Understanding Classic Car Financing

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Updated on Monday, February 4, 2019

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A classic car can be a fun addition to your collection. While some buy them as an investment, other car buyers purchase them to drive around their hometown, show them off at local and national car shows or remember a time when antique cars were the norm.

Before you buy

The Classic Car Club of America defines a classic car as a “fine” or “distinctive” vehicle produced in the U.S. or abroad between 1915 and 1948. These vehicles were generally expensive and built in limited quantities.

These classic vehicles, per the club, include features like custom coachwork and other luxury items, such as power brakes and power clutches.

National organizations like the Classic Car Club of America and the Antique Automobile Club of America can help you learn about these antique vehicles, see them in person and meet other car owners. This can be a great way to determine if owning a classic car is right for you and your lifestyle. The Antique Automobile Club of America focuses on preserving automotive history and can be a good resource, too.

Several websites, including Sports Car Market, can help you research auction prices. Also, pricing guides such as NADA Guides, Old Cars Report Price Guide and the Cars of Particular Interest Value Guide can give you an idea of how much money you will have to spend.

If you do not want to purchase a classic car from an individual, Mecum Auctions Co. and Manheim are options.

How to finance a classic car

Traditional banks, credit unions and online lenders typically do not provide auto loans for classic cars because they can have strict requirements about the age of a vehicle and the number of miles. But you can find lenders, which we’ll detail shortly.

Before you get started, remember that there are other expenses when you purchase a classic car, including insurance, shipping, storage fees, restoration work, maintenance, aftermarket elements and unexpected repairs.

You should expect that the lender may seek an appraisal, have restrictions on the vehicle for mileage and age, and conduct a physical inspection.

There are specialty auto lenders that focus on antique or classic cars. One of them is J.J. Best Banc & Co., a New Bedford, Mass.-based auto lender.

Here are some examples of other companies that will finance classic cars:

  • Collector Car Lending
  • Complete Auto Loans
  • Digital Federal Credit Union
  • DuPage Credit Union
  • Gateway Classic Cars
  • LightStream
  • Premier Financial Services
  • Star One Credit Union
  • SunTrust
  • Woodside Credit

Starting with these lenders might help you better understand classic cars and how to value them. Unlike buying a car from a dealership, classic cars appreciate in value over time rather than depreciate the minute they are purchased and driven off the lot.

The above companies could offer loans without certain restrictions, including on loan-to-value ratio, mileage or age. Some of them could even waive a down payment.

Other funding alternatives are available, including personal loans, home equity loans or home equity lines of credit. Lenders have typical requirements, including credit score and payment history.

Personal loans typically have competitive rates and can allow you to borrow between $1,000 and $50,000 for many purposes. APRs could be higher compared with what you could get for an auto loan — including for a classic car — so shop around and compare them.

Home equity loans or HELOCs are options if you have enough equity in your home. These rates are competitive, but the amount of your loan will depend on how much equity you have.

A HELOC, which mimics a credit card, gives borrowers a line of credit from which they can draw funds as needed. You can access the line of credit during the draw period, during which you make interest-only payments. After that is the repayment period.

Another option is a home equity loan— also referred to a second mortgage — and gives borrowers a fixed amount of money in a lump sum. You make fixed monthly payments, which can help you budget easier.

Both of these options require you to pay closing costs, such as a home appraisal, an application fee, title search and attorney’s fees. This process can take several weeks or longer. If you’re shopping around for classic cars, start this process before you set your eye on one.

Requirements for a classic car loan

A classic car loan should have the same requirements as a traditional auto loan. Lenders will evaluate your credit score, income and down payment. Ask the lenders how long the loan repayment period is to determine your monthly payments, which could be more than a typical auto loan since the value of a classic car could be higher.

Can you lease a classic car?

If you’re not sure that buying a classic car is a good investment or that you will drive it often, you can opt to lease one instead. One immediate benefit is that leasing one could come with much lower monthly payments. This a good way to try out an exotic vehicle and determine if you like the maintenance of driving one.

At the end of the lease, you are likely to pay more for the vintage car if you decide to keep it.
Check out the details of your lease contract before you agree to it. Some lenders are more flexible and will give you the option to purchase your leased vehicle for the residual amount.

Classic car financing: the bottom line

Owning a classic car can be a good option and much cheaper than you imagined. All classic car owners are not wealthy or don’t own other expensive assets, such as boats and pricey vacation homes.

You can easily shop around online, attend an auto auction or meet with other classic car owners at related events to determine if buying or leasing one is a good idea for you.

While getting an auto loan is not as simple as buying a new car from a dealership, several lenders specialize in financing classic car purchases. Aside from enjoying owning a car from a different period in history, this is also an investment that is likely to increase in value over time.