Financing a collector car isn’t quite the same as taking out a standard auto loan. Classic cars often have higher values and unique considerations, making it essential to plan your financing strategy before you start shopping. In this chapter, we’ll discuss why it’s crucial to check your credit early, how specialty lenders differ from typical banks, and what you should know about down payments, loan terms, and titles.
1. Check Your Credit First
Many potential buyers find the car of their dreams only to discover financing complications due to credit issues. To avoid disappointment, review your credit at the very start of your classic car search. Under U.S. federal law, you’re entitled to one free annual report from each of the three major credit bureaus:
Visit AnnualCreditReport.com for details on obtaining your free reports. If your FICO score sits below 700—or if you spot any errors—take steps to correct them before you begin negotiating on a specific car.
2. Why Specialty Lenders?
While your local bank may offer auto loans, they often lack the expertise needed for older or high-value collector cars. Specialty classic car lenders typically provide:
- Competitive Rates – Because these lenders understand collector car values, they may be able to offer lower interest rates than a standard auto loan.
- Longer Loan Terms – Terms can range up to 10 years, recognizing that many classics carry higher price tags and are not a main source of your transportation.
- Faster Approvals – Classic car specialists have streamlined processes for verifying collectible vehicles, speeding up underwriting.
Generally, you’ll need 20% down (sometimes 30% for hot rods or custom builds, where value is harder to pin down). Many specialty lenders also give you a grace period—often 30 to 60 days to find your car after pre-approval.
3. Title & Documentation Concerns
No lender will finalize a loan if the vehicle doesn’t have a clear title. Many older classics have unique paperwork requirements, especially if the car lacks a traditional title or is registered with a “Registration Certificate” in states that use such systems for vehicles older than a certain year. Always verify:
- Title Status – Confirm that the seller has the correct, valid document and that it’s free of liens.
- Local Regulations – Rules for titling older cars vary by state. If the car is from out of state, check with your DMV about transferring ownership.
4. Calculating Your Total Loan Amount
When determining how much to borrow, remember to factor in costs beyond the cost of just the vehicle itself:
- Travel Expenses – If you’ll be flying or driving far to inspect the car.
- Shipping – For transporting the car if you’re buying out of state.
- Inspections & Appraisals – Particularly for high-value or numbers-matching classics.
- Taxes & Registration – Different states have different sales tax and title transfer fees.
5. Collector Car as an Investment?
Some classic car owners choose financing even if they can pay in cash, especially when market prices are rising. Historically, certain models have appreciated 10–20% annually during hot market periods. While this can justify borrowing at a low interest rate, the market is less predictable today. If you’re financing strictly as an investment play, be aware of the risks as values can fluctuate sharply.
Chapter 8 Conclusion
Securing the right financing for your classic car can simplify the buying process and provide peace of mind. By checking your credit early, considering a specialty lender, and ensuring the title paperwork is in order, you’ll be well-prepared to make an offer as soon as you find the perfect vehicle. In the next chapter, we’ll address finalizing the purchase process, focusing on how to protect yourself from scams, handle payments securely, and complete the transfer of ownership.
Chapter 7 - Inspecting a Classic Car