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.'