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Colin Wood
Colin Wood Associate Editor
6/9/21 12:03 p.m.
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For many people, financing is one of the ways they can afford a new—or even slightly used­—car.

But what about classic cars? Can those be financed, too?

As it turns out, yes, they can—and not just multi-million-dollar Cobras or Gullwing Mercedes, either.

Learn how clas…

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wearymicrobe
wearymicrobe PowerDork
6/9/21 12:25 p.m.

At the 3.49% I was quoted for 8 years on a classic last month with 50% down. It does as well as my standard bond and low risk investments so of course.

At the 6.9% that is standard in the industry for 6-8 years with 0-10% down not on your life.  Everything is overpriced right now and I mean everything though. Does not matter what it is bike/project/calssic/exotic/truck its all way to far up to take the risk on a classic right now unless its a once in a lifetime buy due to rarity. 

rattfink81
rattfink81 Reader
6/9/21 12:31 p.m.

I have and then daily'ed it,  but I don't generally make good financial decisions so..

NOHOME
NOHOME MegaDork
6/9/21 1:55 p.m.

If the picture were one where I was considering buying an example in my budget range and then restoring, vs getting a loan and buying a good example of the marque that I can drive today, I would advise the loan as the cheaper option.

 

So if instead of buying a project for 20k and restoring, you used your 20k plus another borrowed 20k to buy a nice example, after five years you should be able to get your purchase price back and only be out the $3500 or so in interest. That is cheap motoring compared to driving a new car off the lot and much less than what it would cost to do a restoration on the 20k car. Not to mention the years of driving that you get.

ShinnyGroove (Forum Supporter)
ShinnyGroove (Forum Supporter) HalfDork
6/9/21 2:14 p.m.

I wouldn't, but I realize that's a luxury and I wouldn't judge anyone else for doing it.  Interest rates on loans are so low and life is short.

bmw88rider
bmw88rider UltraDork
6/9/21 3:01 p.m.
wearymicrobe said:

At the 3.49% I was quoted for 8 years on a classic last month with 50% down. It does as well as my standard bond and low risk investments so of course.

At the 6.9% that is standard in the industry for 6-8 years with 0-10% down not on your life.  Everything is overpriced right now and I mean everything though. Does not matter what it is bike/project/classic/exotic/truck its all way to far up to take the risk on a classic right now unless its a once in a lifetime buy due to rarity. 

This exactly. It would have to be a steal right now to even buy. I got my recent purchase at a very good price so it makes sense. 2-3 years ago it made sense to go and buy knowing that the value curve had room for growth. Now, it's more likely to go down. 

wearymicrobe
wearymicrobe PowerDork
6/9/21 5:01 p.m.
bmw88rider said:
wearymicrobe said:

At the 3.49% I was quoted for 8 years on a classic last month with 50% down. It does as well as my standard bond and low risk investments so of course.

At the 6.9% that is standard in the industry for 6-8 years with 0-10% down not on your life.  Everything is overpriced right now and I mean everything though. Does not matter what it is bike/project/classic/exotic/truck its all way to far up to take the risk on a classic right now unless its a once in a lifetime buy due to rarity. 

This exactly. It would have to be a steal right now to even buy. I got my recent purchase at a very good price so it makes sense. 2-3 years ago it made sense to go and buy knowing that the value curve had room for growth. Now, it's more likely to go down. 

I am shopping Ford GT's right now and yeah they are up a solid 80K from 12 months ago when the market was sane. Not worth what they are asking now, everything was so far up I sold my Viper and my R8 and made a profit on both even after ownership costs after years of driving.

The whole thing is insane, I have decided to just sit on the cash I had set aside and sit on the sidelines until things go back to normal or at least level out with inflation. Now having said that I have the loan setup and ready to go if I want to go nuts and something comes up at a rational price. I do agree with the aboe about buying over building, its lways cheaper to get something that is finished that the last owner took a bath on to get it perfect. I never see the value of buying something cheap and spenging more in time and money in the long run to finish when you could be driving. I its your thing do it but don't finance a build. 

 

 

 

Pete Gossett (Forum Supporter)
Pete Gossett (Forum Supporter) MegaDork
6/9/21 5:45 p.m.

In reply to wearymicrobe :

Kind of my thought too. I'm really wanting a (running/driving) Europa, but prices are surprisingly up on them too. I don't actually have room for one right now anyway, nor am I sure which car(s) I want to get rid of, so I'll wait it out. 

wearymicrobe
wearymicrobe PowerDork
6/9/21 5:52 p.m.

There is a bunch of stuff I had my eye on. There is a white on white early diablo near me that I was really interested in at sub 100K that needed work but it went above asking a month back. Couple Ford Mustang fastbacks that are setup for vintage racing as well that went for monster money. what is killing me is the classic Volkswagen's. I sold a complete 69 body and pan with no running gear body about a year ago for 800$ and seeing stuff like it for 3K now. Running early non oval cars are over 15K with 1300 motors and needing full interiors. Driving me nuts because I need those cheap running cars with good motors for kit cars. 

frenchyd
frenchyd UltimaDork
6/9/21 7:16 p.m.
wearymicrobe said:
bmw88rider said:
wearymicrobe said:

At the 3.49% I was quoted for 8 years on a classic last month with 50% down. It does as well as my standard bond and low risk investments so of course.

At the 6.9% that is standard in the industry for 6-8 years with 0-10% down not on your life.  Everything is overpriced right now and I mean everything though. Does not matter what it is bike/project/classic/exotic/truck its all way to far up to take the risk on a classic right now unless its a once in a lifetime buy due to rarity. 

This exactly. It would have to be a steal right now to even buy. I got my recent purchase at a very good price so it makes sense. 2-3 years ago it made sense to go and buy knowing that the value curve had room for growth. Now, it's more likely to go down. 

I am shopping Ford GT's right now and yeah they are up a solid 80K from 12 months ago when the market was sane. Not worth what they are asking now, everything was so far up I sold my Viper and my R8 and made a profit on both even after ownership costs after years of driving.

The whole thing is insane, I have decided to just sit on the cash I had set aside and sit on the sidelines until things go back to normal or at least level out with inflation. Now having said that I have the loan setup and ready to go if I want to go nuts and something comes up at a rational price. I do agree with the aboe about buying over building, its lways cheaper to get something that is finished that the last owner took a bath on to get it perfect. I never see the value of buying something cheap and spenging more in time and money in the long run to finish when you could be driving. I its your thing do it but don't finance a build. 

 

 

 

The assumption is that prices will go down. After all prices that go up always do go down later.  That's why you can always buy cars for the same price they were a while ago.  
    Of course it is possible that prices won't return and we will remember the time we could have bought that same car for only••••• 

   Car ownership seems to come in two forms. Those who buy and sell hoping to profit from the transaction. 
 And those who own cars for sentimental reasons or to add to their collection.  
    They buy when the opportunity presents itself rather than a calculation regarding profit or loss. 
  Financing offers an option if there is a conflict or a money problem. 

TurboFocus
TurboFocus HalfDork
6/9/21 7:25 p.m.

i got an unsecured personal loan on my dream car and got screwed really badly on interest.

i have no regrets and would do it all over again. and again. and again.

wspohn
wspohn SuperDork
6/10/21 10:04 a.m.

I had a shot at buying a Maserati Ghibli SS 4.9...and I did the mature thing and decided that I would sell the car I had for sale at the time (Jensen Interceptor convertible).  Missed out on the Maserati which went South to an American buyer.  Being mature (for a change) wasn't much consolation - until the old car Gods handed me an even rarer car for less money - Lamborghini Islero S.  Kind of an 'atta boy' from the Fates.

Generally I have found the principal of 'don't finance what you can't immediately afford' to be a pretty good one.

NickD
NickD MegaDork
6/10/21 10:47 a.m.

I don't finance any car. A classic car is, 9 times out of 10, going to be a toy, not a necessary vehicle. And if you can't afford to pay for a toy out of pocket, then you don't really need it.

CrustyRedXpress
CrustyRedXpress Reader
6/10/21 10:54 a.m.

I did. The loan was ridiculously low (3.5 maybe?) so I left the money in the market instead. Over 4 years there was something like a 13.4 CAGR after inflation. 

Bets like that don't always pay off, but it's nice when they do.

Apis Mellifera
Apis Mellifera Dork
6/10/21 10:56 a.m.

The tier of classic cars I buy do not require financing.  The question is like asking if I would finance the purchase of a pack of ramen.

bearmtnmartin (Forum Supporter)
bearmtnmartin (Forum Supporter) UltraDork
6/10/21 11:28 a.m.

If you follow the adage of borrow for what you want and save for what you need it makes no sense to buy a classic on payments for purely emotional reasons. But if can make an emotionally detached decision based on logic and potential appreciation then go for it I would say. The problem is that with GRM types the emotional side will always trump the logic side. 

Having said that, people think nothing of financing a new car based on emotion, and often convince themselves it was a logical decision when it clearly was not to everyone else, and new cars of course are almost always a terrible investment, at least compared to almost new cars.

infernosg
infernosg Reader
6/10/21 12:45 p.m.

I financed my 1st gen RX7 with an unsecured personal loan. I didn't have the all the money on hand and it was too good of a car to pass up (early VIN, all original, less than 30 miles, etc.). Interest rates were E36 M3 no matter how much I put toward the initial purchase price. I could have put down more than 50% but I ended up financing the majority of it and paid 2-3X the monthly payment. Paid off the loan something like 3 years early.

67LS1
67LS1 New Reader
6/10/21 7:16 p.m.

I'm weird and have been very fortunate so I've never had a car payment of any kind. But I've also only owned one new car in my life.

I have a brother that leases all the time and swears by it and at the low teaser rates of like zero % for X months I should too.

I've never shopped for a classic or collector car loan so not sure what rate I'd be offered but I know it wouldn't be zero. But you'd be spending discretionary money at that point so if you can afford it, do it. Can you pay them off early if you want?

 

pirate
pirate HalfDork
6/10/21 9:56 p.m.

With cars and project cars I have always been on the cash purchase and pay as you go for projects. I never wanted to take money out of the household income my wife also contributed to for something that was primarily my interest. I have at different times had part time businesses to pay for my car habit. 

maj75 (Forum Supporter)
maj75 (Forum Supporter) Dork
6/11/21 7:54 p.m.

People finance new cars and that's a terrible idea, financially.  The value of your "investment" drops like a rock the minute you drive it off the lot. (Ignore the current craziness)

With the right classic car, you stand a chance that the value doesn't drop, and maybe appreciates.  But it has to be the right car and you might as well try to pick stocks as pick the car that's going to be more valuable in 10-20 years.

Loweguy5
Loweguy5 HalfDork
9/23/22 6:35 a.m.

I used Lightstream and it has been a fantastic experience.  Right now the market is down and stocks are cheap.  There is no way I'm going to sell even a share right now but we are buying all the shares we can afford.  I use my cash for that and happily take loans to buy things like cars.

Leverage, when used properly, can be your friend.

frenchyd
frenchyd MegaDork
9/23/22 11:49 a.m.

I do finance my classic cars, always have.   I buy the basic worn out hulk with cash.  Then let it sit in the shop until my cash gets replenished a bit and then buy some  parts.  Maybe if I'm getting real antsy I'll even put big purchases on a credit card.    But then hold off until it's paid off.   In the mean time It's coming apart, getting cleaned up, mental lists made and prices looked up.  
 Items crossed out. And as cash arrives new orders sent in.  More work etc. typically in a couple of years. 2000 manhours  I'll push the finished car outside.  Go have some fun.  

MadScientistMatt
MadScientistMatt UltimaDork
9/23/22 1:00 p.m.
frenchyd said:

I do finance my classic cars, always have.   I buy the basic worn out hulk with cash.  Then let it sit in the shop until my cash gets replenished a bit and then buy some  parts.  Maybe if I'm getting real antsy I'll even put big purchases on a credit card.    But then hold off until it's paid off.   In the mean time It's coming apart, getting cleaned up, mental lists made and prices looked up.  
 Items crossed out. And as cash arrives new orders sent in.  More work etc. typically in a couple of years. 2000 manhours  I'll push the finished car outside.  Go have some fun.  

Yep. Way better if you can decide if you want to make a "monthly payment" on the car or just hold off on installing the whatever another month. I try to avoid financing a daily driver, but understand that can be a necessary evil. Anyone financing a classic would have to be either a lot smarter or a lot dumber at the money game than I am 

ae86andkp61 (Forum Supporter)
ae86andkp61 (Forum Supporter) Dork
9/24/22 1:17 a.m.

I financed my latest Suzuki Cappuccino purchase with a personal loan. Backstory: I imported a similar Cappuccino from Japan a few years back and was in the midst of addressing all the issues/attempting a restoration (and losing steam) when I became aware of another car, same year, same model, lower miles, nicer condition, ready-to-drive, and for sale one state away!

I didn't have the cash on hand to purchase outright (which is my usual preference for fun car purchases) but I knew I could finish/sell the project car I owned to finance at least half of the price of the cherry one for sale, and I didn't want to let the unicorn slip through my fingers. The financing was the bridge that allowed me to buy the cherry one first, then get the project one to a sellable state, sell it, pay down the loan, and emerge with a better and more collectible car, plus a small debt I'll have paid off (no penalties for early payment-so I'll pay ahead of schedule) later this year, or early next year.

As a single middle-aged guy with no kids, minimal debt, and a decent job, I recognize I'm in a privileged place to be able to enjoy these options.

Financing is a tool that can be used to one's benefit if considered smartly. Life is short, and if enjoying the time we're here could be improved by going partway out on a financial limb...I'm guilty as charged.

z31maniac
z31maniac MegaDork
9/25/22 4:09 p.m.

Maybe. 

But there is nothing wrong with financing a vehicle if the interest rate beats inflation. And at the current inflation rate, you're credit would have to be TERRIBLE to not get a vehicle loan below 8% at the moment. 

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