How to Get an Auto Loan for a Classic Car

Whether or not you're a collector, purchasing a classic car can be a worthwhile investment. Unlike modern cars, classic cars increase in value over time. However, because of their age, classic cars might not qualify for a traditional auto loan; instead, you’ll need a classic car loan. Although it may take more time and effort, finding a classic car lender that specifically offers financing for classic vehicles is crucial. These lenders understand the nuances of the classic car market and can give you better loan terms to suit your needs.

A classic car loan is a financing option car enthusiasts may consider to purchase a vintage, classic or exotic car. A specialized loan is needed because traditional auto loan lenders often don’t approve applications for classic car loans, given the vehicle’s age.

Lenders specializing in auto loans for classic cars have a better understanding of the market. They know that you're buying more than a used car — and, contrary to modern vehicles, class cars are likely to increase in value over time rather than devaluate. These lenders are also aware that classic cars often cost more than modern vehicles and, as such, may offer higher loan amounts and longer loan terms. For example, Woodside Credit's classic car loan goes up to $1,000,000 and may be payable for up to 180 months.

Some lenders require an appraisal of your car (or at least a physical verification of whether the engine starts) as part of the loan application process. As with all lenders, you'll have to pay interest on your loan, but most lenders don't have added fees like prepayment penalties. To qualify for classic car loans, you must have a good credit score (the higher it is, the lower your APR), an acceptable debt-to-income ratio and a 10%–20% down payment.

Given all these factors, finding a reputable specialty lender is worth the extra time and effort. Searching online can help you find one, but using your network is also an efficient way to get information. Friends at car shows or those who have also purchased older cars can be excellent sources for classic car lenders.

There's no single definition of what a classic car is — even between specialty lenders, there are differences in what qualifies as a classic car. However, some common factors are typically associated with classic cars, including age and year manufactured, value and demand, rarity and popularity and condition and upkeep.

You may get a better deal by getting an auto loan for classic cars, but it's essential to know that this isn’t your only financing option. Instead of an auto loan, you may want to consider these alternatives:

• Personal loan: A personal loan may be a good option if you have a good credit standing since it results in competitive rates. You'll also have your pick between a secured or an unsecured loan. The latter means putting up an asset as collateral, which could result in a higher loan amount. However, if you default on your loan, your lender can seize your collateral.
  
  Personal loan lenders have few restrictions for funds usage, so if your application is approved, you can use the money to purchase a classic car.

• Home equity loan: Borrowing against your house's equity may allow you to borrow more than a traditional auto or personal loan. However, it assumes that your home equity is sizeable. Home equity loans are similar to secured personal loans, wherein your house becomes collateral. So if you can't pay your loan, you'll risk losing your home.

If neither appeals to you, consider leasing a classic car instead of taking out a loan. When the lease expires, you can roll it over to a new one or buy the vehicle outright.

Your search for a classic car loan doesn't have to be overwhelming. To learn more about the requirements, steps and your other options, read the answers to frequently asked questions about auto loans for classic cars.