Understanding the Basics of Classic Car Financing

Classic car financing works differently to standard vehicle loans because lenders assess age, condition, and market value rather than manufacturer pricing.

Most mainstream lenders won't finance vehicles over 10 to 15 years old, which pushes classic car purchases into specialist territory. That means different documentation, different deposit expectations, and often a secured loan structure that relies on independent valuation rather than redbook figures. If you're comparing this process to Kia finance or other new vehicle options, you'll notice the approval timeline is longer and the paperwork more involved.

How Lenders Assess a Classic Vehicle

Lenders need proof of value and proof of condition before they'll approve finance on a classic car. An independent valuation from a recognised classic car appraiser is usually mandatory, and in some cases, a mechanical inspection report is required as well. The vehicle's age, rarity, and the availability of replacement parts all factor into whether a lender considers it acceptable security.

Consider a buyer looking to finance a 1974 Holden Monaro. The car has been partially restored, with recent work on the engine and suspension, but still needs paintwork. The buyer finds a lender who specialises in classic vehicles and provides a valuation report showing the car's current market value at $85,000. The lender approves finance for 60% of that amount, meaning the buyer needs a deposit of $34,000, plus costs. The loan is structured over five years with a fixed interest rate slightly higher than current new vehicle rates, and the lender requires comprehensive insurance with an agreed value policy.

Deposit and Loan Amount Expectations

Most classic car lenders will finance between 50% and 70% of the vehicle's appraised value. That puts your deposit requirement between 30% and 50%, which is notably higher than standard used car finance where 20% is common. The loan amount is determined by the valuation, not by what you're paying the seller, so if you're buying privately and paying more than the appraised value, you'll need to cover that difference yourself.

Some lenders also require you to demonstrate that you have the financial capacity to maintain and insure the vehicle, particularly if it's a high-performance or rare model. Maintenance costs on older vehicles can be unpredictable, and lenders want assurance that the asset won't deteriorate due to lack of upkeep.

Interest Rates and Loan Structure

Interest rates on classic car loans typically sit above those offered for new or late-model used vehicles. Lenders price in the risk associated with older assets, limited market liquidity, and the potential for mechanical issues. Rates can vary widely depending on the lender, the vehicle's condition, and your financial profile, so a car loan comparison across multiple lenders is worth the time.

Balloon payments are less common on classic car finance than on new vehicle leases, but some lenders will structure them if you're planning to sell or refinance within a set period. Fixed terms are usually between three and seven years, though some specialist lenders offer longer terms for high-value collectibles.

Why Your Employment and Credit History Still Matter

Classic car finance is a secured loan, but the lender still assesses your income, employment stability, and credit file. If you're self-employed, expect to provide two years of financials and recent tax returns. If you've had credit issues in the past, some specialist lenders will still consider your application, but the interest rate will reflect that risk.

The difference between a mainstream lender and a specialist is often flexibility around income types and willingness to look at the full picture rather than relying solely on automated credit scoring. That said, you're still expected to demonstrate serviceability based on the monthly repayment and your other financial commitments.

Insurance Requirements and Agreed Value Policies

Lenders financing classic vehicles almost always require comprehensive insurance with an agreed value that matches or exceeds the loan amount. Market value policies won't satisfy the condition because they rely on the insurer's assessment at the time of a claim, which may not align with what you paid or what the car was valued at when the loan was approved.

Agreed value policies can be more expensive, particularly for high-performance or modified classics, so factor that into your budget before committing to the purchase. If the premium is unaffordable, the loan probably is too.

The Application Process and What to Prepare

The car loan application process for a classic vehicle takes longer than a standard approval. You'll need the valuation report, photos of the vehicle, proof of its registration history if available, and details of any restoration work or modifications. If the car is unregistered, some lenders will still approve finance, but they may require a roadworthy certificate and registration as a condition of settlement.

Private sales are common in the classic car market, so expect the lender to request a copy of the sale agreement and the seller's details. If you're buying from a dealer, the process is slightly smoother because the dealership can often coordinate directly with the lender.

Once approved, settlement usually requires you to transfer the deposit to the seller and arrange for the lender to pay the balance directly. You'll also need to organise insurance and, in some cases, provide proof of cover before funds are released.

If you're weighing up whether to finance or pay cash, consider what happens to your liquidity if the car needs unexpected work. Keeping some savings in reserve and spreading the cost through a secured car loan can give you more flexibility, provided the interest rate and term suit your circumstances.

Call one of our team or book an appointment at a time that works for you. We work with lenders who understand classic vehicles and can structure finance that reflects how you'll use and maintain the car.

Frequently Asked Questions