Are you passionate about classic cars with an average budget? Do you like cars at classic car shows and still dream of driving yourself one day?
A classic car loan could be the answer to your addiction to the auto show. If you like vintage or exotic cars, you’ve probably dreamed of owning one.
You are probably also very aware of a painful truth: classic cars can be expensive – very expensive. This is a question to which surprisingly few classic car dreamers wonder: why not finance through a loan? It is true. Why not consider a classic car loan? There are many lenders on the market. Many people pay their wheelset that way. Why should not you?
This is the fact that you will probably not be surprised: getting a loan for a classic car can be a bit tricky. You can try your bank or credit union, the one with which you have a mortgage or the lender who financed all your regular vehicles. And you can be lucky. I suggest starting there.
But you will probably discover that they have never taken out a loan for the purchase of a classic vehicle and have no knowledge of the classic and exotic car market.
Find a specialized lender
First and foremost, they understand that what you buy is not just a “used car”. They appreciate the many esoteric factors that come into play in valuing a classic car and have a solid understanding of the market. And determining an exact value is extremely important to you and the lender.
Another good way to find a specialized lender is to ask your friends at car shows (maybe not strangers!) With whom they used to finance their purchase. The benefit of asking a friend is that he will tell you right away because he is not trying to hit your commission.
Classic car loan requirements
It is interesting to note that many of the conditions and procedures for obtaining a conventional car loan are identical to those of a conventional loan. But there are also some significant differences. Of course, you will have to submit an application and, like any auto loan, conventional or not, the lender will check your credit rating and history to determine if you can afford to buy and pay your payments. All finance companies aim to make money and minimize their exposure to risk. So make sure you have settled all credit history issues before applying for your loan.
Otherwise, you are considering a higher interest rate (possibly much higher) or a total refusal.
Be smart about it
It’s one thing to want a classic car and to have the reasonable means. But what does that mean?
In short, you need to determine your budget and how much you can reasonably pay each month. A classic car is not a buy if you have a limited budget.
Here are some other factors to consider. You will need at least 10% (and probably 20%) of the purchase price of the vehicle. Remember, the more you can afford to pay in advance, the lower your interest rate will be. In addition, a conventional car loan term generally lasts up to ten years, compared to a standard car loan of five to seven years. If you can afford to make payments for a shorter loan period, such as three or five years, consider the shorter term option. You will probably benefit from a shorter-term loan because their interest rate is generally lower.
Rent a classic car instead of buying
Just like with a classic car, renting a vintage car is a possible alternative to an immediate purchase. With a lease, you and your lender will determine what is known as the “residual value” of your potential purchase. The residual value is the minimum amount that your classic will be worth at the end of the rental period.
The lender will then lend you the difference between the cost of the vehicle and its residual value. At the end of the rental period, the lender recovers the car and will then turn around to resell it at the residual value. If you want to keep the vehicle at that time, you can buy it from the lender or possibly negotiate another lease.
Leasing can be a great alternative to buying, especially if you like the idea of changing a classic car every few years. Just remember that you will probably need premium insurance if you finance your classic car other than yours, let alone if you rent a classic car.
Whether you rent, borrow, or buy your vintage car directly, you will take on a heavy financial responsibility. Classic car enthusiasts are passionate about their vehicles, but you can not let your emotions get the best of you when you buy the car of your dreams. Make sure that you or an expert inspect the vehicle before you buy it to make sure you get the vehicle you think you are. And never fund a classic car that you can not afford realistically, no matter how much you fell in love.
This love will disappear in the blink of an eye if you are late in your payments – and you can always browse photos of the car of your dreams, for free, on the Internet – and in the meantime, maybe save some money. towards one day the realization of this dream.
Note: This article is for informational purposes only and should not be construed as an endorsement or recommendation by any of the above companies.