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interest rates vary between 6.55% and 19.07% p.a. Total interest repayments vary between
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Classic car loans in Australia – Invest in a unique asset
When it comes to car finance, most lenders aren’t willing to fund vehicles older than 12 years. Typically, classic cars are no spring chickens, but they aren’t old clunkers and rust traps either. Instead, buying a classic can be a smart investment that puts you on the map in terms of owning an iconic piece of automotive history. Fortunately, classic car loans are available in Australia, and BestFind looks at your options and how they work.
What makes a car a classic?
Before a car earns the prestigious tag of ‘classic,’ most car dealers, lenders, and insurance companies agree that it has to have eclipsed a certain age. The specifics vary, but the general consensus seems to lie between 20 and 40 years. Any older, and you start venturing into vintage and antique territory, although some lenders will finance cars from these eras as well.
However, you’ll first need to do your research to make sure the classic you’ve got your eye on passes the maturity test, depending on the provider you’re using. Keep in mind that other metrics also come into play when defining a classic vehicle. These include factors like desirability, rarity, appreciation value, as well as make and model.
How do classic car loans work?
Classic car loan providers are specialist lenders that will finance classic, exotic, and rare cars. They are the top option when financing your unique ride because they have a better handle on the nitty gritties of classic car markets. For instance, traditional or standard vehicle loans might not provide expert valuations, and your collectable could end up in the same bracket as a regular used vehicle.
However, although classic car loans work a little differently from standard car loans, there are also some similarities. Whether you’re buying a Holden, Ford, or Toyota old-timer here’s what you can generally expect when taking out this type of loan:
- Flexible amounts and terms. Across the price spectrum, classic cars can range anywhere from a $40,000 Mustang to an ultra-expensive, multimillion-dollar Ferrari 275 GTB. As such, most lenders offer flexible loan amounts that depend on your financial situation. Loan terms usually go up to 10 years which is an ideal repayment period if you’re buying a big-budget classic.
- Stringent credit requirements. Buying a classic ride is typically an investment since they’re generally not susceptible to the normal rules of depreciation. To qualify, your credit score needs to be tip-top unless you’re willing to pay a higher rate.
- Fewer restrictions. Classic car loans have no hard and fast rules when it comes to restrictions about age and type of vehicle. For instance, they’re popularly used to purchase muscle cars, prestige cars and other collector cars that are far older than 10 or 12 years
- Secured. Most classic car loans are secured, meaning a repayment default will result in the lender repossessing your vehicle. The trade-off is a lower interest rate because of less risk to the lender. You might also be able to apply for an unsecured loan which comes with higher interest rates.
What other loan options can I use?
Have you looked up classic car loans only to find the lending criteria isn’t as inclusive as you’d like? Or perhaps you want all your options on the table before you settle? Here are a few more loan types to keep your finance options wide open:
- Standard car loans. Depending on your vehicle’s age and other details, your application might be able to squeeze through the cracks of standard car loan requirements. However, it’s generally best to confirm with the lender if you’re unsure whether they’ll finance your classic.
- Personal loans. A personal loan might just have the flexibility you need when purchasing a classic vehicle. They come in secured and unsecured form and in most cases, the money doesn’t have to cover your purchase exclusively.
- Dealer finance. Some Australian car dealers offer finance for your unique purchase. But dealer finance is often more costly, especially if you sign up for the add-on features. We recommend that you put in some legwork before taking up the first dealer finance offer you come across.
- Car loan brokers. Car loan brokers can help you hunt down the perfect finance option since they often have special relationships with lenders. They may also know all the ins-and-outs of the application process, which eases some of the administrative burden for you. However, you’ll have to pay extra for this service.
How do I track down the best loan deal?
Whether your shopping takes you to a specialist lender’s doors or another credit provider, there are a few things you’ll need to tick off your to-do list to ensure you’re buying into the right option for you:
- Add up interest and fees. Make sure you’ve got a good grasp of the total cost of the loan. Whether your interest rate is variable or fixed, it’s generally best to favour the lowest rate available. Loan fees and charges include application and establishment fees as well as monthly service and late repayment fees. The comparison rate usually rolls up all these standard costs into one percentage, so make a point to check it out.
- Use our classic car loan calculator. Make sure you keep your budget happy by choosing a monthly repayment amount that’s friendly and workable. Using the classic car loan repayment calculator also helps you figure out what loan term works best for your financial situation. However, keep in mind that borrowing more and taking longer to pay it off means you’ll build up more interest and costs.
- Consider if the loan is flexible. A loan with laid back terms usually allows you to chip in with extra repayments at zero cost. That means you can take a quick exit from your debt without racking up too many borrowing charges. But in case you need to cash-back those extra repayments, choosing an option with a redraw facility is also best.
- Read the fine print. From what we’ve outlined, finance options for classic car purchases are varied, and lenders tend to have a jumble of requirements and terms and conditions. Read the fine print and do your due diligence to make sure you’re applying for the right loan product.
How to apply for a classic car loan online
If you want to apply for any finance option in our product table above, click the “Go to Site” button, and it will take you to the provider’s application page.
Besides having a good credit score, other standard requirements for vehicle loans also apply. You must be an Australian citizen or permanent resident, 18 years or older, with a stable income source as evidenced by your payslips and bank statements. Some Australian lenders will also require you to have specialised insurance, mainly if the loan is secured.
Specialised lenders usually have experts to evaluate the value of your classic automobile before they approve the funds. If not, you might have to hire an independent car valuation expert. Last but not least, if you have bad credit, your best bet lies in applying for a secured loan and putting up a deposit if possible.
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