Everything You Need to Know About Classic Car Loans

Classic cars sit in a strange place when it comes to vehicle financing.

Most lenders treat them as high-risk assets. Dealer financing doesn't exist because you're buying privately or at auction. And if you're self-employed, the usual income verification hurdles get even taller. But classic car loans are available, and the right structure can make the purchase straightforward without forcing you to drain your savings or liquidate investments.

Why Lenders See Classic Cars Differently

A classic car is typically defined as a vehicle that's 25 years or older, although some lenders draw the line at 15 or 30 years depending on their risk appetite. The issue is depreciation and liquidity. A lender financing a new sedan or certified pre-owned SUV knows the vehicle will hold predictable value and can be sold quickly if needed. A 1972 Holden Monaro or a 1985 Porsche 911 is a different proposition. Values fluctuate based on condition, rarity, and collector demand, and the pool of potential buyers is much smaller.

Because of this, most lenders either decline classic car finance outright or require a secured loan structure with a lower loan-to-value ratio. You'll typically need a deposit of at least 20% to 30%, and the interest rate will sit higher than what you'd see on a new car finance deal. Some lenders will also cap the loan amount or require a valuation from an accredited appraiser before they'll consider the application.

How Self-Employed Income Affects Your Application

If you're self-employed, the income verification process adds another layer. Most lenders want to see two years of tax returns or financial statements, and they'll assess your income conservatively. Consider a buyer who runs a landscaping business in Melbourne's eastern suburbs and wants to finance a $60,000 classic Mercedes. The lender won't just look at gross revenue. They'll assess net profit after business expenses, and they may average the last two years to smooth out any fluctuations. If your income varied significantly between years, they'll often take the lower figure.

Some lenders offer low doc options for self-employed borrowers, where you can declare your income and support it with business activity statements or accountant letters rather than full financials. The trade-off is usually a higher interest rate and a lower loan amount. For classic cars specifically, low doc products are harder to find because you're stacking two risk factors: non-standard income verification and a non-standard asset. That doesn't mean it's impossible, but it does narrow your options.

If your business structure allows it, using equity in your home or investment property to fund the purchase can sometimes be a cleaner path than applying for a traditional car loan. A personal loan is another option if the loan amount is relatively small, though the interest rate will typically be higher than a secured car loan and you won't have the vehicle tied up as security.

Secured Car Loans vs Unsecured Personal Loans for Classic Cars

A secured car loan uses the vehicle as security, which usually means a lower interest rate compared to an unsecured loan. The catch with classic cars is that not all lenders will accept them as security. Those that do will often require a professional valuation and may impose conditions around how the car is stored, insured, and used. Some lenders won't finance a classic car that's used as a daily driver, while others will require agreed-value insurance and proof of secure garaging.

An unsecured personal loan removes those conditions but comes with a higher cost. In a scenario like this, a self-employed buyer purchasing a $40,000 classic Jaguar might pay 9% to 12% on an unsecured loan versus 7% to 9% on a secured loan, depending on their credit profile and the lender's assessment. The monthly repayment difference on a five-year term could be $200 to $300, which adds up over the life of the loan. But if the car doesn't meet the lender's security requirements or you want flexibility to modify or sell the vehicle without seeking lender approval, the unsecured route can make sense.

Loan Terms and Balloon Payments

Classic car loans are typically offered over shorter terms than new car finance. Where you might see seven-year terms on a new electric vehicle or hybrid car, classic car loans usually max out at five years, and some lenders prefer three to four. The shorter term keeps the lender's exposure lower, but it also increases your monthly repayment.

A balloon payment can reduce the monthly repayment by deferring a lump sum to the end of the loan term. You might structure a $50,000 loan with a 30% balloon, meaning you'd owe $15,000 at the end of the term. That drops the monthly repayment significantly, but it assumes you'll either have the cash to pay out the balloon, refinance it, or sell the vehicle. For a classic car that's appreciating or holding value well, this can work. For one that's sitting in a garage depreciating due to lack of maintenance or market shifts, it's a risk.

Balloon payments aren't available with all lenders, and they're less common on unsecured loans. If you're considering one, make sure you have a clear plan for how you'll handle the final payment before you sign.

What About Business Car Loans for Classic Cars?

If the classic car is genuinely used in your business, a business car loan might be an option. This is less common but can apply if you're in a field like media production, events, or marketing where the vehicle serves a commercial purpose. The loan would be assessed against your business income and assets, and you may be able to claim depreciation and interest as business expenses, though you should confirm that with your accountant.

Most self-employed buyers purchasing a classic car are doing so for personal use, and attempting to structure it as a business expense when it's not genuinely used in the business creates complications with the ATO. If there's a legitimate business use case, document it clearly and discuss it with both your broker and your accountant before proceeding. You can explore business loans as part of that conversation.

Refinancing a Classic Car Loan

If you've already financed a classic car and your circumstances have changed, refinancing can sometimes reduce your interest rate or adjust your loan term. This is particularly relevant for self-employed buyers whose income has increased or stabilised since the original loan was written. A buyer who financed a classic car two years ago on a higher interest rate due to limited trading history might now qualify for a lower rate with two additional years of financials and consistent income.

Refinancing a car loan works similarly to refinancing a home loan. You're essentially taking out a new loan to pay out the existing one. The new lender will reassess the vehicle's value, your income, and your credit profile. If the car has appreciated or held its value, you may find lenders more willing to offer favourable terms than they were at the time of purchase. Car loan refinance can be worth exploring if your current rate is sitting above 10% and you have a strong repayment history.

Refinancing isn't without cost. There may be exit fees on your current loan, and the new lender may charge an application or valuation fee. Run the numbers to make sure the interest saving outweighs the cost of switching.

How to Strengthen Your Application

If you're self-employed and applying for finance to purchase a classic car, a few things will make your application stronger. First, have your financials in order. Two years of tax returns or financial statements, recent business activity statements, and a clear profit and loss statement will give the lender confidence in your income. If your income has been variable, be prepared to explain why and provide context around the trends.

Second, if you can increase your deposit, do it. A 30% deposit will open up more lenders and improve your interest rate compared to a 10% or 20% deposit. It also reduces the loan amount, which lowers the lender's risk and your monthly repayment.

Third, get a professional valuation before you apply. If you're buying a classic car for $70,000 and the lender's valuation comes back at $55,000, they'll only lend against the lower figure. Knowing the market value upfront helps you set realistic expectations and negotiate with the seller if needed.

Finally, work with a broker who understands both self-employed lending and vehicle finance. Not all lenders offer classic car loans, and those that do have different criteria around age, condition, and usage. A broker can match you with the right lender and structure the loan in a way that aligns with your circumstances. Whether you're after a car loan for a classic restoration project or a turn-key collector vehicle, the right structure makes all the difference.

If you're thinking about financing a classic car and want to talk through your options, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions