When it comes to buying a classic car, the next best alternatives to cold hard cash are loans and leases. Here are some of the different financing options you may want to consider:
This is a fairly new alternative for someone wishing to buy an antique, classic or collectible vehicle. The loan representatives understand the collector car market – namely, why a 40-year old car might cost upwards of $100,000, or much more. Interest rates tend to be low and loan terms can be generous, keeping monthly payments affordable. See a list of potential loan providers.
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Your bank may extend you a personal loan, although amounts are often limited to $5,000. That works well if you’re a little short of the cash needed for a deal. Assuming good credit, you can get a small unsecured loan -- you may pay for the lack of collateral though, with an interest rate that could easily exceed the prime rate.
These loans have grown in popularity because of their low interest rates. Though often tax deductible, you should consult your tax advisor to confirm before going this route. You’ll need to consider the variable interest rate and risk when deciding to put a lien on your home.
A bank might approve your loan, if you’re lucky enough to work with a collector car enthusiast who understands your passion for older cars. And most don’t understand the difference between a collector car and a used car. They will likely offer you a short term loan – usually a max of 36 months – and a high interest rate up to double the cost of a new car loan.
Leasing is attractive for its low monthly payment. Some leases are close-ended – that means you know the residual value of the car up front and have the option of returning the car. Other leases are open-ended, meaning the value of the car will be set at the end of the lease and you must then buy the car.
Some leasing programs function like balloon loans, with low payments until the last one, which is larger and requires refinancing or a payoff if you wish to keep the car. See a list of potential lease providers.
Banks are now treating collector cars similarly to fine art, allowing you to borrow against the appraised value while you maintain possession of the vehicle(s).We can connect you with financial institutions offering loan options with your vehicles as collateral. (Typically available for collections of $1m or more.)
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