Classic car financing in Canada

Car loan providers typically don’t want to finance old vehicles, so it’s tough to find classic car financing in Canada. If you have your heart set on buying a vintage set of wheels, here are your options.

5 options for classic car financing in Canada

While cold hard cash is the fastest way to get your hands on the classic car of your dreams, most of us don’t have that kind of disposable income at the ready. Don’t fret, though—if you don’t have the money to buy a classic car upfront, there are classic car loans available to help you with your purchase.

1. Classic car loans
2. Personal loans
3. Home equity loans
4. Personal line of credit
5. Hobby-specific financing

1. Classic car loans

Getting financing through car loan lenders may be more challenging, but there are still lenders who can offer classic car loans. The car loan may be unsecured, which means your classic car won’t act as collateral. An example of a lender that can finance a classic car is Coast Capital.

2. Personal loans

Consumers can take out a personal loan to help with any of their financial needs, from renovating a home, paying for a vacation, consolidating debts and, of course, buying a classic car.

Personal loans are repaid over a few years. You can potentially get a lower rate by securing your loan with an asset like your home. For unsecured personal loans, lenders prioritize your credit score and income when assessing your eligibility.

You can turn to banks, credit unions and online lenders for a personal loan. It’s wise to comparison shop so you secure the lowest rates on your loan.

Compare personal loans to finance a classic car in Canada

3. Home equity loans

If you’re a homeowner with a substantial amount of equity built up, you could use a home equity loan to finance a classic car. Using home equity as collateral, you can secure low rates and long repayment terms. Spend funds as you please, from buying a classic car to paying for insurance and repairs.

Keep in mind, you’re putting your home’s equity on the line so choose a loan and repayment plan you can stick to. Your loan amount is determined by a home appraisal from your lending institution. Make sure your home is in tip-top shape before your appraisal so it’s garnering a fair market value.

4. Personal line of credit

If you need a hand with your classic car purchase, consider opening a personal line of credit. While a personal loan is provided as a lump sum of funding you need to repay within a fixed amount of time, a line of credit stays open as long as you keep up with payments. Once you repay what’s withdrawn, you can re-access the money.

A line of credit may come in handy to help with your purchase, along with repairs, insurance, gas and other unexpected expenses. Because they don’t come in increments as high as personal loans and home equity loans, a line of credit may not be enough to cover off the majority of your financing for your classic car.

5. Hobby-specific financing

Hobby-specific financing is a niche area of lending, catering to consumers who need custom loans. In this case, lenders understand that consumers are asking for a loan for a unique reason, such as building up their classic car collection.

You won’t find these loans marketed by major banks and credit unions, but online lenders and private lenders may be more inclined to provide these loans to help you buy a classic car.

How to get a classic car loan in Canada

Classic cars are collectible, which raises their value. Your eligibility depends on your credit and finances. Most lenders expecting a down payment of around 20%. The more you can spend upfront, the lower your interest rate could be. At the end of your loan term, you own the car and are able to sell it or keep it as a valuable asset.

This gives you the freedom to do whatever you like with the vehicle, from painting it to customizing its features.

If you’re looking into securing a loan to buy a classic car, here’s a step-by-step look at what to expect:

1. Find your classic car

Before you apply for a loan, you need to know what kind of car you’re going to buy and how much it costs. You’ll also need to determine if you need more cash to insure, repair and maintain the vehicle. Have details on hand such as the make, model, year, mileage, price and dealership information.

Your lender may have the car inspected and appraised. If you’re unsure of the car’s market value, make sure you do your own homework before buying. Have a good idea of precisely how much you need for your loan.

2. Decide on the loan option you’d like to proceed with

Between car loans, personal loans, lines of credit, home equity loans and hobby-specific loans, you have a slate of financing options. Decide which route provides you with the financing you need at the terms you want. Do you want to secure your loan with collateral? Do you want a fixed or variable rate?

3. Shop around for a loan

Find lenders with criteria you can meet before comparing APRs (annual percentage rates), terms and fees. Some lenders offer pre-approval, which allows you to compare the rates and terms you qualify for before filling out the full application.

4. Apply for financing

Most lenders have an online application, though banks and credit unions might require an in-person visit. With an online lender, you could have funds sent over to you as fast as one day, while banks typically take at least a week to process the application.

To apply for a loan, you may need to provide the following documents and information:

• Valid government-issued photo ID like a driver’s licence or passport
• Proof of income like recent pay stubs or tax Notice of Assessments
• Basic employment information such as your job title and the name and contact information of your employer
• For secured loans, information about the asset you’re providing as collateral (i.e. your home or car)

5. Fill out the paperwork

At this point, the seller has to sign the title over to you and complete the bill of sale. You can typically drive away in your car as long as the title is transferred over to your name.

6. Register the title transfer and your car

Once you’ve signed the paperwork, visit your provincial licensing office to register the title transfer and your new car. You’ll have to pay a fee depending on where you live. You can often register your car online, though some provinces may require you to report to a physical location.

What is the oldest car a bank will finance?

Most banks won’t finance cars older than 10 years with a typical car loan. If you want to finance an older car, your best bet will likely be to look at other bank lending options like a personal loan, personal line of credit or home equity line of credit.

If you have a longstanding relationship with your bank and a good to excellent credit score, getting classic car financing from your bank may allow you to lock in a more competitive interest rate.

What’s unique about classic car loans?

Classic car loans share many of the features of standard car loans, but they do have some characteristics that set them apart.

• Stricter credit requirements. The larger the purchase, the higher your credit score will need to be in order to secure a loan. Many classic car loan providers only accept customers with a good or excellent credit score. Good credit lowers your risk, usually resulting in lower interest rates.
• No vehicle age restrictions. It’s common for used car loan providers to restrict financing to vehicles that are no more than five years old. Classic cars are far older but have high value, so the age restriction is more relaxed.
• Restrictions on vehicles. Classic car loans can often be used to buy antique, muscle or other exotic cars, while everyday car loans are usually limited to modern vehicles.
• Expert valuations. There isn’t a set standard for deciding which cars are classic. Classic car loan providers often have experts who can establish the car’s value. Many auto insurers consider classic cars as being at least 10-25+ years old (with some exceptions). But standards vary, so check with your lender to see if the car you want makes the cut.

Many borrowers turn to personal loans for classic car financing since the requirements tend to be easier to meet.

Representative example: Omar buys a Corvette

Omar, a B.C. resident and classic car collector, visits a local car show and meets a private seller offering a 1960 Ermine White Chevrolet Corvette in great condition with all original parts. The asking price is $70,000, which Omar agrees to pay, offering a 20% deposit ($14,000) to secure the sale while he searches for a loan to cover the rest.

Because of his strong credit history and good income, Omar finds a reputable lender specializing in classic car loans who’s willing to lend him the money to pay the amount owing on the car plus 12% PST ($56,000 + $6,720). Omar also pays approximately $50 to register his vehicle with the Insurance Corporation of British Columbia (ICBC)—this includes the cost of a license plate, insurance decal and vehicle permit as well as a registration fee.

Cost of new vehicle	$56,000 ($70,000 less $14,000 deposit)
Loan type	Auto loan (term loan)
Loan amount	$64,400
Interest rate (APR)	6.90%
Loan term	7 years
Additional fees	4% origination fee ($2,576) $0 application fee (waived by dealership)
Payment	$968.82 monthly or $446.61 biweekly
Total loan cost	$81,380.88 with monthly payments or $81,283.02 with biweekly payments

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How to value a classic car

In order to accommodate the wide variety in car values, classic car loans can be flexible in the amounts that are given. Depending on its condition, rarity, originality, collector appeal and many other factors, a classic car could cost as much as a few hundred thousand dollars.

There are guides to valuation, but often it requires an expert with some in-depth knowledge of the market. A specialized lender may have a classic car specialist on hand, or you can contact one yourself and have the car appraised before applying for a loan.

What to look for in classic car loans

There’s more to a loan than just the interest rate. You should also look at:

• Fees. Fees add to the total cost of your loan. Many lenders charge multiple fees, but there are some that are negotiable or vary from lender to lender. Find a lender that has minimal fees so you can walk away with a better deal.
• Repayment terms. Some loans last 24 months while others can stretch as long as 144 months. The longer your loan term, the lower your monthly payment but the more you’ll end up paying in interest in the end. Weigh the pros and cons of various repayment terms when comparing your loan options.
• Flexibility. Can you make additional repayments? Are there any early repayment fees? The flexibility of a loan can make a difference in your ultimate choice of lender.
• Security. Lenders often require you to use your car as the security for your loan, and a classic car loan is no different. By using your car as collateral, you’ll have access to lower interest rates, but you do risk losing the car entirely should you default.

Classic car insurance in Canada

Many car loans agreements will require that you get comprehensive coverage. The value of your classic car may increase the premium you pay.

Classic car insurance policies can include benefits like lay-up periods to reduce premiums, which may be more suitable if you’re a collector or looking to invest in the classic car as an appreciating asset (meaning, an asset that goes up in value over time).

Classic car insurers are very careful with what they’ll insure. You may only be allowed to drive your car during certain months or on specific roads. This is due to the difficulty in replacing parts that have been worn down or damaged. There may also be coverage restrictions if you haven’t maintained a clean driving record for a number of years.

High-value classic cars

A large variety of classic cars on the market have buyers lining up to make a purchase, but here are a few that auto enthusiasts put at the top.

• Chevrolet Camaro
• Dodge Charger
• Ford Torino
• Plymouth Roadrunner
• Chevrolet Chevelle

These classics may cost you more, but could be worth the investment if you love driving or working on classic cars that can last you for years to come.

Bottom line

A classic car is an investment. Many appreciate in value when maintained f and stored properly, and each one is a unique collector’s item. Review your finances before borrowing a loan for a classic car. Review the costs and features to make sure it suits your needs and budget, and don’t hesitate to speak with an accountant or classic car expert before finalizing your purchase.

Frequently asked questions

• Can you finance a classic car?

  Yes, but your loan options will be more limited. Some typical car loan providers won't finance a car that's older than a certain number of years, like 10 years old, while others may have less specific criteria or even specialize in financing classic cars. Many banks offer secured financing options too, using large car collections (valued at over $1 million) as collateral.

• Are there any banks that finance cars older than 10 years?

  Not likely. The Big Banks in Canada—like CIBC, RBC and Scotiabank—will not finance a car older than 10 years.

• Can I find a car loan to restore a classic car?

  A car loan provider won't want to finance a restoration project, but that doesn't mean you don't have options. You could take out a personal loan to cover the restoration costs of a classic car purchase.

• How long is the term for classic car loans?

  Loan terms for classic cars can stretch over 10+ years if the value of the car is high enough, but like normal car loans, the standard term lasts from 2-7 years. There are financing options for longer than that, but you'll likely save money with a shorter term because you'll pay less in interest.

• What qualifies as a classic car?

  The exact definition of a "classic car" may change depending on which finance company you apply to. However, we can look at classic car clubs to get an idea of what qualifies. The Antique and Classic Car Club of Canada defines classic cars as being 20 years of age or older, while the Vintage Car Club of Canada only allows cars that are a minimum of 25 years old.

  Similarly, many insurance companies define classic cars as those that were manufactured at least 10-25+ years ago. A car could be exempted from any minimum age requirements if it was a limited edition or has historical significance.

• What impacts the price of a classic car?

  Certain features of a car will add or detract from the value.

  • Manufacturer
  • Model
  • Age
  • Condition
  • Original features
  • Authenticity
  • Mileage

  These will all play a part in how much a classic car costs and how its value will appreciate over time.