Top 10 Ways to Finance a Classic Car Purchase

Classic cars fall outside the lending criteria most banks use for standard vehicle financing.

Most lenders treat cars over 10 to 15 years old as higher risk, which means their standard car loan products either exclude classics entirely or price them with higher interest rates and shorter loan terms. If you're looking to purchase a collector vehicle, restoration project, or investment-grade classic, you need finance structured around the asset's actual value and your specific circumstances rather than a one-size-fits-all auto loan.

Why Standard Car Loans Don't Work for Classic Vehicles

Standard secured car loans are designed for depreciating assets with predictable market values. Lenders rely on redbook valuations and expect the vehicle to lose value over time in a way that matches their loan repayment structure. Classic cars don't follow that pattern. A 1970s Holden Monaro or Ford Falcon GT might be appreciating, a partially restored MG Midget might have a value that depends entirely on completion quality, and a rare imported Porsche 911 might have a market value that only specialist valuers understand. When a lender can't slot the asset into their standard risk model, they either decline the application or treat it as unsecured lending with a higher interest rate.

Consider a buyer who wants to purchase a 1969 Ford Mustang valued at $85,000. The vehicle has appreciated over the past decade and is expected to hold or increase its value if maintained properly. A standard car loan application gets declined because the lender's policy excludes vehicles over 10 years old from their secured lending. The buyer then applies for a personal loan and receives approval, but at an interest rate nearly 4% higher than what they'd pay on a secured car loan. Over a five-year loan term, that rate difference costs them thousands in additional interest on an asset that's actually lower risk than a new vehicle losing 20% of its value in the first year.

Secured Personal Loans Structured Around the Asset

A secured personal loan that uses the classic car as security gives you access to lower interest rates than unsecured finance, provided the lender is willing to accept the vehicle as collateral. The difference between this and a standard car loan is that the lender assesses the security based on a specialist valuation or agreed market value rather than a generic database. You'll typically need a written valuation from a recognised classic car valuer or auction house, and the lender will apply a loan-to-value ratio that reflects their confidence in being able to sell the vehicle if needed.

Loan-to-value ratios for classic cars usually sit between 50% and 70%, which means if you're purchasing an $80,000 vehicle, you might access $40,000 to $56,000 in finance and need to provide the balance as a deposit. That's a higher deposit requirement than most new car loans, but it reflects the lender's position on a niche asset. Interest rates on these loans tend to sit between standard secured car loan rates and unsecured personal loan rates, depending on the lender's appetite for the asset class.

Using Equity in Property to Fund the Purchase

If you own property with available equity, refinancing to access that equity or establishing a separate equity loan can fund a classic car purchase at home loan interest rates rather than car finance rates. A $60,000 classic car purchased using equity from your home loan might cost you around half the interest rate you'd pay on a secured car loan, and significantly less than an unsecured personal loan. The trade-off is that you're securing the debt against your home rather than the vehicle, which means the lender has recourse to your property if you default.

This approach works particularly well when the classic car is part of a broader investment strategy or when you're purchasing a vehicle you intend to hold long-term. The longer loan terms available on home loan refinancing mean you can structure the debt to suit your cash flow, though most buyers choose to repay the amount more quickly to avoid paying interest over decades on a depreciating or static asset. If you're considering this option, speak with a broker who understands how to structure the equity release so it doesn't interfere with your overall borrowing capacity or future finance plans.

Specialist Classic Car Finance Providers

A small number of lenders and finance companies in Australia specialise in classic, vintage, and collectible vehicle finance. These providers understand the asset class, work with specialist valuers, and structure loans that reflect the way classic car values behave. They'll typically lend on vehicles that are unmodified or sympathetically restored, and they may have specific criteria around the vehicle's age, provenance, or condition.

Loan amounts, interest rates, and terms vary based on the vehicle and your financial position, but the key advantage is that you're working with a lender who won't automatically decline the application because the car is older than their policy allows. These lenders may also offer finance for vehicles purchased at auction, which many mainstream lenders won't touch due to the timing and settlement structure of auction purchases.

Unsecured Personal Loans as a Fallback Option

If you can't secure finance against the vehicle itself and don't want to use property equity, an unsecured personal loan remains an option. You'll pay a higher interest rate than any secured option, but the loan is unattached to any asset, which means the lender has no claim on your car or property if your circumstances change. Monthly repayment amounts on unsecured loans are higher due to the rate and the shorter loan terms most lenders impose, but for smaller loan amounts or short-term funding, the total interest cost might still be manageable.

Unsecured lending also removes the need for a formal valuation, which can save time and cost if you're purchasing privately and want to settle quickly. The trade-off is that your borrowing capacity on an unsecured loan is typically lower than what you'd access with security, so this approach works when you already have a substantial deposit or are purchasing a lower-value classic.

Balloon Payments and Residual Structures

Some classic car finance arrangements include a balloon payment at the end of the loan term, which reduces your monthly repayment amount by deferring a lump sum to the final payment. A $50,000 loan with a 30% balloon payment might have monthly repayments calculated on $35,000, with $15,000 due at the end of the term. That structure can make an expensive vehicle more accessible in the short term, but you need a clear plan for how you'll meet the balloon payment when it falls due.

Balloon payments work when you're confident the vehicle will hold or increase its value and you're prepared to either refinance the residual, sell the vehicle, or pay out the balance from other sources. They don't work if you're hoping the car's value will cover the balloon and the market moves against you. If you're financing a classic car as an investment, factor in the possibility that values can be volatile and that selling at the exact moment you need to meet a balloon payment might not align with market conditions.

What Lenders Look for Beyond the Vehicle

Your income, employment stability, existing debts, and credit history all play a role in whether a lender approves finance for a classic car, just as they would for any other loan. Lenders want to see that your monthly repayment amount is sustainable relative to your income and that you're not over-leveraged across other commitments. If you're self-employed, recently separated, or carrying other debts, the lender's assessment focuses on your capacity to service the loan rather than just the value of the vehicle.

In our experience, buyers who've recently gone through separation sometimes find their borrowing capacity reduced due to changes in household income or existing commitments from the settlement. If that applies to your situation, working with a broker who understands how to present your financial position and access lenders with flexible serviceability criteria makes a tangible difference to the finance options available to you. You can read more about how borrowing capacity is calculated and what impacts it in different circumstances.

Comparing Car Loan Options Across Lenders

Not all lenders assess classic car finance the same way, and the difference between one lender's criteria and another's can be the difference between approval and decline. Some lenders exclude vehicles over a certain age entirely, others will consider classics but only with a low loan-to-value ratio, and a few treat them as a normal secured asset provided the valuation stacks up. A car loan comparison across multiple lenders shows you where the most flexible terms sit and where you'll get the most suitable interest rate for your circumstances.

If you're also carrying other debts or considering refinancing existing commitments, a broker can structure a debt consolidation strategy that includes the classic car finance and improves your overall monthly repayment position. That approach works particularly well when you're refinancing out of higher-rate personal loans or credit card debt at the same time as purchasing the vehicle.

Insurance and Agreed Value Considerations

Lenders who provide finance secured against a classic car will require comprehensive insurance with an agreed value that matches or exceeds the amount you're borrowing. Agreed value policies for classic cars differ from market value policies because the insurer and you agree upfront on what the vehicle is worth, and that's the amount paid out in the event of a total loss. If your agreed value is $70,000 and your loan balance is $65,000, the insurer pays $70,000 and you're left with $5,000 after the loan is cleared. If your agreed value is too low, you could end up with a shortfall.

Make sure the agreed value on your insurance is reviewed regularly, especially if the vehicle is appreciating or if you're investing in restoration work that increases its value. Lenders may also require evidence of secure storage, particularly for high-value or rare vehicles, so factor in garage or storage costs when you're calculating the total cost of ownership.

Finance Approval Timeframes for Classic Car Purchases

Finance approval for a classic car takes longer than a standard auto loan because most lenders require a specialist valuation and a more detailed assessment of the security. If you're purchasing at auction or from a private seller who wants a quick settlement, you need to factor in the time it takes to arrange a valuation, submit the application, and receive formal approval. Some brokers and lenders can arrange conditional pre-approval based on your financial position, with final approval subject to the valuation once you've identified the specific vehicle.

Pre-approved car loan structures give you confidence to bid at auction or negotiate with a private seller, knowing that finance is available subject only to the vehicle meeting the lender's security requirements. If you're purchasing from a dealer, ask whether they have relationships with finance providers who understand classic cars, but don't assume dealer financing will be more flexible or lower cost than arranging your own finance through a broker.

Call one of our team or book an appointment at a time that works for you. We'll assess your financial position, identify lenders who'll consider classic car finance, and structure the loan to suit both the vehicle and your circumstances.

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