If you are in the market for classic car financing, you should be aware of a couple of things. First of all, it will certainly increase the overall cost of the car, but at the same time it can be the only way to buy one without having to wait for a couple of years.
Step number one would be to determine exactly how much you can afford for the car of your dreams before starting to search for ways of financing it, either as monthly payments or as a lump sum. You should wait 1-2 years if you aren’t able to get proper financing. We say this because if you choose one with very big monthly payments, you will not be able to enjoy your car to the fullest and you will only think about how much money you are paying for it each and every month for a couple of years.
In addition, these hefty payments will most likely make you work more, meaning that you will have less time to enjoy your classic car. A typical auto loan has a period of three up to five years while a specialty classic car loan can be up to 10 years. The longer the period, the higher the interest rates you will have to pay.
You need to look at the list of lending institutions at BuyClassicCars in order to identify lenders that can provide you with the necessary financing services for a classic car or other specialty models. After that, you must choose the car that you want (although many of you already know exactly what to get) and find out the likely price tag at which you will be capable to negotiate a deal.
In order to get classic car financing, we recommend that you go online and apply to a couple of financial institutions. The amount of financing you will be able to get will be based upon the lender’s determination of the fair market value of the vehicle that you plan on financing.
You might as well think of other ways to finance the car, like borrowing against your home equity or even a retirement plan like a whole life insurance policy. These loans in most of the cases can offer you more favorable monthly payments in comparison to those financial institutions that specialize in lending money for classic cars.
It is highly advisable to avoid getting in over your head by purchasing a car that is way out of your lead. The vast majority of the financial advisors in the United States will tell you that you should finance long-term necessities like a house or transportation and avoid getting into debt for luxury purchases like a classic / antique car.
When thinking about a classic car loan amount, you need to take into consideration the following to aspects:
a) Travel and shipping costs – before making the purchase, it is highly advisable to do a full inspection of the car and if the vehicle is not in the area where you live, travel expenses will certainly be involved. We are certain that you are not willing to drive 500 miles back to your home with the classic car, which means that you will pay extra for proper transportation of your expensive purchase;
b) Classic car inspections – the vast majority of these classic car lenders will ask you to have the car inspected by a specialty car inspection service before they can approve your loan request. This requirement will set you back another hundreds of dollars so be prepared. Of course, thinking into perspective, this is a good thing because by doing so you will know if the car you plan on buying is an original model and if the money the seller asks is suitable for the condition of the vehicle. All of this information is vital not only to you, but also for the lending institution so it is a win-win situation. If you have already thought about taking the car through an inspection service, you need to talk to the lending institution and see if they have their own associates, no need to have the vehicle inspected twice.
Most of these lenders will ask you for a 20% down payment if the vehicle you plan on acquiring is a classic car and if it is a hot rod, you need to put down on the table 30% of the car’s value. Depending upon your personal credit score, the necessary down payment can vary.
There are some people that despite the fact that they have all the money necessary to buy the car, they still choose to finance it. Most of the classic and antique cars over the last 10-15 years have boomed in value, in some cases growing at a staggering rate of 15% annually. This situation makes your classic car purchase a very reliable investment taking into consideration the fact that it is growing considerably faster than the 6-7% interest rate you will have to pay. However, due to the fall of the economy, things could change and the value of these cars might not go high as before, especially for replicas.
Here are a couple of questions that you should take into consideration when looking for classic car financing:
a) Will you have to pay an application fee for the loan?
b) Are there any hidden fees involved?
c) Does the financial institution provide automatic payment plans?
d) How is the interest calculated and weather it is a fixed or variable loan?
e) Are there any prepayment penalties on the loan? What about fees for late payments?
Whether you are look for a classic car to drive from time to time or if you see it more like an investment, the process of getting the proper financing for it can be a bit difficult but if you plan ahead and think about all of the ramifications, things should go as smooth as silk.
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