Acquiring Car Loans for Antique Vehicles

Car Loans for Antique VehiclesMany classic car collectors face the challenge of obtaining a loan for an antique vehicle. Because antique vehicles typically do not qualify for traditional car loans, collectors turn to alternative lenders to get a loan for their dream car. It’s important to be aware of the hurdles and pitfalls involved in securing financing for an antique car just as it would be with any other type of loan.

Establish the Value of the Vehicle

A lender will want to know the value of the vehicle before approving a loan. Lenders need proof that the value of the property matches the value of the proposed loan. In the same way that a home appraisal is essential to the mortgage process to establish equivalent value between the loan and the home, lenders want to ensure that there is property collateral to back up the loan in the case of non-payment.

Antique Vehicle LoanBank loan appraisals can be an effective way to convince a lender of the viability of a loan. Not only will a well-documented appraisal reassure your lender, but it can also protect you should a vehicle show issues including improper restoration, hidden damage, or other problems that would not be obvious without an appraisal. The last thing you or your lender want is for the car to be worth significantly less than the loan, making it difficult or even impossible for you to recoup the loan amount should you need to sell.

Lenders also require that the vehicle be insured to protect against accidental loss. Look for an agreed value policy that will guarantee the loan will be paid-in-full should an unfortunate situation deem it a total loss.

Beware of Predatory Loans

Because classic car buyers face certain challenges in the loan process, there is a robust industry based on predatory practices that target those looking to finance a vehicle. Extremely high-interest rates, inflated down payments, and complicated contracts can be a sign that the loan is not on the level. Read contracts carefully and ask questions – if there is anything you don’t understand be sure to get the answers you need before signing anything.

Establish Antique Vehicle ValuesIn general, a good loan should include no more than a 10-20% down payment, and loan payments should be consistent and regular so that you always know what you’ll owe and when. Variable payment rates, particularly those that start high and decrease over time, can be a sign that your loan is intended to get as much money as possible in the shortest amount of time as part of a larger ploy. You should never sign any loan contract until you are completely clear about your payment schedule and your intended date of payment completion.

No matter where you secure a loan, you want to borrow as little money as you need at the lowest interest rate. A pre-purchase vehicle inspection allows you to make the best decision about the loan you’ll need. If the vehicle requires repairs or restoration, you will want to take into account these extra “after-purchase” expenses. It is often in your best interest to only borrow on the existing value of the vehicle. If you purchase a classic car without an inspection and discover that more work is needed than you had planned, you may have difficulty selling the vehicle or paying for the loan and find yourself stuck paying monthly for a vehicle that is essentially useless.

Knowing the accurate value of the car you are hoping to buy will make it much easier to obtain the right loan for an antique vehicle. Let AAG perform a pre-purchase inspection on the vehicle before you apply for a loan to make the most informed decision about how to finance your “dream car”. Call today to schedule your pre-purchase inspection or certified appraisal!

Collector Cars: Know Your Values

Collector Car Value Appraisal with AAGKnowing the value of your classic car can affect your bottom line in so many ways. Vintage vehicles are often sold, purchased, and traded “among friends”, at auctions, and in situations where the agreed value is little more than a few words and a handshake. This may seem adequate for a car you intend to work on as a hobby and have little intention of driving (except on holidays), but knowing the exact fair market value of your antique car can be very important.

Taxes

It is not uncommon for the IRS to look into the value of a collector car and launch an audit if the value claimed on a tax form doesn’t seem to match the fair market value of a vehicle. The unfortunate truth is that many collectors don’t know the fair market value of their vehicle and may rely on the price they paid for the vehicle when claiming the car’s value for tax purposes. This can be particularly fatal if you’ve bought a car from a relative or a friend who did not price the car accurately (often as a kind gesture). You could end up being liable for taxes on a $25,000 car even if you only paid $5,000 for it.

You may be asking yourself, “But what happens if I really DID pay $5,000 for the car and then restored it to a $25,000 value?” This can also be troublesome without proper documentation. Should you decide to sell that vehicle and receive a full $25,000 for the car, you don’t want to pay taxes on the full profit when a large portion of the price of restoring the vehicle makes up for the difference between purchase and sale price. A lack of documentation showing the original value of the vehicle, the price of restoration, and the value at the time of sale can cost you a pretty penny.

Classic Car Value Appraisal from Auto Appraisal GroupInsurance

Many vintage auto owners will claim that their collector cars rarely leave the garage and that they have no intention to sell the vehicle, believing that they don’t really need to know the full value of their classic auto. It would be nice to believe that a car that is largely garaged and only driven on the 4th of July is safe from the type of insurance claims that require full knowledge of a vehicle’s value. Unfortunately negligent drivers rear end even antique cars, and there is just no way to know that an accident or theft will never happen and require you to file an accurate claim with your insurance company.

While insurance companies rarely question a claim on a classic car when the other driver is at fault, attorneys for the at-fault party may not be so quick to accept the value presented by the classic car’s owner. Without proper documentation of value, a claim can easily be disputed. Good paperwork helps you to defend your claim and get the compensation you deserve.

In situations where value can be helpful or even vital to the protection of your assets, a well-documented vehicle inspection can be critical. Whether you’re being audited by the IRS or defending an insurance claim, a carefully documented value appraisal can save you money, time, and hassle. A pre-purchase inspection can also help you determine if a vehicle has been properly valued and help you understand what your tax commitment may be.  Furthermore, a resale value appraisal will help you save money and get more for your restoration efforts.

Know what your vintage vehicle is worth! Contact AAG today to schedule a value appraisal or pre-purchase inspection and protect your investment.