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In the UK, the semi-official definition of a classic car is a vehicle that is over 15 years old and still in roadworthy condition.

Classic Car Finance Explained: What You Need to Know

UK Car Finance
01, Jun 2020

The term ‘classic car’ is thrown around a lot these days, but what does it actually mean?  More importantly, to what extent does classic car finance differ from conventional car finance?

In the UK, the semi-official definition of a classic car is a vehicle that is over 15 years old and still in roadworthy condition. While the term typically has connotations with vintage vehicles from times gone by, any car that rolled off the production lines as recently as 2005 is technically considered a classic car.

So, does this mean that classic car finance is a different financial product/service to conventional car finance? If you’re planning to compare car finance deals to pick up a new ride, does classic cars bring additional considerations into the process?

No Real Difference

The short answer is no – classic car finance as a whole isn’t really any different to normal car finance. Something that makes sense when you think about it, as a 2005 Ford Focus in pretty decent condition isn’t what you’d normally think of as a ‘classic’.

Instead, car finance as a whole is issued on the basis of some basic factors. Those being the current financial status of the applicant, their recent credit history, how much they intend to borrow and so on. In the case of secured loans for car finance, the current market value of the vehicle will also be taken into account.

It’s the same story with the vast majority of specialist loans across the board.  Rather than taking into account the type of car you intend to buy, lenders are far more interested in your financial status. If you’re clearly in a strong enough position to comfortably meet your repayment obligations, you’ll qualify for car finance.

Whether the car you intend to buy is 8 years old or 80, this alone won’t usually affect your eligibility.

Different Types of Classic Car Finance

There are several options available for covering the costs of a classic car investment, which again are similar to those of picking up a newer vehicle.  Eligibility requirements vary from one lender to the next, but the following tend to be the most popular and accessible options for financing a classic car:

Specialist Car Finance

The market for specialist car finance products in the UK is growing all the time, enabling buyers to pick up cars with minimal deposits and affordable monthly repayments. Some of which guarantee ownership at the end of the repayment term, others involving an optional ‘balloon’ payment to take ownership of the car.

Unsecured Loans

If the value of the vehicle is less than £10,000, it may also be possible to pay for it with an unsecured loan. However, you’ll need extensive proof of income and a clean credit history to qualify.

Secured Loans

A secured loan for vehicle finance can be issued against the vehicle itself, or other assets deemed viable by the lender. Secured loans often attach competitive rates of interest, though you risk losing your security if you fail to keep up with your repayments.

Across the board, it’s advisable to speak to an independent broker before going ahead, in order to choose the best option to suit your requirements and your budget.

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