What happens when you’re looking at something that’s not only pre-loved, but is unique, and might even be a fixer-upper when it comes to the nuts and bolts?
Financing classic cars shouldn’t be a hassle, but there are extra steps and aspects to consider. Here’s how to get started with classic car finance so you can rest easy bidding or approaching private sellers.
Know your credit history
Before pouncing on your prized possession to be, you should know about your finances and credit history. Your credit history, expressed as a score between 0-1200 (sometimes 0-1000), is the first check a lender will make to see if you qualify for a classic car loan. In some instances, lenders may only offer classic or specialised loans to customers with excellent credit scores. Make sure you look at your history and fix up any mistakes to ensure you have the best chance of approval.
Work out your budget
Though you may have a car in mind, you must figure out if you can afford it. You’ll have to look at all your income and expenses to see how much you have left over to pay back the loan, take out insurance, conduct maintenance, and other expenses. You can use a car loan calculator to help you with working out repayments as an estimate. You should also work out if the car you intend to buy will appreciate, which makes it an investment more than a “hobbyist” car – this is something your lender will want to know, as it can influence their approval decision.
Consumer car loans vs. specialised vehicle loans
With a budget in mind and confidence in your credit history, you need to apply for car finance. You can opt for a consumer car loan – a “normal” car loan you take out when buying a new vehicle – or look for specialised finance for classic or unique cars tailored for this purpose. Specialised vehicle loans may not have an age restriction; though they may insist on independent valuation before agreeing to finance a vehicle. They may also fund auction purchases, while other lenders do not.
Want more options? Take look at brokers
With so many options and lenders out there, your best bet to finance your classic car purchase is to approach a broker. Savvy CEO and classic car lending expert Bill Tsouvalas says car loan brokers can help find a loan product that suits your buying needs.
“Brokers have many banks and lenders on their panel, which means they can find specific products that fit the type of car you’re trying to finance, where you’re buying it from, and most importantly, at a more competitive rate than going it alone. They can help you find a range of products instantly instead of doing it yourself, which can take a lot of time. As you know, classic car buying is a buyer’s market and taking your time might see your preferred car sold to someone else.”
Author: Bill Tsouvalas.
Bill founded Savvy in 2010 with an aim to connect Australians with competitive loans using the latest in technology. He has over 15 years of experience in finance, fintech, and economics.