Simple hacks to finance a classic car

Financing a classic car involves different considerations than buying a newer vehicle.

Most lenders treat classic cars as higher-risk assets because valuations can fluctuate, parts may be scarce, and the vehicles often aren't used as daily transport. This means standard car finance products don't always apply, and you'll need to approach the purchase with a clear strategy around loan structure, deposit size, and how the lender views the vehicle's worth.

Why standard car finance doesn't always work for classics

A secured loan relies on the vehicle as security, but lenders assess risk based on how quickly they could sell the asset if needed. Classic cars sit in a niche market where valuations depend on condition, originality, and buyer demand at a specific point in time. Many lenders won't provide finance for vehicles over a certain age, typically 10 to 15 years, which rules out most classics immediately. Even if a lender is willing to consider it, they may cap the loan amount below the vehicle's actual value or require a larger deposit than you'd expect for a new or certified pre-owned vehicle.

Consider a buyer in Edithvale looking at a restored 1970s Holden HQ Premier. The agreed purchase price is $45,000 based on recent auction results and condition reports. A standard lender offering used car finance declines the application because the vehicle falls outside their age criteria. The buyer then approaches a specialist lender who agrees to finance 60% of the purchase price, meaning a $27,000 loan amount with an $18,000 deposit required upfront. The interest rate sits higher than typical auto loan rates due to the perceived risk, and the loan term is capped at five years rather than the seven years often available for newer vehicles.

Using personal loans or specialist classic car lenders

When a secured car loan isn't an option, a personal loan can fill the gap. Personal loans are unsecured, meaning the lender doesn't hold the vehicle as security, but they also come with higher interest rates to offset that risk. The advantage is flexibility. There's no restriction on vehicle age, and you're not limited by a lender's assessment of the car's resale value. The loan amount is based on your income and borrowing capacity rather than the car itself.

Some lenders specialise in classic and luxury car finance, and they understand the market differently. They may accept valuations from recognised classic car clubs or independent appraisers, and they're more likely to finance the full agreed purchase price if the documentation supports it. These lenders also tend to offer longer loan terms, which can reduce the monthly repayment, though you'll pay more interest overall. Specialist lenders may also be comfortable with vehicles purchased from private sellers rather than requiring dealer financing, which opens up more options when you're buying something rare or unique.

If you're buying through a dealership that specialises in classic or collectable vehicles, ask whether they have a relationship with a direct lender. Some dealers can arrange vehicle financing that takes the hassle out of comparing products yourself, though it's still worth doing a car loan comparison independently to confirm the rate and terms are competitive.

Structuring the deposit and repayment to suit the purchase

The deposit required for a classic car is almost always higher than for standard vehicle financing. Where you might secure a new car with 10% to 20% down, a classic may require 30% to 50%, depending on the lender and the vehicle. This isn't just about risk. It's also about liquidity. If the lender needs to recover the asset, they want to know the loan amount sits well below what they could realistically sell it for in a distressed timeline.

Your monthly repayment will reflect both the loan amount and the interest rate, which may sit above what's advertised for new car finance or green car loans. Some lenders offer a balloon payment structure, where a portion of the loan is deferred to the end of the term. This reduces your regular repayment but means you'll need to either refinance, pay out the balloon, or sell the vehicle when the term ends. Balloon payments can work well if you plan to sell the car after a few years or if you expect your income to increase, but they add complexity and shouldn't be used just to make the repayment look affordable on paper.

In our experience, buyers who treat the classic car as an asset rather than just transport tend to structure the finance more conservatively. They prioritise a shorter loan term, avoid balloons where possible, and aim to own the vehicle outright within three to five years. This approach also makes it simpler if you later decide to refinance a car loan or consolidate it with other debts.

What lenders look for in a classic car finance application

Lenders assess the vehicle and the borrower. For the vehicle, they want proof of value. This could be a professional valuation, recent auction results for comparable models, or documentation from a recognised club or registry. Photos showing condition, service history, and any restoration work also strengthen the application. If the car is modified, some lenders become cautious because modifications can narrow the resale market. Originality tends to be viewed more favourably unless the modification is well-documented and adds clear value.

On the borrower side, the car loan application process follows familiar steps. Lenders review your income, existing debts, living expenses, and credit history. Because the interest rate on classic car finance is often higher, the monthly repayment can strain your budget more than expected. Some buyers assume they can use no deposit options or instant approval products, but these are rare for classic vehicles. Most applications require full documentation and a detailed assessment, which can take several days to a week depending on the lender.

If you're self-employed or buying the vehicle for business use, a business car loan may be an alternative worth exploring, particularly if the classic car will be used in your trade or for promotional purposes. The tax treatment and loan structure differ, and it's worth discussing with both your broker and accountant before committing.

Refinancing or paying out the loan early

Once the loan is in place, your circumstances or the vehicle's value may change. If interest rates drop or your credit position improves, refinancing the loan can reduce your repayment or shorten the term. Classic car values can also rise, particularly if the model becomes more sought-after or you've invested in restoration. If the car appreciates significantly, you may be able to refinance at a lower rate or access equity for another purpose, though this depends on the lender's willingness to revalue the asset.

Paying out the loan early is another option if you come into funds or sell another asset. Most lenders allow early repayment, but some charge a fee, particularly on fixed-rate products. If you're planning to sell the car within a few years, confirm the exit terms upfront so there are no surprises when you're ready to settle the loan amount.

For buyers in Edithvale and the surrounding bayside suburbs, classic car ownership often ties into lifestyle and long-term wealth building. Whether the vehicle is a weekend project, a future investment, or something to pass down, the finance structure should support that intention rather than work against it. Taking the time to compare lenders, understand the repayment impact, and plan the deposit properly makes the difference between a purchase that feels sustainable and one that becomes a financial strain.

If you're considering finance for a classic, collectable, or luxury car and want to explore your options, call one of our team or book an appointment at a time that works for you. We work with lenders who understand this market and can help structure a loan that fits both the vehicle and your broader financial position.

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