If you are a devotee of custom or classic cars, you may want to think
about how to go about financing one. Not everybody who collects classic
cars has the cash to pay for it in one fell swoop. Though significantly
different from conventional auto financing, this specialty is still
something to consider if that perfect car has caught your eye. Just try
to get a handle on the process and then make your vintage car dreams
come true.
As
almost all of the regular sources of auto loans stay away from loans
for classic vehicles, a car lender that handles specialty cars will be
likely your only option. Unlike other lenders, specialty car lenders
don't use any of the traditional price guides to assess the value of the
car in question. They will make their own evaluation as to the cars
value.
A good practice to get into is to get a credit report
prior to any vehicle shopping. The lender is sure run a credit check, so
you should be aware of any problems so that you will have time to
address any issues that may be fixable. Remember, all negative activity
in your credit history can affect your score and ultimately your ability
to secure financing. Foreclosures, bankruptcies and an excessive amount
of late payments can significantly damage you scores and hurt your
chances of procuring a loan. Furthermore, classic car lenders usually
have more rigorous lending rules than do traditional auto lenders.
You
will also find that custom car loan terms can differ from those of the
common everyday auto lender. It is not unheard of to have a 10-year
loan, for example, on a classic auto. New car lenders typically offer
loans for a maximum of 6 years.
Classic car financing differs in
the amount of down payment required as well. With a new car it is fairly
easy to procure a loan that finances the full value of the vehicle -
that is, no down payment. Classic car lenders, in most cases, require at
least 20 percent of the value as an initial payment. Because of the
more subjective manner of estimating the value of a vintage automobile,
the larger down payment offers a heftier collateral, in a sense, in the
event of loan default.
Classic car lenders almost invariably
require some kind of physical inspection of the vehicle before approval
of financing. Approval for financing of a new or used car, on the other
hand, can be arranged without even viewing the car. Basic information
about the car is all that is needed.
Classic Car Financing
There
are definitely some challenges that are unique to the buyer trying to
arrange financing for a classic car. As is often is the case, title
questions can arise with classic vehicles. Make sure that a title does
exist before you expend time and energy trying to get a loan. Without a
title you are out of luck.
Before you take the steps to financing
a classic car, you need to decide if it really makes sense in the long
run. Is it for fun or is it an investment or both? Many of the classic
vehicles continue to increase in value. Do your research and then
determine if borrowing for a classic car is for you.