Top Strategies to Finance a Classic Car Purchase

Classic cars are a different animal when it comes to finance.

Most lenders won't touch anything over 10 to 15 years old through their standard new or used car loan products. That means you're either paying cash, using a personal loan with a higher interest rate, or finding a specialist lender who understands what a well-maintained classic is worth. The decision you need to make is which route protects your cash flow and your ability to borrow for other things down the track.

Why Standard Car Loans Don't Cover Classics

Most lenders cap their secured car loans at vehicles no older than 10 to 15 years because they want an asset that holds predictable value. A classic car might be worth more than a new hatchback, but the valuation process is harder and the resale market is smaller. That means if you default, the lender has a harder time recovering their money. So they either decline the application outright or offer an unsecured personal loan instead, which comes with a higher interest rate and shorter loan term.

Some specialty lenders and credit unions will finance classics, but they'll want a detailed valuation from a registered valuer, proof of agreed value insurance, and evidence the car is being stored securely. The loan amount is usually capped at 70% to 80% of the valuation, so you'll need a bigger deposit than you would for a new ute.

Secured vs Unsecured: What It Means for Your Repayments

A secured car loan uses the vehicle as security. If the lender agrees to secure the loan against a classic, you'll get a lower interest rate because the lender has recourse if you stop paying. An unsecured personal loan doesn't require the car as security, so the lender is taking more risk and charges you more for it.

Consider a builder buying a 1972 Holden HQ Monaro valued at $60,000. A secured loan at 8% over five years would cost around $1,215 per month. An unsecured personal loan at 12% over the same term would cost around $1,335 per month. Over five years, that's an extra $7,200 in interest. The catch is that not every lender will secure against a 50-year-old car, even if it's worth more than a new Corolla.

If you're weighing up whether to use a personal loan or tap into equity elsewhere, the finance for tradies page covers the different loan types and when each one makes sense.

How Classic Car Finance Affects Your Borrowing Capacity

Every dollar you commit to a monthly repayment reduces what you can borrow for a home loan or investment property. Lenders assess your borrowing capacity by looking at your income, existing debts, and living expenses. A car loan repayment of $1,200 per month might reduce your maximum home loan by $200,000 or more, depending on the lender's serviceability model.

If you're planning to buy property in the next 12 to 24 months, it's worth running the numbers before you commit to car finance. In some cases, it makes more sense to delay the classic car purchase or use savings instead of a loan. In other cases, the classic holds its value well enough that you could sell it quickly if you needed to reduce debt before applying for a mortgage.

Specialist Lenders and What They Look For

Specialist lenders who finance classics will ask for a professional valuation, photos, service history, and proof of insurance with an agreed value. They want to see that the car is a genuine collectable, not a project car that's half-finished in a shed. The valuation needs to come from someone accredited, not just a mate who knows cars.

They'll also want to know how you're storing it. A car kept in a locked garage with an alarm system is a lower risk than one parked on the street. Some lenders will only finance classics that are garaged and insured for agreed value, which can add to your ongoing costs.

The loan amount is typically capped at 70% to 80% of the valuation, so if the car is valued at $80,000, you'll need at least $16,000 to $24,000 as a deposit. That's higher than the 10% to 20% deposit you'd need for a new car through a dealer.

Using Equity Instead of a Car Loan

If you own property and have equity available, you might get a lower interest rate by refinancing your home loan and drawing down the extra funds. The interest rate on a home loan is usually lower than a car loan, even a secured one. But there are trade-offs.

Using equity means you're securing the debt against your home, not the car. If something goes wrong and you can't make repayments, you're risking your house, not just the Monaro. You're also paying off the car over 25 or 30 years instead of five, which means you'll pay more interest in total unless you make extra repayments.

This approach works if you're disciplined about paying the debt down quickly and if the classic is likely to hold or increase in value. It's a bad idea if you're already stretched on your mortgage or if the car is more of a passion project than a genuine investment. The home loans for builders page has more on how equity works and when it makes sense to use it.

The Application Process for Classic Car Finance

The car loan application process for a classic is more involved than clicking through an online form. You'll need to provide the valuation, insurance documents, proof of income, and a deposit. If you're self-employed, the lender will want to see tax returns or BAS statements to verify your income, the same as they would for a home loan.

Some lenders will ask for a deposit upfront before they order a valuation. Others will let you submit the valuation with your application. Either way, expect the process to take longer than a standard car loan. Finance approval might take a week or two instead of a day or two, and the lender might want to inspect the car before they release funds.

If you're buying from a private seller, make sure the contract has a finance clause so you're not committed to the purchase before the loan is approved. Dealer financing is rare for classics because most are sold privately, so you'll need to arrange your own finance rather than relying on the dealer to sort it out.

Refinancing a Classic Car Loan

If you've already got finance on a classic and the interest rate is higher than it needs to be, you can refinance the car loan the same way you would refinance a home loan. This works if rates have dropped since you took out the original loan, or if your credit score has improved and you now qualify for a lower rate.

Refinancing a car loan usually means paying out the existing lender and taking a new loan with a different lender. There might be an early exit fee on the old loan, so check the numbers to make sure the saving is worth it. Some lenders will also refinance a car loan that was originally unsecured into a secured loan if the car still meets their age and value criteria.

Call one of our team or book an appointment at a time that works for you. We work with lenders who understand classic cars and can walk you through the options without the runaround.

Frequently Asked Questions