Most lenders treat a 1967 Mustang the same way they treat a Toyota Camry, which creates problems when the vehicle sits in a garage nine months of the year and increases in value.
Classic car finance requires a different approach because the asset behaves differently. You're not just buying reliable transport - you're acquiring something that might appreciate, needs specialist insurance, and won't be driven daily. Lenders who understand this distinction offer structures that reflect how you'll actually use the vehicle, rather than forcing it into a standard auto loan template.
What Makes Classic Car Finance Different from Regular Car Loans
Classic vehicles typically require secured car loan structures with lower loan-to-value ratios than conventional vehicles. Where you might finance 80-90% of a new family car, classic car lending often caps at 60-70% of the purchase price.
Consider someone purchasing a $45,000 restored Holden Monaro. A lender treating this as a standard used vehicle might offer 80% lending, requiring a $9,000 deposit. But lenders experienced with classic cars will typically require $13,500 to $18,000 upfront, reflecting that the vehicle isn't generating income and won't be used for daily commuting. The loan amount calculation changes because the usage pattern changes.
The interest rate also shifts. Classic car finance interest rates sit higher than new car finance rates because lenders can't rely on manufacturer support programs or volume dealer relationships. Where a new electric vehicle might attract promotional rates, a classic car typically prices closer to personal loan territory - often 1-3% higher than standard vehicle financing.
How Classic Car Loans Affect Your Borrowing Capacity for Property
A classic car loan reduces your borrowing capacity for a home loan in the same way any debt does, but the impact multiplies if the monthly repayment is high relative to how you use the vehicle.
When assessing your home loan application, lenders add up all your monthly commitments - including that $650 monthly repayment on the classic car sitting in your garage. If you're a first home buyer trying to maximise your borrowing capacity, a classic car loan taken 12 months earlier can reduce your property purchase power by $90,000 to $130,000, depending on the lender's assessment rate.
In our experience, buyers planning to purchase property within two years should structure classic car finance differently. A shorter loan term with higher repayments looks worse for serviceability than a longer term with a balloon payment at the end. The monthly repayment matters more to a mortgage lender than the total debt, which creates an opening for smarter structuring. If property purchase is your priority, delay the classic car or structure it to minimise the ongoing commitment that appears on your credit file.
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Using Asset Finance Instead of Standard Car Loans
Classic cars sometimes qualify for asset finance rather than consumer car loans, particularly if you can demonstrate business use or investment purpose.
Asset finance through an asset finance structure can offer longer terms and different tax treatment than personal use vehicle loans. If you're a business owner who uses a classic car for corporate functions, promotional activity, or client entertainment, this financing method might reduce the monthly commitment while maintaining deductibility.
The qualification criteria differ substantially. Where consumer car loans focus on your income and living expenses, asset finance lenders examine the asset's value stability, your business cash flow, and whether the vehicle generates any return. A 1974 Porsche 911 that appears at paid events or in commercial photography sessions has a stronger case than one used purely for weekend drives.
The Refinance Option When You Already Own the Vehicle
If you already own a classic car outright and need to refinance a car loan elsewhere or free up capital, the vehicle can sometimes serve as security.
Refinancing against a classic car you already own works differently than refinancing a depreciating asset. Some lenders will advance 50-60% of the current market value, treating it more like refinancing against collectibles than vehicles. The funds aren't restricted to car-related expenses - you could use them to cover a deposit on another purchase or consolidate other debts.
The valuation process becomes critical. Unlike a three-year-old sedan with a clear market value in RedBook, your classic needs an independent specialist valuation. Budget $300-600 for this, and expect lenders to apply a conservative view of that valuation when determining how much they'll advance. A $60,000 valuation might support a $30,000-36,000 loan, with rates reflecting the specialised nature of the security.
Deposit Size and How It Changes Approval Odds
Larger deposits significantly improve both approval likelihood and the interest rate you'll pay on classic vehicle purchases.
No deposit options exist for new and near-new vehicles through manufacturer programs, but they don't extend to classic cars. Lenders want genuine financial commitment when the vehicle won't be used as reliable transport. If you can contribute 40-50% of the purchase price, you'll access more lenders and considerably improved pricing.
Deposit funds can come from savings, trade-ins, or other assets. We regularly see buyers who own investment property but have limited cash redirect focus to a personal loan secured against equity rather than an unsecured car loan at higher rates. The personal loan uses your property as security but remains separate from your home loan, giving you access to the funds needed for the classic car deposit while keeping the vehicle finance itself cleaner and simpler to manage.
When Dealer Financing Doesn't Work for Classic Cars
Dealerships selling classic vehicles rarely offer the same finance arrangements as new car dealers because they don't have manufacturer-backed finance arms.
A modern dealership selling new vehicles connects you directly with captive finance companies offering promotional rates, instant approval processes, and zero percent financing offers. Classic car dealers typically refer you to third-party lenders or expect you to arrange your own funding. This means the car loan application process starts before you visit the dealer, not at the point of sale.
Pre-approved car loan arrangements work particularly well when purchasing classics. You know your loan amount limit, you've locked your rate, and you can negotiate as a cash buyer. The dealer doesn't need to be involved in your finance approval, which speeds up the purchase and removes one variable from the transaction. Getting finance approval sorted before you start shopping also prevents disappointment when you find the right vehicle but can't secure funding quickly enough.
Structuring Repayments Around Irregular Income
Classic car ownership often overlaps with business ownership or professional practice, where income fluctuates seasonally.
Monthly repayment structures assume consistent income, but if you're an accountant with strong earnings between July and October and quieter periods otherwise, a standard monthly commitment creates unnecessary pressure. Some lenders accommodate irregular repayment patterns, allowing larger payments when cash flow is strong and reduced payments during quieter months.
Balloon payment structures also suit classic car purchases when you know a lump sum is arriving at a future date. A 30% balloon payment reduces your monthly commitment substantially. On a $40,000 loan over five years, a 30% balloon reduces the monthly repayment by around $200. Just confirm you have a genuine plan to clear that balloon when it arrives - whether through refinancing, sale of the vehicle, or scheduled income you're confident will materialise.
If you're purchasing a classic car while also navigating first home buyer challenges or managing existing property debt, the interaction between these commitments matters more than any single loan structure. Open Finance Solutions works with clients nation-wide to structure vehicle finance in ways that protect your property borrowing capacity while still getting you into the vehicle you want. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I get a car loan for a classic car with no deposit?
No deposit options don't typically extend to classic vehicles. Lenders usually require 30-40% deposit as a minimum because the car won't be used as daily transport and represents a higher risk than a conventional vehicle purchase.
Will a classic car loan affect my ability to get a home loan?
Yes, any car loan reduces your borrowing capacity for property. A $650 monthly car repayment can reduce your home loan capacity by $90,000 to $130,000, depending on the lender's assessment criteria and your other financial commitments.
What interest rate should I expect on classic car finance?
Classic car interest rates typically sit 1-3% higher than new car finance rates. They price closer to personal loan rates because lenders can't access manufacturer support programs or volume dealer discounts.
Can I use a classic car I already own to refinance other debt?
Some lenders will refinance against a classic car you own outright, typically advancing 50-60% of its current market value. You'll need an independent specialist valuation, and the funds aren't restricted to car-related expenses.
Do classic car dealers offer finance like new car dealerships?
Classic car dealers rarely have manufacturer-backed finance arms, so they typically refer you to third-party lenders or expect you to arrange your own funding. Getting pre-approved before shopping gives you more negotiating power and speeds up the purchase.
