Financing Your Classic Car Purchase

When it comes to buying a classic car, the next best alternatives to cold hard cash are loans and leases. Hagerty does not provide financing directly, but we do provide collector car market and valuation data to many banks who do. Here are some of the different financing options you may want to consider:

Classic Car Loan Options

Hobby-Specific Financing

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.

PROS: Very low monthly paymentsdoesn’t tie up cash
CONS: The cost of borrowing money

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Personal Loans

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.

PROS: Convenient
CONS: High interestsmall principle

Home Equity Loans

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.

PROS: Lower interest ratesoften tax deductible
CONS: Variable interest ratesthe loss of your home if you default

Local Banks

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.

PROS: Convenient location
CONS: High interest ratespossible lack of interest in collector car loans

Leasing a Classic Car

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.

PROS: Doesn’t tie up cashlow payments
CONS: You don’t own the vehicle and you don’t benefit if it appreciates
For more information on financing options and lenders, click here.