The conventional lender will offer you the same deal on a classic car loan. This is because you could want to obtain a credit card with them instead, making it simpler for them to give you special conditions on your loan. Go ahead and consider the benefits and drawbacks of buying a classic car before making one of the largest decisions you will make in your life. You may find it easier to obtain offers if your credit score is not up to standard.
What Exactly is a Classic Car?
A Classic Car is anything from your grandparents’ favorite car to the car you drive when you are sixteen. The term ‘Classic Car’ is used in many ways, but the basic definition of what a car must be is as old as they come! For example, in 2008, Chevrolet produced the Corvette C6 model. This vehicle was one of the most advanced and sophisticated ‘classic cars’ that had ever been created. The electric and high-strength materials made the car much more superior than its previous models. The design was meant to last for years, and therefore earn its classic title.
Steps to Can I get a Classic Car Loan:
- Visit the dealership of your choice and test driving a classic car. Set up an appointment with the sales representative, or even better, speak directly with the dealer owner. This will allow you to gauge whether they are trustworthy and offer fair terms for transactions between the dealer and the borrower. Explain your plans clearly but concisely to them and ask about any problem during the test drive. If there was a problem, read my article on classic car financing to see how you can best handle it.
- Once you have your classic car, you have to know that it will be considered as collateral in case of default. The lender will check your classic car’s reliability and ask for a valuation report of the classic car’s value. If you are financing through a bank, they will most likely use a third-party appraiser to determine the classic auto’s value. If the lender does not deem the classic a risky investment, they may make available standard financing terms. Here’s a great article on car financing.
- Using your consumer credit report, you can get an auto loan that is typically tied to a 25 to 50 percent of the classic car’s value. For those who do not have a FICO score, an agreement is made with the dealer to include the car’s value as part of the loan. Be careful while choosing the terms; there are ways to keep yourself protected while still deciding how much risk you will bear.
- Build value into your classic car by keeping it clean and unexpected costs such as insurance, taxes, and registration like any other vehicle. The classic car can be financed fairly easily over a period of 6 to 14 months with a fixed interest rate of about 13 percent or higher depending on the expenses of insurance and taxes.
With lower down payments, you can expect to pay more for your classic car loan than when buying a new or used modern classic car. This is although low-cost lenders offer a 50% APR without credit check for qualifying borrowers. This boils down to the difference between different financing vehicles and lender risk. When you buy an old car, you are increasing your risk profile. It would help if you had a part-time job to ensure that you can finance and service the classic properly. You will also pay a higher percentage of the loan amount long after the car is paid off.
You can avoid a large upfront payment with the lease agreements for leasing classic cars. These financing arrangements have become common on the Internet and in the automotive industry. The leasing agreement includes a high-interest rate that starts around 15% or higher, depending on the monthly payment you wish to pay. In as little as 16 months, you could be out of debt with no equity in your vehicle. If you change your mind about driving a classic car, you are free to walk away without paying any penalty. At the end of the term, you have to buy at a sticker price, which is much higher than what you would expect from traditionally used car dealerships. This way, you can keep your business to yourself and get a cut out of the profits. You may end up paying for every part of repairs with no deduction for warranty coverage.
Risks for a Classic Car Loan
Lenders and investors are willing to lend to you if you can demonstrate that you have the capital on hand to help you maintain your classic car. Working smartly to bring a huge amount upfront will go a long way to convince them that you can afford the classic car and better manage it as a hotel rather than a garage with insurance costs. If you don’t have the resources available, you may have to take out small loans that act as a revolving line of credit and pay no interest. An additional challenge is finding an investor that believes in your ability to manage your assets wisely.
Documents for Classic Car Loans
- Proof from your down payment money or if you just paid cash, proof of the cash.
- Proof certificate on the down payment or a logbook of down payments
- Proof of car insurance (Your parents or spouse’s information is okay)
- One or more valid drivers license
- A written contract of Sale
- Lease agreement
- Signed title
- Common Certificate
- Copy passport
- License, bank statement, or other current document showing your income