Finance Roll

Have you decided to buy a classic car or collector car? If so, you are probably looking for information on how to finance that purchase. This article will explain how to make the process easier to eliminate the problems many borrowers can face when financing a classic car or collector car purchase.

If there is only one thing you get out of this article, it is that you understand to compare specialty classic car and collector car lenders. Purchasing a classic car is not the same as purchasing your new daily commuter vehicle, and financing through your bank. A typical new car value can easily be determined by looking it up in a price guide, and easily calculated with depreciation due to miles and age. A classic car or collector car is quite different, and the value can be determined by many factors including how rare it is, the options on the vehicle, has it been restored or is it all original parts, etc. A typical lender may not know how to go about properly evaluating the true value, causing problems in the loan process, or making you pay higher interest rates since they don't understand the true value of the car being purchased.

As is with any loan, it is dependent on your credit score. A score below 600 and you will probably be turned down by any lender. 600 to 700 may be good enough for a loan, but be prepared for higher interest rates. A score above 700 and you will sail through the loan process and receive the best interest rates. Most lenders will require 20% down on the car, so be prepared for this. If the cars value is hard to determine, such as most hot rods and other one of a kind models, 30% down may be required. Knowing this beforehand is important. The last thing you want to do is go through the loan process and fall in love with the car you are ready to buy, only to find that you do not have the initial down payment.

Classic car lenders will not expect you to have the car you want to buy found when you start the loan process. They understand that customers may be looking for a truly rare model or a specific car, option, color, etc. You will not be going to your local car lot to test drive whatever is there. Keeping this in mind, you will probably only have 30 to 60 days after being approved for a loan before you will have to reapply. The length of the loan through a specialty lender can be extended as well. Whereas a typical auto loan will be from 3 to 6 years, a specialty car lender may extend it from 12 to 15 years, depending on the loan amount. Be prepared for higher interest rates the longer the loan is.

You may choose to have your car inspected by a certified collector car inspector before purchasing it. More than likely the lender will also require an inspection before purchase, and they usually require you to choose one of their certified inspectors. Make sure you find what inspectors they suggest before going out on your own finding one, so you do not have to have two inspections. Inspections can be a bit pricey, depending on where the car is and what is being inspected.

When determining the loan amount, do not forget about extra money you may need. If you find the car you want out of state, you will probably want to see the car before purchasing it. There will be travel costs involved with that. If the car is far enough away, or is not in drivable condition, you will need to pay for transportation costs of the vehicle back. Sometimes insurance companies will not let you drive the car too far, even to get it home after the purchase. All this could add up to thousands of dollars, and can usually be rolled into the loan. Check with the lending officer for more details on this if required.

Financing your classic car purchase should not be a painful experience if you shop around with specialty lenders. I am not affiliated with any lender so I will not name any names of lenders to contact, but a simple search online brings up many reputable companies. Visit some classic car forums and ask some questions regarding certain lenders. More than likely someone has dealt with them, and forum members are more than willing to lend a hand to a new classic car owner. A smooth loan process will make the enjoyment of driving around town in your new classic car so much more enjoyable.