Part 1 of 3 – Financing a Classic Car
Contrary to what members of the general public must think, most enthusiasts don’t build their collections by cruising the big-dollar auctions in search of only the most perfect and desirable cars, throwing greenbacks around in front of the television cameras. No, the majority of us just don’t have that kind of a budget for our hobby, if we have a budget at all. With our modest disposable income, we buy restoration candidates rather than finished cars -sometimes because we get great satisfaction out of the work, but other times because there’s no other financially feasible way in. Or we may learn to love that rusty six-cylinder, four-door sedan, though we lust in our hearts for the pristine V-8-powered convertible that lies far beyond the reach of our savings account.
For most of the history of the collector car hobby, that’s the way it’s been. Your choices have pretty much been shaped by the diameter of the bankroll in your pocket. But a growing number of collectors are turning to a new alternative, signing on the dotted line for loans of anywhere from 5 to 12 years to get into the driver’s seat of their dream cars right now. Over the past several years, a number of lenders have begun offering specialized collector car financing, catering to the needs and interests of collector car fans. You supply the good credit rating and your John Hancock, and they’ll do the rest.
“Americans like to leverage their credit”
Woodside Credit of Newport Beach, California, which advertises itself as the fastest-growing collector car lender in the U.S. began offering loans in the summer of 2003, and they have grown tremendously year after year.
So, who’s doing the borrowing? The younger generation of car enthusiasts, apparently. For older collectors, it was a cash hobby. They believe that if you can’t pay cash for something, you shouldn’t be in it. People in their 30s and 40s are more comfortable making payments for everything, frankly.
Saving up for the car of your dreams may seem like a daunting task. No matter how much you keep putting away those pennies, the value of the classic car you’re after keeps going up. Sometimes it seems as if the car of your dreams is also the car of everyone else’s dreams.
But there’s a little secret that I should tell you about. Lots of people finance classic cars. It’s much more common than you might think. In fact many savvy collectors and investors finance their classic cars. Speaking to your accountant and having a well thought out financial plan (and fairly good credit) may not only allow you to achieve ownership of that classic, it might even offer financial advantages. Consider too that if you combine the money that you’ve already saved with financing that might be available, you are probably closer to ownership than you think.
Next Week: Financing a Classic Car – Part 2 of 3