Buying a classic car often requires financing, but not every bank lends for these purchases. I will explore banks that offer loans for classic cars in the USA, compare their terms, and show how they stack up against each other.
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Why Classic Car Financing is Different
Classic cars do not depreciate like regular cars. Instead, they often appreciate in value. Banks consider them collectible assets, which changes how they underwrite loans. They use different lending criteria, often requiring specialized appraisals and lower loan-to-value (LTV) ratios.
Banks That Offer Classic Car Financing
Most traditional banks do not finance classic cars, but some national and regional banks do. The following table summarizes key banks that offer classic car loans and their basic terms:
| Bank | Interest Rate (APR) | Loan Term (Months) | Minimum Loan | Maximum Loan | LTV Ratio |
|---|---|---|---|---|---|
| Woodside Credit | 6.99% – 9.99% | 60 – 180 | $10,000 | No Limit | Up to 90% |
| J.J. Best Banc & Co. | 7.49% – 9.99% | 60 – 144 | $10,000 | $1,000,000+ | Up to 90% |
| LightStream | 6.24% – 14.24% | 24 – 84 | $5,000 | $100,000 | Up to 100% |
| Collector Car Lending | 7.99% – 10.99% | 60 – 120 | $10,000 | $500,000 | Up to 80% |
| Hagerty Financial | 7.99% – 12.99% | 36 – 84 | $10,000 | $500,000 | Up to 90% |
Each lender has different qualifications. Some prioritize credit scores, while others focus on the car’s value and history.
Case Study: Financing a 1967 Ford Mustang
Consider a buyer purchasing a 1967 Ford Mustang valued at $50,000. The buyer has a credit score of 750 and can make a $10,000 down payment.
If they finance through J.J. Best Banc & Co. with an 8% interest rate over 10 years:
- Loan Amount: $40,000
- Monthly Payment: $485.93
- Total Interest Paid: $18,311
- Total Cost: $58,311
Now, if they finance with Woodside Credit at 7.5% over 12 years:
- Loan Amount: $40,000
- Monthly Payment: $392.54
- Total Interest Paid: $20,505
- Total Cost: $60,505
The lower monthly payment from Woodside Credit may be attractive, but the total cost is higher due to the longer term.
Factors That Affect Classic Car Loan Approval
1. Credit Score
Most lenders require a credit score above 700. A score of 750 or higher may secure a lower interest rate.
2. Loan-to-Value Ratio (LTV)
Lenders usually finance 80-90% of the car’s appraised value. Some, like LightStream, finance 100%, but they do not specialize in classic cars.
3. Vehicle Age and Condition
Most lenders require a professional appraisal, and cars in poor condition may be ineligible.
Comparison of Loan Repayment Costs
The following table compares total repayment costs for different banks assuming a $50,000 classic car purchase with a $10,000 down payment.
| Bank | Loan Amount | Interest Rate | Term (Months) | Monthly Payment | Total Interest Paid | Total Cost |
|---|---|---|---|---|---|---|
| Woodside Credit | $40,000 | 7.5% | 144 | $392.54 | $20,505 | $60,505 |
| J.J. Best Banc & Co. | $40,000 | 8.0% | 120 | $485.93 | $18,311 | $58,311 |
| LightStream | $40,000 | 6.24% | 84 | $590.56 | $9,625 | $49,625 |
Alternatives to Bank Financing
1. Home Equity Loans
Borrowers with significant home equity may get lower interest rates using a home equity loan.
2. Personal Loans
Some banks and credit unions offer unsecured personal loans, though they usually have higher interest rates.
3. Seller Financing
Some private sellers and dealers offer financing directly. Terms vary widely, but interest rates may be negotiable.
Final Thoughts
Financing a classic car requires careful consideration. The best bank depends on the car’s value, the borrower’s credit score, and the loan term preferences. LightStream is ideal for those wanting a fast, no-collateral loan, while Woodside Credit and J.J. Best Banc & Co. offer longer terms with competitive rates for serious collectors.
