Classic Car Loans Are Almost Always More Expensive Than Traditional Car Loans

Andrew Koole
· 5 min read
Buying a
classic car
is a little more complicated than purchasing a regular vehicle. Once it’s deemed a collectible, a car’s value becomes much more flexible than when it was simply considered used. More than ever before, it’s worth what someone is willing to pay for it.
Because of this, securing a loan for this type of purchase won’t be as easy as it is for a daily driver or work vehicle. If you don’t have the cash on hand, you’ll need to know where to look to gain access to your dream car or new, appreciating asset.
Jerry
did a little research to help set you on the right track. Below you’ll learn how classic car loans differ from traditional car loans, which lenders offer financing for classic cars, and a few other ways to enter the
classic car market
.
Securing financing for a classic car can be tricky.

How classic car loans differ from traditional car loans

Anyone who’s sought out a car loan knows that the amount you loan depends completely on the type of car you plan to buy. Banks aren’t known for handing money out willy-nilly (at least they shouldn’t be). To secure a loan, you need to walk in with a plan.
The same is true for anyone wanting to finance a classic car. But, as previously mentioned, the value of a classic car isn’t as set-in-stone as other types of vehicles. Values change regularly based on rarity, trends within the community, and interest in particular types of modifications.
For this reason,
CarsDirect
says many regular lenders don’t offer to finance classic cars. Their estimating systems can’t adapt to the shifting collector car market, so they simply avoid it altogether. 
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Where to go for a classic car loan

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Even if a traditional lender is willing to loan you money for a classic car, you’re probably better off going to a specialty lender. These lenders are more aware of the classic car community and understand how modifications and rarity affect the value of a car.
Hagerty
, an excellent resource for anyone interested in becoming a classic car owner, doesn’t provide financing for classic cars. But they do offer the most robust index system for classic car valuation, and they also recommend a few specialty lenders who know the market best.
The four key lenders they endorse all have their unique traits. J.J. Best Banc & Co., a luxury vehicle financier, also offers loans for boats and aircraft. 
Lightstream, the lending division of SunTrust Bank, isn’t exactly a specialty lender but offers large fixed-rate loans to people with good credit. 
Premier Financial Services and Woodside Credit are both specifically focused on collector car financing, the first narrowing in on exotics and rare collectibles and the latter offering loans for all types of collector cars, including classic project cars. 

Other ways to get your hands on the keys of a classic car

MORE: How Is Hagerty Keeping Car Culture Alive?
No one needs a classic car, which is why loans for them are more expensive than they are for regular cars. But as prices for even affordable classics continue to jump, entering the classic car market will require a little financial gymnastics for the majority of us. 
Securing a specialty car loan from a trusted institution is probably your best option, but it often requires top-tier credit, something we don’t all have. Thankfully, it isn’t the only one. A trip to the bank can still get you the leg up you need to buy the car of your dreams.

Other types of loans

Personal loans are a decent option for anyone who just needs a few grand to secure the desired model. But beware: this type of loan tends to have high
int
e
rest
rates. 
For something with lower interest, you can also look into a home equity loan. Make sure you’re in a secure financial state before signing on, though, because defaulting will mean you lose your home—not a particularly wise trade. 

Leasing a classic car

Some of the specialty lenders listed above also offer closed- and open-ended leases for classic cars. The type of lease you choose will depend on the financial situation you’re working with and what you plan to do with the car once the lease is up.
In a closed-ended lease, you and the lessor determine the value of the car at the beginning of the lease, and you can choose to return the car or pay what’s still owed on it to own it outright at the end. 
In an open-ended lease, you have to pay the remaining value of the car at the end of the lease, which is determined then rather than when you originally signed the lease agreement.

To-dos once you have your classic car in the driveway

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Once the financing is all lined up and you’ve got the keys to your collectible in your hands, there are a few more steps you’ll need to make before you can legally drive off into the sunset. 
As with any vehicle, you’ll need to register it in your state of residence. You’ll also have to find a
classic car insurance
policy you can afford, something Jerry can definitely help you out with.
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