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What Are My Financing Options for a Classic Car?

What Are My Financing Options for a Classic Car?
Austin Kilham

Austin Kilham

Updated April 22, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Most people buy cars for practical purposes. They need transportation to get to and from work and to run errands around town. But for classic car enthusiasts, a car can be a collector’s item that conjures memories of another era. Classic cars can also be very expensive. And unlike buying a new car, they are potentially a good investment since they can actually appreciate in value. If you’re dreaming of buying a classic car, one option is to finance your purchase through a classic car loan. Finding financing for a classic car can be tricky, and understanding the process is an important first step.  

What Is a Classic Car?

There’s more than one definition of a classic car. The Classic Car Club of America defines a full classic as “a ‘Fine’ or ‘Distinctive’ automobile and American or foreign built, produced only between 1915 and 1948.” ​​As far as definitions go, that one’s pretty narrow. Other definitions peg a classic car as any vehicle manufactured in 2000 or earlier, and they make distinctions between antique cars built in 1975 or earlier, and vintage cars manufactured between 1919 and 1930.Classic cars typically have been repaired and maintained in accordance with the manufacturer’s original design specifications and should not have been altered.  

How Much Does a Classic Car Cost? 

The price of a classic car will depend on the car’s make and model, what kind of condition it’s in, and how rare it is. Some might cost a few thousand dollars to buy, especially if they aren’t in top condition. While particularly sought after and rare models can easily fetch millions of dollars. It’s hard to say for sure which was the most expensive car ever sold, since transactions are often made privately. For example, an American businessman is thought to have bought a Ferrari 250 GTO for $70 million. Classic car auctions provide the best verifiable public record of classic car prices. 

How Can I Get a Classic Car Loan? 

Most lenders don’t specialize in the collectors car market. For example, they may have little expertise in how to value a classic car. As a result, traditional forms of automobile financing may not apply to a classic vehicle. You may need to look into classic car loans, which are now offered by various specialty lenders. Research these lenders online, or ask other people in the collector car community if they financed their purchases and find out who they used. Once you’ve identified a lender, you’ll need to go through their loan application process. 

Classic Car Financing Credit Score 

As with traditional auto loans, the loan amount and interest rate offered through a classic car loan will vary depending on your financial situation. Lenders will look at your credit score to help them get an idea of your credit worthiness and how likely you are to pay back your loan on time. The higher your score, the better the terms and interest rates you’ll likely be offered. If you have a low score, lenders will worry you are at greater risk of defaulting on your loan. To offset some of this risk, your lender will likely offer you a loan with a higher interest rate. Generally speaking, classic car financing with bad credit is a challenge.Credit score requirements will vary by lender. Favorable classic car financing rates may require a credit score of 700 or higher. 

Classic Car Financing Rates and Terms 

Though terms and interest rates on classic car loans will vary depending on your financial situation, you can expect to find rates anywhere from about 1.99% on the low end to upward of 10% from some of the major classic car lenders. Only people with the best credit scores will qualify for the lowest rates in financing a classic car. It may be useful to compare classic car interest rates to the average interest rate for a used car, which was 8.21% at the end of 2021.

Classic Car Financing Options and Alternatives 

A classic car loan is not your only way to get yourself behind the wheel of a vintage automobile. Here’s a look at a few of your other options. 

Paying Cash 

Buying a classic car outright in cash is the cheapest way to own a classic car. Of course that requires that you have the cash on hand and don’t need to dip into your emergency savings or retirement fund. Buying in cash means you’ll avoid fees and closing costs on a loan, and you won’t pay any interest, which could ultimately save you thousands of dollars. 

Personal Loan 

You may also be able to take out a personal loan to cover the purchase of a classic car. When you take out a personal loan, you receive a lump sum from your lender anywhere from a few thousand dollars upwards of $100,000, which you’ll pay back in monthly installments with interest. Once you receive the loan, there are no requirements or rules on how you need to spend the money. The lender’s priority is getting the money back, with interest. Loan amount, terms, and interest rates will again depend on your credit history and financial situation. Those with better credit scores will be offered the lowest interest rates. Carefully compare rates between classic car loans and personal loans. 

Leasing a Classic Car 

If you’re not ready to commit to purchasing a classic car, consider leasing one, whether with a short-term car lease or a long term one. In return for some upfront costs and a series of monthly payments, leasing allows you to get behind the wheel of a classic car for a relatively short period of time.You may be subject to mileage restrictions when you lease, as mileage is one of the factors that affects the value of the car. At the end of the lease period, you’ll return the car. And if you so choose, you can swap it out and give a different vehicle a try.

Refinance Your Classic Car

If at any point your classic car loan becomes unmanageable or you’re looking to save money, you may consider refinancing your loan. When you refinance, you pay off your old loan with a new one, hopefully with better terms or a better interest rate. When is the best time to refinance a car? You may consider refinancing when interest rates drop or when your financial situation improves. For example, if you’ve raised your credit score, you may qualify for a new loan with a lower interest rate. What are the benefits of an auto loan refinance? A lower interest rate can save you money over the life of the loan, while a longer term may lower your monthly payments. Because you’re paying interest for longer, a longer-term may be more costly in the long run.  Beware that there are costs of refinancing an auto loan. Be sure you understand any extra upfront fees or closing costs that might reduce the amount you save by securing a lower interest rate. To learn more about refinancing, consider these tips for auto loan refinancing. 

The Takeaway 

Classic car loans are one of the best ways to finance the purchase of a vintage automobile. You may also want to compare terms and interest rates to a personal loan to see if it is cheaper. Once you lock in a loan, you aren’t necessarily stuck with it forever. Down the road, you can look into refinancing to see if you could save money. To explore auto loan refinance options, visit Lantern by SoFi. 
Photo credit: iStock/ArthurHiddenThe tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0222031

Frequently Asked Questions

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About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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