What a classic car loan is and how it differs from a standard auto loan

A classic car loan is a loan designed specifically for vehicles that are typically 25 or more years old, though some lenders set the threshold at 20 years. The main difference from a regular auto loan is that classic car lenders do not base the loan amount on the vehicle's current market value the way a bank does with a new car. Instead, they often ask you to provide documentation of what the car is actually worth — an appraisal, a recent sale price of a comparable vehicle, or a valuation from a classic car pricing guide like NADA Guides or Hagerty's valuation tool.

Classic car loans also typically come with different terms. The loan period is often shorter — sometimes 10 to 15 years instead of the 6 to 7 years common for new cars — and the interest rate is usually higher because the lender sees the car as a riskier investment. You may also face restrictions: some lenders require that you store the car in a garage, limit how many miles you drive it per year, or require that you maintain comprehensive and collision insurance throughout the loan.

The reason lenders treat classic cars differently is straightforward: a 1965 Mustang loses value if it sits in the rain, but a 2024 Mustang loses value straightforward by being driven off the lot. Classic cars are often hobby vehicles rather than primary transportation, which changes how lenders think about risk.

Key Takeaways

  • Classic car loans require you to prove the vehicle's value through an appraisal or pricing guide rather than relying on the lender's valuation.
  • Interest rates on classic car loans are typically higher than standard auto loans because lenders view them as higher-risk investments.
  • Loan terms are often shorter — 10 to 15 years — and may include restrictions on storage, annual mileage, or insurance requirements.
  • You will need to show proof of income and have a credit history, just as with any auto loan, but lenders may also want to know about your restoration plans or how you intend to maintain the vehicle.

Where to find a lender that offers classic car loans

Not every bank or credit union offers classic car loans, so you cannot straightforward walk into your regular bank and expect them to finance a 1972 Chevelle. Specialty lenders are your best starting point. Companies like Hagerty, J.G. Wentworth, and LendingClub have specific classic car loan products. Credit unions sometimes offer them too, particularly if you are a member of a credit union that focuses on enthusiast communities or has a classic car lending program.

You can also contact classic car dealerships or restoration shops in your area — they often have relationships with lenders and can point you toward financing options. Online lenders and peer-to-peer lending platforms may also consider classic car loans, though you will need to shop around and compare terms carefully.

Before you approach any lender, gather documentation of the car's value. This might include a professional appraisal (which costs $300 to $500 but carries weight with lenders), recent auction results for similar vehicles, or a valuation report from Hagerty or NADA Guides. Having this ready speeds up the process and shows the lender you have done your homework.

What lenders will ask about your income and credit

Classic car lenders follow the same basic income and credit checks as any auto lender, but they may weight them differently. You will need to provide proof of income — recent pay stubs, tax returns, or bank statements — and the lender will pull your credit report to see your payment history and current debt load.

However, because classic cars are often purchased by people later in their careers or in retirement, some lenders are more flexible about income sources. If you are retired and living on Social Security and investment income, a classic car lender may accept that, whereas a traditional auto lender might not. The key is showing that you have stable income and a track record of paying your debts on time.

Your credit score matters, but it is not the only factor. A score in the 650 to 700 range may still get you approved for a classic car loan, though at a higher interest rate than someone with a 750+ score would receive. If your credit is weaker, be prepared for a higher rate or a requirement to put down a larger down payment.

Down payment expectations and loan-to-value ratios

Classic car lenders typically ask for a larger down payment than standard auto lenders do. While a new car loan might require 10 to 20 percent down, a classic car loan often requires 20 to 30 percent or more. This protects the lender if the car depreciates or if you default on the loan.

The reason is the loan-to-value ratio, or LTV. This is the percentage of the car's value that the lender is willing to finance. A lender might say they will finance up to 70 percent of the car's appraised value, which means you need to cover the remaining 30 percent yourself. If the car is appraised at $50,000 and the LTV is 70 percent, the lender will finance $35,000 and you need to put down $15,000.

Some lenders are more aggressive with LTV — they might go to 80 or 85 percent — but those loans usually come with higher interest rates. If you have a strong credit score and a solid income, you may be able to negotiate a better LTV and a lower down payment requirement.

Interest rates and how they are set

Interest rates on classic car loans vary widely depending on the lender, your credit score, the age and condition of the vehicle, and the loan term. Rates typically range from 5 percent to 12 percent or higher, which is noticeably higher than rates on new car loans (which often start around 3 to 4 percent for borrowers with good credit).

The reason for the higher rate is that classic cars are seen as hobby purchases rather than reliable transportation, and they are harder to repossess and resell if you stop paying. A lender cannot straightforward auction off a 1955 Thunderbird the way they can a 2020 Honda Civic.

Your rate will depend most heavily on your credit score and the loan-to-value ratio. A borrower with a 750+ credit score and a 60 percent LTV might get a rate around 6 to 7 percent, while someone with a 650 credit score and an 80 percent LTV might pay 10 to 12 percent. Always ask the lender for the annual percentage rate (APR), which includes fees and gives you the true cost of borrowing.

Restrictions and requirements you may face

Many classic car lenders impose conditions on how you use and maintain the vehicle. These might include a requirement that the car be stored in a climate-controlled garage when not in use, a limit on annual mileage (often 2,500 to 5,000 miles per year), or a requirement that you maintain comprehensive and collision insurance at all times. Some lenders also require that you have the car inspected annually by a certified mechanic to confirm it is being maintained.

These restrictions exist because the lender has a financial stake in the car's condition. A classic car that sits in a garage and is driven carefully holds its value much better than one that is driven daily in harsh weather. If you plan to use the car as primary transportation, a classic car loan may not be the right fit — you might be better served by a standard auto loan, even if the car is older.

Before you commit to a loan, read the fine print carefully and make sure you can live with the restrictions. Some lenders are more flexible than others, and it is worth shopping around to find terms that match how you actually plan to use the vehicle.

The appraisal process and what happens if the car's value drops

Most classic car lenders require a professional appraisal before they will fund the loan. This appraisal is different from a standard vehicle inspection — it is a detailed assessment of the car's condition, originality, and market value. The appraiser will examine the engine, body, interior, and mechanical systems, and will compare the car to recent sales of similar vehicles.

The appraisal typically costs $300 to $500 and is sometimes paid by you upfront, though some lenders cover the cost. The lender uses this appraisal to set the loan amount and the interest rate. If the appraisal comes in lower than you expected, the lender may offer less money than you hoped, or may ask you to put down more cash.

After the loan is funded, what happens if the car's value drops? Most classic car loans do not have a clause that requires you to pay the difference if the car depreciates. However, if you default on the loan and the lender repossesses and sells the car, and the sale price is less than what you owe, you could be responsible for the shortfall. This is another reason lenders ask for a substantial down payment — it gives them a cushion if the car loses value.

Frequently Asked Questions

Can I get a classic car loan if I have bad credit?

Yes, but you will pay a higher interest rate and may need to put down a larger down payment. Some lenders specialize in working with borrowers who have credit scores below 650. Shop around and be prepared to provide additional documentation of income or assets to offset the credit risk.

What if the classic car needs restoration work?

Most lenders will finance a car that needs restoration, but they will base the loan amount on the car's current condition, not its value after restoration. If you plan to restore the car, you may need to find separate financing for the restoration work itself, or budget for it out of pocket.

Do I need to have the car inspected before I explore for the loan?

You do not need a pre-loan inspection, but having one done can strengthen your process. An inspection report shows the lender that you have been thorough and gives them confidence in the car's condition. The lender will require an appraisal, which is more detailed than a standard inspection.

Can I refinance a classic car loan later?

Yes, if your credit improves or if interest rates drop, you can refinance to a lower rate. However, not all lenders offer refinancing for classic cars, so you will need to shop around. Refinancing typically requires a new appraisal, which costs money, so make sure the rate savings justify the cost.

What happens if I want to sell the car before the loan is paid off?

You can sell the car, but you will need to pay off the loan in full from the sale proceeds. If the car sells for less than what you owe, you will need to cover the difference out of pocket. This is called being "upside down" on the loan, and it is a risk with any auto loan, but especially with classic cars whose values can fluctuate.