Buying a classic car isn’t easy when you don’t have the money upfront. Your car loan options are more limited because car loan lenders typically do not want to finance older cars. If you have your heart set on buying this type of car, here’s a closer look at your options for classic car financing in Canada and how you can secure your loan.
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.
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 provided as a lump sum that you’ll repay over the course of a few years. You can opt into a secured personal loan, using an asset like your house or your savings as collateral, to unlock lower interest rates and better terms. You can also shop around for unsecured personal loans, in which lenders will prioritize your credit score and income to determine your loan details.
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
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3. Home equity loans
If you’re a homeowner with a substantial amount of money built up in equity, you can use a home equity loan to finance your classic car purchase. With your home equity as collateral, you can secure low rates and long repayment terms. Like a personal loan, you can use the funds from your home equity loan as you please, from buying your classic car to paying for insurance and any 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, you can also 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. Like all car loans, your eligibility depends on your credit and finances, with most lenders expecting a down payment of around 20%. The more you can spend upfront, the greater your chance of scoring a lower interest rate. 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:
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.
Between car loans, personal loans, lines of credit, home equity loans and hobby-specific loans, you have a slate of options in front of you for financing your car. Decide on which route makes most sense for you and provides you with the financing you need at the terms you want. You’ll also want to zero in on whether you’d like to secure your loan and whether you’d like a fixed interest rate or a variable rate.
With a concrete idea of the type of loan you’d like to secure, shop around with lenders that provide the loan product. Start by finding lenders that you’re eligible to borrow from 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.
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.
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.
Once you’ve signed the paperwork, you’ll have to 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 and will likely have to fill out more paperwork. You can often register your car online, though some provinces may require you to report to a physical location to register the title.
What is the oldest car a bank will finance?
Most banks won’t finance cars older than 7 to 10 years with a typical car loan. If you want to finance a car older than 10 years at a bank, 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 is 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 are high-value purchases, so the age restriction is more relaxed. Back in 2014, Zuto, an auto loan company from the UK, reported financing a 1921 Talbot Darracq!
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 one standard set of guidelines for deciding which cars are classic and which are simply old. Classic car loan providers will often have experts who can establish the car’s value. Many auto insurers consider classic cars as being built before 1980 or that are at least 25 years old (with some exceptions). But because standards vary among loan providers, be sure to check with your lender to see if the car you’ve got your eye on 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 $70,000.00, which Omar agrees to pay, offering a 20% deposit ($14,000.00) to secure the sale while he searches for a loan to cover the rest.
Because of his strong credit history and good income, it doesn’t take long for Omar to find 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 ($56,000.00 + $6,720.00). Omar also pays approximately $50.00 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
$56,000.00 ($70,000.00 less $14,000.00 deposit)
Auto loan (term loan)
Interest rate (APR)
4.00% origination fee ($2,576.00) $0.00 application fee (waived by dealership)
$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.
A classic Dodge Charger (year unknown). The Charger was originally released in 1966 and sold for approx. $3,500 USD ($4,700 CAD). Today, these models can sell for approx. $55,000 USD ($74,000 CAD) if kept in perfect, showroom condition. For comparison, the 2019 Charger is listed as $29,220 USD ($37,095 CAD).
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, as a condition of the loan, require you to take out comprehensive coverage. And the value of your classic car may increase the premium you pay. Classic car insurance policies can include benefits such as 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 who and what they agree to insure. Your insurance provider may only allow classic cars to be driven during certain months or on certain roads due to the difficulty in replacing parts that have been worn down or damaged. There may also be restrictions on your eligibility for coverage if you haven’t maintained a completely 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.
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.
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
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.
Not likely. The Big Banks in Canada – like CIBC, RBC and Scotiabank – will not finance a car older than 7 to 10 years.
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.
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.
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 25 to 30 years ago. A car could be exempted from any minimum age requirements if it was a limited edition or has historical significance.
Certain features of a car will add or detract from the value.
These will all play a part in how much a classic car costs and how its value will appreciate over time.
Carmen Chai is a freelance writer at Finder, specializing in financial products. She is an award-winning Canadian journalist who has lived and reported from major cities such as Vancouver, Toronto, London and Paris. She has reported on personal finance, mortgages, and banking products for nearly a decade.
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