10 Ways To Get Classic Car Financing
You’ve worked your whole life. You bought and paid for a house over 30 years. Now it’s time to do something for yourself – it’s time to buy the car you wanted in high school. However, if you thought their original MSRP was high back then, you’ll pop a blood vessel when you shop for that same car today. Prices today are ten times higher than what your parents paid for the house you grew up in. Frankly, just buying wheels for these classic cars at today’s prices are sometimes more than what you would have paid for your car back in the 1960s thanks to inflation.
Owning a classic car is a dream cherished by many enthusiasts. The timeless beauty, historical significance, and sheer pleasure of driving a vintage automobile can be incredibly rewarding. However, acquiring a classic car often requires a significant financial investment. For those unable to purchase a classic car outright, classic car financing is an excellent option. In this article, we will explore the various steps and strategies involved in obtaining classic car financing, enabling you to turn your dream of owning a classic car into a reality.
This is extremely timely given that these cars are getting rarer and rarer and prices are rising.
- Research and Preparation: Before diving into the world of classic car financing, it’s crucial to conduct thorough research and prepare yourself for the process. Start by identifying the type of classic car you desire, as well as its current market value. Consider factors such as make, model, year, condition, and rarity. Familiarize yourself with the specific requirements and criteria that lenders may require to get classic car financing.
- Check Your Credit Score: Your credit score plays a pivotal role in securing favorable financing terms. Obtain a copy of your credit report and review it carefully for any errors or discrepancies. If necessary, take steps to improve your credit score by paying off debts, resolving any outstanding issues, and maintaining a healthy credit utilization ratio.
- Determine Your Budget: Establishing a realistic budget is essential when seeking classic car financing. Consider not only the purchase price of the vehicle but also additional costs such as insurance, maintenance, storage, and restoration expenses. Determine a down payment amount and monthly payment range that comfortably fits within your financial capabilities.
- Seek Multiple Financing Options: Explore various financing options to find the one that best suits your needs. Traditional lenders, such as banks and credit unions, often offer classic car financing. Specialty lenders or companies that specialize in classic car financing are another viable option. Some lenders will let you stretch out loan terms for 15 years. Online platforms and auction houses may also provide financing solutions. Compare interest rates, loan terms, down payment requirements, and other associated fees to make an informed decision.
- Documentation and Paperwork: Gather all necessary documentation required for the financing process. This typically includes proof of income, identification, proof of insurance, and details about the vehicle being purchased. Prepare the necessary paperwork to streamline the application process and expedite loan approval.
- Down Payment Considerations: Classic car financing often requires a down payment. Aim to save a substantial amount to secure better loan terms. A higher down payment can lower your loan-to-value (LTV) ratio, making lenders more inclined to provide favorable financing. Additionally, a larger down payment reduces the risk for both parties involved.
- Loan Terms and Negotiation: When discussing loan terms with potential lenders, negotiate for the best possible interest rate and repayment schedule. Provide detailed information about the classic car, its value, and any additional factors that may strengthen your case. Demonstrate your commitment and knowledge, as it can positively influence the lender’s decision.
- Insurance Considerations: Classic car insurance is a vital aspect of protecting your investment. Before finalizing the financing, secure comprehensive insurance coverage tailored specifically for classic cars. Insurance companies specializing in classic car coverage can guide you in obtaining an appropriate policy based on the car’s value, condition, usage, and storage arrangements. Companies like Hagerty cater to collectors.
- Maintenance and Preservation: Maintaining and preserving a classic car is crucial to its long-term value and enjoyment. Budget for ongoing maintenance, repairs, and preservation efforts. Demonstrating a commitment to the vehicle’s care can enhance your credibility as a borrower and help protect the investment made by the lender.
- Be Prepared for Extra Costs: Apart from the loan itself, be prepared for additional expenses such as loan origination fees, title fees, registration costs, taxes, and shipping to your home. Factor in these expenses when determining your budget to avoid any surprises during the financing process