Is finance the only thing standing between you and your dream classic car? Well if that’s all that’s stopping you from owning that 70’s Aston Martin or that 80s Ferrari Dino then fear not as classic car finance may be the answer you've been searching for.
Did you know that it’s possible to take out finance on most classic cars? If you are looking to finance a classic then rest assured that there are a tonne of options available on the market to suit your needs and budget.
So if you don’t have a shed load of cash to spare then classic car finance may just be the route for you. Read on to learn more on the different types of classic car finance on offer and what you need to do for each.
But before we do that, let’s quickly recap on what defines a classic a car…
A classic car is typically a car that's older than 15 years. All vehicles registered before January 1 1976 are exempt from road tax. However, please note that there are no legal definitions of a classic car in the UK and some providers and insurance companies will have their own definitions.
At the ‘traditional’ end of classic car finance is a personal loan with your local credit union or bank. If you already have a mortgage it might be worth chatting to your bank about a loan to finance your dream classic or performance car. One advantage of getting a personal loan over other forms of classic car finance is you will own the car from the very start.
If you do decide to go down this road make sure to produce a solid budget first, including your mortgage, household bills, insurance costs etc and see if you can comfortably afford it. Remember a lot of classic cars will come with higher maintenance costs than regular used cars. You need to factor in all of these costs before making a decision! There are a lot of loan calculators online to help you with your research and budgeting.
For a Classic PCP loan, you pay a deposit up front and then pay monthly instalments usually lasting between 2 to 4 years, however, unlike hire purchase (below) you don’t own the car when all the instalments are finalised. You then have the option to pay the balloon payment. The balloon payment is determined by the finance company and it represents the value they believe the car will be worth by the end of your instalments.
When your instalments are paid you are usually left with 3 options:
Another option here is personal leasing. This works just like PCP except you buy the car outright at the end of your instalment period, this is agreed beforehand.
Hire purchase is when you pay for the vehicle in monthly instalments but the vehicle is owned by the finance company until you pay your final instalment is paid.
Make sure to ask around before making any big decisions, take your time and get advice. Talk to friends and family members as well as talking to other classic car owners on forums etc (link to our forum in the future).