.” They appreciate the many esoteric factors that go into valuing a classic automobile and have a strong knowledge of the market. And determining an accurate value is extremely important for both you and the lender.

Another good way to find a specialty lender is to ask your friends at car shows (maybe not strangers!) who they used to finance their purchase. An advantage of asking a friend is that they’ll tell it to you straight since they’re not trying to get your commission or anything.

Classic Car Loan Requirements

Interestingly, many of the terms and procedures for obtaining a classic car loan are the same as those for a conventional loan. But there are also a few significant differences. You will, of course, be required to submit an application and, as with any car loan, conventional or otherwise, the lender will check your credit rating and history to determine whether you can afford the purchase and payments. All finance companies are in the business to make money and minimize their risk exposure, so make sure you have taken care of any credit history problems before applying for your loan. Otherwise, you’ll be looking at a higher (possibly much higher) interest rate or being turned down entirely.

Be Smart About It

It’s one thing to want a classic car, and it’s another thing to be able to afford it reasonably. But what does that even mean?

In short, you need to figure out your budget and the amount that you will be reasonably able to pay every month. A classic car isn’t a purchase you should make if you’re on a shoestring budget.

Here are a few other factors to consider. You will be required to put down a minimum of 10% (and most likely 20%) of the vehicle’s purchase price. Keep in mind that the more you can afford to pay up front, the lower your interest rate will be. Also, a classic car loan term typically runs for up to ten years as compared to a standard car loan of five to seven years. If you can afford to make the payments for a shorter loan period, such as three or five years, consider the shorter term option. You will likely benefit from a shorter duration loan, as they typically come with a lower interest rate.

Leasing A Classic Car Instead of Buying

Just like with a conventional automobile, leasing a classic car is a possible alternative to an outright purchase. With a lease, you and your lender will determine what is known as the “residual value” for your prospective purchase. The residual value is the minimum amount your classic will be worth at the end of the lease period.

The lender will then loan you the difference between the cost of the vehicle and its residual value. At the end of the lease period, the lender receives the car back and will then turn around and sell it for the residual value. If you are interested in keeping the vehicle at that time, you can purchase it from the lender or possibly negotiate another lease.

Leasing can be an excellent alternative to buying, especially if you like the idea of changing classic cars every few years. Just remember that you’ll likely have to purchase top-notch insurance if anyone other than you finances your classic car -- and if you are leasing a classic vehicle, all the more so.

Whether you lease, borrow, or purchase your classic car outright, you will be taking on a serious financial responsibility. Classic car enthusiasts are passionate about their vehicles, but you cannot let your emotions get the best of you when buying that car of your dreams. Make sure that you or an expert inspect the vehicle before you buy to insure you are getting the vehicle you think you are. And never finance a classic car that you can’t realistically afford, no matter how hard you’ve fallen in love. That love will disappear in the blink of an eye if you get behind on your payments -- and you can always browse for photos of the car of your dreams, for free, on the internet -- and in the meantime, perhaps save some money towards one day achieving this dream.

Note: This article is presented for informational purposes only and should in no way be construed as an endorsement or recommendation of any of the above-mentioned companies.​