Financing a Classic Car Works Differently Than Standard Vehicle Loans
Most lenders treat classic cars as specialised assets rather than standard transport. The vehicle's age, condition, and intended use all influence whether you can access traditional car finance or need an alternative structure. Understanding these differences before you start searching saves time and prevents disappointment when you find the right vehicle.
Classic car valuations depend on factors that don't apply to newer vehicles. A 1974 Holden Monaro in original condition might be worth considerably more than one that's been modified, even if both run well. Lenders need specialist valuations to assess these vehicles, which can add a few days to your car loan application process compared to financing a vehicle with published pricing guides.
What Lenders Consider When Assessing Classic Car Finance
Lenders evaluate three main factors when you apply to finance a classic vehicle. Your borrowing capacity and income stability matter just as much as they would for any secured car loan, but the vehicle itself receives closer attention. The car's age, whether it's roadworthy, and how you plan to use it all influence the lender's decision.
Most traditional lenders won't finance vehicles over 15 to 20 years old through their standard car loan products. Classic cars fall into specialist lending territory, where the loan structure might resemble a personal loan secured against the vehicle rather than conventional dealer financing. Some lenders will only consider classic cars if you're using them occasionally rather than as daily transport, while others focus more on the vehicle's value and condition regardless of how often you drive it.
The vehicle's agreed value becomes particularly important. Consider a buyer purchasing a restored 1969 Ford Mustang valued at $85,000. The lender arranges a specialist valuation to confirm the price reflects current market conditions for that model and condition. Once verified, they approve finance for 70% of the valuation, requiring a deposit of $25,500. The remaining $59,500 is structured as a five-year secured loan. Because the vehicle isn't used for daily commuting, the lender accepts the age and focuses on the asset's value stability.
Interest Rates Reflect the Vehicle's Age and Use
Classic car finance typically carries higher interest rates than new or late-model used car loans. Lenders price the additional risk of age-related mechanical issues and potentially limited resale markets into the loan rate. Where a three-year-old family sedan might attract a rate starting around 7%, a classic car loan often sits between 9% and 12% depending on the lender and your circumstances.
The rate you're offered also depends on whether the lender views the purchase as recreational or investment-focused. A classic car stored carefully and driven occasionally may receive more favourable terms than one being purchased for daily use. Some lenders also adjust rates based on whether you're buying from a dealer or a private seller, as dealer sales can include warranties that reduce the lender's risk.
Deposit Requirements Are Usually Higher for Older Vehicles
While some lenders offer low or no deposit options for newer cars, classic car finance almost always requires a substantial deposit. Most lenders want between 20% and 40% of the vehicle's value upfront, both to reduce their exposure and to confirm you have genuine savings behind the purchase.
This deposit structure protects both you and the lender if the car's value fluctuates. Classic car markets can be less predictable than mainstream vehicle markets, particularly for models that go in and out of favour with collectors. A larger deposit means you maintain equity in the vehicle even if values shift.
How Valuations Work for Classic and Collector Vehicles
Valuing a classic car isn't as straightforward as checking a pricing guide. Lenders typically require a valuation from an accredited specialist who understands the particular make, model, and era. The valuer examines the vehicle's originality, condition, provenance, and any restoration work. Their report becomes the basis for how much the lender will advance.
The valuation process can take anywhere from a few days to two weeks, depending on the valuer's availability and the vehicle's location. If you're purchasing from interstate, this timeline can extend further. Planning for this additional step prevents delays when you're ready to finalise the purchase.
In Western Australia, buyers looking at classic American muscle cars or Australian-made vehicles from the 1960s and 1970s often work with valuers who specialise in those specific categories. The valuation fee usually sits between $300 and $600 depending on the vehicle and the valuer's travel requirements, and it's typically paid upfront by the buyer.
Insurance Requirements Differ from Standard Car Loans
Most lenders require comprehensive insurance on any vehicle securing a loan, but classic car policies work differently. Agreed value policies are standard for classic cars, where you and the insurer set a value at the start of the policy rather than relying on market valuations at the time of a claim. The lender needs to see that the insured value matches or exceeds the loan amount.
Some insurers also impose conditions like limiting annual kilometres or requiring the vehicle to be garaged overnight. If your lender sees restrictive usage conditions on your insurance policy, they may adjust your loan structure or decline finance if they believe the restrictions indicate the car won't hold its value as well as expected. Arranging insurance and sharing the policy details with your broker early in the process helps avoid surprises.
Loan Terms Are Often Shorter Than Standard Car Finance
While you might finance a new vehicle over seven years, classic car loans typically max out at five years. Lenders shorten the term to reduce their exposure to age-related depreciation and mechanical risk. Shorter terms mean higher monthly repayments, so factoring this into your budget from the outset matters.
Some lenders offer balloon payment structures, where you make lower monthly repayments and pay a lump sum at the end of the term. This can make a classic car purchase more accessible in the short term, but you'll need a clear plan for how you'll handle the final payment, whether through savings, selling the vehicle, or refinancing.
Refinancing an Existing Classic Car Loan
If you already own a classic car with finance attached, refinancing can be an option if your circumstances have changed or if you want to access equity in the vehicle. The process works similarly to the original loan, with the lender requiring a current valuation to confirm the vehicle's worth.
Refinancing makes sense if your income has increased and you want to pay the loan off faster, or if you've been making repayments reliably and want to secure a lower rate. As with the original finance, expect the lender to scrutinise the vehicle's condition and current market value before approving any car loan refinance request.
Working with a Broker Saves Time and Expands Your Options
Classic car finance isn't offered by every lender, and the ones who do provide it often have different criteria and pricing structures. A broker who understands specialist vehicle finance can match you with lenders who actually want to finance classic cars, rather than having you apply with multiple lenders who'll decline based on the vehicle's age alone.
Brokers also manage the valuation and insurance coordination, which tightens up the timeline and reduces the back-and-forth between you, the seller, and the lender. When you're buying a sought-after vehicle in a competitive market, having someone who can move your application through quickly makes a tangible difference.
Call one of our team or book an appointment at a time that works for you. We'll talk through your situation, look at the vehicle you're considering, and work out a finance structure that fits both your budget and the car's profile.
Frequently Asked Questions
Can I finance a classic car over 30 years old?
Yes, but you'll need a specialist lender rather than a standard car loan product. Most traditional lenders cap vehicle age at 15 to 20 years, so classic cars require lenders who assess the vehicle's value and condition rather than just its age.
What deposit do I need to finance a classic car?
Most lenders require between 20% and 40% of the vehicle's value as a deposit for classic car finance. This is higher than standard car loans because older vehicles carry more risk for lenders, and a larger deposit protects both parties if the market value changes.
How long does it take to get finance approved for a classic car?
Approval typically takes longer than standard car loans because the lender needs a specialist valuation of the vehicle. The valuation itself can take anywhere from a few days to two weeks, and once completed, the finance approval process usually follows within a few business days.
Do interest rates on classic car loans differ from regular car loans?
Yes, classic car loans generally have higher interest rates than loans for newer vehicles. Rates typically range from 9% to 12%, compared to around 7% for late-model used cars, because lenders price in the additional risk of age-related issues and potentially limited resale markets.
Do I need agreed value insurance to finance a classic car?
Most lenders require comprehensive insurance with an agreed value that matches or exceeds the loan amount. Agreed value policies set a fixed payout amount at the start of the policy, which protects both you and the lender if the vehicle is damaged or stolen.
