Before you can learn how to finance a classic car, you need to know what a classic car is. Different lenders have different ideas about what this means, but the age of the car is always a factor. For example, the Classic Car Club of America considers cars made between 1915 and 1948 to be classics. However, many states consider cars that are old to be antiques or vintage.
For insurance and licensing reasons, a car is considered a classic if it is at least 20 years old but not more than 40 years old. When getting a loan to buy an old car, this is probably the description you will have to use.
How do I get a loan for an old car?
Classic car fans can get loans if they know where to look and what steps to take:
1. Check your credit report first.
As with any kind of loan, the first thing you should do to get financing for a classic car is check your credit score. This will help you get an idea of the rates that classic car loan companies may offer you. By raising your credit score or making it better, you can make it more likely that you will get a better interest rate.
2. Choose an initial payment
Like other kinds of loans, classic or antique car loans usually require a down payment. The more you can pay upfront, the less you will have to pay each month. Some lenders may set up their loans so that you have to put down up to 20%. Figure out how much you can and are ready to put down.
3. Identify a classic car lender
Once you’ve checked your credit score and decided on a down payment, it’s time to reach out to a chosen lender for the loan. Classic car loan companies focus on helping people get money for these kinds of cars. Due to the age of the car, getting an auto loan for a classic car is a complicated process that needs to be done by specialized lenders.
4. Get car insurance that fits your needs
As we’ve already said, insurance companies have clear rules about what a “classic car” is. Because of this, they offer special insurance that covers more for a classic car’s age. After you’ve bought your car, look for a company that gives this kind of insurance.
Other ways to get money for an old car
Depending on your finances, the requirements for a classic car loan may make you think twice about going that route. If that’s the case, you might want to think about some alternatives to classic car loans, such as:
1. Personal loan
For those who don’t know, a personal loan can be either uninsured or guaranteed, and the interest rate can be set or change over time. The amount you can borrow is usually between $1,000 and $100,000, and the time length can be up to 84 months. How much you can borrow and how much interest you have to pay will depend on things like your credit score and past financial records.
2. Loan against the value of your home
In short, a home equity loan is a type of protected loan for which you put up your house as collateral. The amount you can borrow is based on your credit score and financial background, as well as the value of your home on the market. Most of the time, you can borrow up to 80% of the value of your house.
In many situations, the interest rates on classic car loans are lower than those on home equity loans. This makes owning a classic car more affordable for many people who like them. Some lenders for classic cars can even offer reduced loan terms that can be surprisingly affordable.
3. Rent an old car
If you don’t have enough money to buy a classic car, you might be better off leasing one. Unlike traditional loans for classic cars, when your lease is up, you will either have to give the car back or buy it fully. Most car rentals also have limits on how many miles you can drive. If you drive more than that, you’ll have to pay extra.
What do I need to know before I ask for a loan for an old car?
Keep in mind that classic car loans usually last longer than regular car loans, maybe between seven and ten years. If you don’t have much money to spend over the next few years, this may not be the best choice for you. Also, classic cars are usually older than regular cars, which means that you may have to spend more money on them in the future. If you want to buy an old car, it can be exciting, but make sure you know the risks and how long it might take to pay off the loan.
If you’re looking for a loan for a classic car, the interest rate may be an important thing to think about. Most of the time, the interest rates on classic car loans are higher than those on traditional used car loans.
However, the rate can change a lot based on the company and your credit score. To make sure you get the best rate on your classic car loan, you should compare interest rates from different lenders and use some modern technology tools, like online calculators.
Bottom line
Classic car purchases are becoming more and more popular as a way to broaden your portfolio, but classic car loans are not the same as auto loans. With classic car loans, lenders often want a bigger down payment and a better credit score than with normal car loans.
Also, the terms of classic car loans are shorter than those of regular car loans. This means that the monthly payments may be higher, but the loan will be paid off faster. If you want to buy a classic car, you should compare the rates and terms of antique car loans and auto loans before making a choice.
