In Part I of this series, you learned why pre-purchase inspections and appraisals are an invaluable tool to a classic-car shopper. This time around, we'll be discussing financing.
There are several ways to buy a "new classic" EFI GM; you can pull cash out of the bank, or get a regular vehicle loan. And while it's not recommended, you could also tap a 401(k), or take out a home-equity loan.
However, there's another option—collector car financing. While not as well known, this specialized financing offers a few advantages to standard vehicle financing.
GMHTP contacted J.J. Best Banc & Co., a classic auto financing company based in New Bedford, MA, to learn more about collector car financing. J.J. Best is said to be the oldest and largest provider of financing for classic and collectible vehicles. We had lots of questions. The "Why?" question is as good of an opener as any, that's where we'll start.
Why Collector Car Financing?
"The benefit of classic vehicle financing is being able to drive the car or truck you've always wanted, without the up-front cash outlay," starts J.J. Best's Marketing Specialist Tom Joslin. "Whether you have the money or not, financing a collector vehicle keeps more of your own money liquid, while you get to own the car of your dreams."
However, our teenaged and twenty-something EFI GM dream cars are sometimes denied "collector car" status with antique plates, etc., and we wondered if their ages would be an obstacle to financing them, too. Happily, Mr. Joslin explained that J.J. Best finances all collector vehicles on a case-by-case basis—even ones less than 25 years old.
"We're all car guys and girls at J.J. Best, so we understand what makes a vehicle collectible—even if it isn't a typical collector car. We understand what makes specific cars more special, and accordingly, more valuable. Vehicles a traditional lender would dismiss because they don't understand the value are the types that we do everyday."
However, don't expect to get a loan for that "project" you saw in a thousand pieces. To get financed, your dream car should be complete, running and driving, and in good to excellent condition.
How To Apply For A Collector Car Loan
As it turns out, the car of your dreams is at a disadvantage with standard financing, but an advantage with collector car financing.
"The collateral itself is the biggest difference with collector vehicle financing," Joslin explains. "Unlike a new car, which depreciates throughout the term of the loan, collector cars are specialized and unique, so they usually hold their value or often appreciate during that time."
Otherwise, the actual process of getting a loan from a specialty lender like J.J. Best is similar to what you might expect when using standard auto financing. And here's a neat tip; if you've already gotten a standard auto loan, you might get a better rate if you convert it to a collector car loan.
There's a free application process where you input your basic personal information, and possibly include additional info and income verification. J.J. Best doesn't need details about the vehicle right away. "Many buyers find it convenient to get approved for financing, before they find the exact vehicle they want to purchase," Joslin says.
Next, a standard credit check is done. A variety of factors are taken into consideration, including (but not limited to) your credit score. Then, you're approved—sometimes in as little as five minutes.
Even if the loan application is denied, you have options: you'll be notified by mail as to the reason why, and you may be able to work with a loan officer to arrange proof of income or a co-signer, to turn that ‘no' into a ‘yes.'
A collector car loan is very similar to a standard vehicle loan: a term of up to eight years, fixed, reasonable rates, and no pre-payment penalty.
"Everything is tiered on an applicant's credit and credit history, how much they are borrowing, and how much the loan is for—from a minimum of $6,000 on a $7,000 vehicle, and up," Tom explains.
"Our normal term is five to eight years, and our low rates—from 3.5% to 7.99%—are in line with a normal car loan for people with good to excellent credit."
As a general rule, you'd need to put down at least 10% of the vehicle's purchase price, and depending on your credit rating, you can finance up to 90% of the price. Finally, as you're signing on the dotted line and getting your money, there are a couple of minor fees involving collateral verification and documentation, which are based on your specific loan.
Approvals For Auction Goers, Too
In addition to offering an approval for a specific vehicle, specialty financiers can also get you approved to bid at classic-car auctions.
"We can also provide approvals or letters of guarantee for the majority of collector car auctions nationwide," Joslin reveals. "We work with most collector car auction companies; In fact, at most of the larger events, we have J.J. Best representatives on-site who can get you approved, process your paperwork, and write you a check on the spot." That's tempting…Barrett-Jackson, anyone?
How Collector Car Financing Can Protect You
Specialty financiers know you're buying a special, exciting performance machine, not some ubiquitous commuter car. You'll be glad to know that the precautions they take protect both of your interests.
"We can leverage our years of industry experience and large network of 2,000-plus classic and collector vehicle dealers to help you find the exact car you've always wanted—then get it into your garage," Tom explains. "Part of our loan process is a VIN-verification inspection to protect buyers from fraud. We have Hagerty insurance agents in-house, and we work with a network of trusted companies that we can recommend for any other services the would-be classic vehicle buyer may need, such as transportation or appraisals."
How something that involves "financing" could ever be so cool, we'll never know. But regardless, before you buy your next "new classic" EFI GM, look into collector car financing. Because when you're about to write a big check, dealing with folks who know our vehicles, speak our language, and understand our concerns is pretty damn reassuring.
Want to buy your next "new classic" GM? Here's how to get financed at J.J. Best.
1. Fill Out An Application
You can apply online at www.jjbest.com, over the phone at 800-USA-1965, or by fax at 508-991-8329.
2. Get Personal
You'll need to include items like where you've lived, what you pay for your mortgage or rent, where you work, how much money you make, and details about the vehicle you want to buy. Be specific!
3. Submit Your Application
Turn in the application, and with any luck, it could be approved in as little as five minutes.
4. Complete The Loan Documents
After J.J. Best mails or emails the documents over, you'll need to sign them, notarize them, and send them back.
J.J. Best will review your information, verify your income, and ensure that you have an insurance binder for the vehicle, typically from a classic car insurance company.
6. You're Approved!
When everything is verified, the funding department will cut the check, and your approval and rate are good for 30 days. Most of the time, the check is made to both the customer and the seller, for fraud protection. Once both parties endorse it, the check can be cashed and you're on your way to owning a sweet new ride.
How Much Will I Pay?
Good question. So we asked J.J. Best to work up several different EFI GM scenarios for a buyer who makes $50,000 a year, and has a 700 credit score. Note that all examples are based on a five-year loan.
1987 Buick Grand National
$25,800 average retail per NADA
$484.19 a month
1991 Camaro Z28 1LE 5.7-liter
$7,000 average retail per NADA
$138.06 a month
2002 Pontiac Trans Am WS6
$18,700 average retail per NADA
$353.47 a month