You found the car of your dreams but aren’t confident about taking money out of your family’s nest egg and your bank won’t finance the deal on favorable terms. This can be an extremely frustrating experience for any car enthusiast. So, we came up with Restomod Financing: How To Get A Loan Without Getting Ripped Off?
So, how do you get a loan to pay for your restomod without getting ripped off? Evaluate your options fully, read over and scrutinize every detail, and work with a reputable lender that specializes in restomod lending.
When looking for classic car, or “restomod” financing, there are a number of important things to consider before signing the loan documents. There are an awful lot of financing options and it’s important you take a hard look at all of them. Moreover, they’re not always as straightforward as they initially seem to be.
Take the time to properly read, understand, and question the smallest details. As a result, you may end up paying considerably more interest than you initially budgeted. If you overspend, your new restomod may lose some luster.
Apply for a Loan
If you have never applied for a loan (or restomod financing) before, this is essentially how it works. Your credit history and ability to repay the loan will be critical factors in determining whether lenders will or will not lend you money. Your credit rating is based on what you owe creditors and how well you’ve paid past debts.
Better credit and higher income increase your chances of getting a low-interest loan. If you have poor credit and low income, you’ll pay higher interest rates. In fact, you’ll be viewed as a security risk. Talk about piling on while you’re down!
Finance Companies and Banks (Personal Loans) – Restomod Financing: How To Get A Loan Without Getting Ripped Off?
- Secured Loans – This is where an asset of yours (e.g. your restomod’s used as collateral for the loan.
Note: If you have a mortgage you may be able to the home to secure a reduced interest rate loan with the same lender in the form of a home line of credit (HELOC).
- Unsecured Loans – This is where you do not use an asset for collateral. These loans pose more risk to lending institutions therefore usually incur a higher interest rate.
Generally speaking, most banks struggle to lend money to restomod customers because they don’t understand the value of a restored and modified classic car. Moreover, these cars cost a lot to purchase and they can usually only lend for up to six years. So, the costs of a restomod can be out of reach for many.
Credit Cards
Low-interest credit cards can help you afford that restomod. In fact, this can occur much earlier than otherwise possible. Interest rates can be as low as 12.5% if you qualify. Just make sure you are aware of any account fees so you avoid any surprises down the road.
Classic & Collector Car Dealerships – Restomod Financing: How To Get A Loan Without Getting Ripped Off?
Dealerships offer finance packages for their restomod customers through a few trusted strategic financing partners. These financing options are unique in that the payback terms extend up to 144 months (or twelve years) which allows the monthly payment to be significantly less than a traditional bank loan.
List of Leading Restomod Finance Companies:
Three leading dealership finance companies:
- Woodside Credit
Recognized as a leading lender in the classic and collector car market, Woodside Credit is committed to helping enthusiasts negotiate the lowest monthly payment for their dream car. In addition to providing buyers fast, friendly, and professional service, Woodside offers a variety of financing options that includes a 12-year payment plan on investments that range from $10K to $600K. In addition to traditional classics that are at least 25 years old, Woodside offers fixed-rate programs for collector cars, antiques, and nine different brands of exotics.
- Collector Car Lending
With rates starting at 6.25% and terms up to 144 months, Collector Car Lending is a great place to finance your dreams. They specialize in classic cars that date from 1928 to 1998 and deal with exotics that are 2010 or older. Best of all, you can build faster equity in your investment thanks to no pre-payment penalties.
- J.J. BEST BANC & CO.
As the oldest and largest classic automobile finance expert in the country, J.J Best Banc & Co. uses a knowledgeable team and top-level customer service to turn your goal of owning a classic car into a reality. Known for their low-interest rates and fast closing times, J.J Best Banc & Co. offers plans for classic cars, muscle cars, vintage cars, antique cars, collector cars, sports cars, kit cars, hot rods, and exotics. Looking to finance something cool from 1900 to the present? Look to J.J Best Banc & Co.
For these types of loans, Restomods are broken up into two groups of cars:
- Classic Cars – Vehicles aged more than 21 years are considered classic.
- Exotic Cars – Select vehicles aged 7+ years are considered exotic.
Loan Programs
- Prime Rate – The prime rate is the rate at which banks loan preferred customers funds and is the best rate customers can attain. Classic car and exotic Restomod prime loans usually require slightly more down than subprime, have a typical repayment length of 10 years (120 months) and interest rates around 6.25%.
- Subprime Rate – The subprime rate is the rate at which banks loan customers with poor credit. Classic car and exotic Restomod subprime loans usually require slightly less down than prime, have a typical repayment length of 12 years (144 months), and interest rates around 7.85%.
Overall, interest rates vary but are usually higher (than bank loans) over the life of the loan. However, their longer repayment terms, and valuation models, make them a viable option. Keep an ear out for ridiculously low-interest deals and sometimes interest-free bargains. Dealerships sometimes offer this to move old or slow-moving stock.
If considering one of these loans check the fine print! Read it, study it, and don’t be afraid to ask questions. Without conducting due diligence, the interest rate can increase dramatically once the promotion period has expired.
Dealer financing for a private seller?
Classic car dealers are how many people find their restomods. However, if you’ve worked with other lenders, they may have even required you to go that route in order to get the loan so you’re doing business with a company and not an individual. That’s all well and good, but what happens when you find that perfect car and the seller is a private party?
The great thing about a few of these established lenders is they understand that you won’t always find your dream car at a dealership. It may be in someone’s garage or in a private collection. So, private sellers are no problem for them and they can make it happen.
Bad Credit Loans
If you cannot secure any restomod financing due to bad credit, focus on using companies that specialize in bad credit lending. If that fails too, you need to work on improving your credit rating. This doesn’t necessarily mean you have to pay off all of your debt first. It may just be a case of making consistent repayments on your existing debt. If you get rejected, keep asking around but be prepared to pay a higher interest rate if accepted.
Ask lenders, why you were rejected. You can explain why you had payment problems in the past. However, now you can prove it won’t happen again (ex. you may have been made redundant but now have a secure job). Check what previous creditors have filed against you. They’ve been known to make mistakes that can greatly affect credit scores which can make the difference between your finance being approved or declined.
Loan Repayment Insurance & Protection Plans – Restomod Financing: How To Get A Loan Without Getting Ripped Off?
These can offer you peace of mind if anything should happen to your ability to pay off the loan. If you lose your job or become too ill to work it can cover some or all of your payments depending on the agreement. Of course, this will cost you extra on top of your repayments, so you need to weigh up whether it is worth it for you.
Restomod Insurance Explained
A car’s age is not enough to qualify for specialized classic car insurance. While requirements differ from company to company, most cars need to meet the following criteria in order to qualify:
- Limited use – Your restomod cannot be used for everyday commuting or errands, and your policy may include mileage limitations and proof the car is being properly garaged if you do travel with it. In some cases, insurers may require that you also own a primary car for everyday use.
- Car shows and meetings – The limited use provision of a restomod policy allows for travel to car shows and auto club meet-ups; however, this coverage may be restricted by some insurers. If this is the case, there are insurers that can provide specialized coverage for car shows and meetings. Before choosing a classic car insurer, it’s worth checking whether they have travel restrictions if you plan to take your car on regular, multi-day, high mileage drives.
- Secure storage – When not in use, your special vehicle must be stored in a locked, enclosed, private structure, such as a residential garage or storage unit.
- A clean driving record – You may be disqualified from restomod auto insurance if you have serious offenses on your driving record, such as reckless driving, repeat speeding violations, or driving while intoxicated.
Having the above knowledge about restomod financing options can save you a lot of money. Or it may help you find financing when no one else will, so you don’t have to be restomod-less for 6-12 months.
Related Questions:
If you‘re financing through the dealer, there’s a chance you can negotiate a lower price for the car because their profit will come from the whole deal, which includes the interest rate on the loan.
One article I found high in Google suggested there was a rule/law (The 10-Day Rule) that forced dealerships to either approve or deny financing to car buyers within ten days upon written notice. That seems to be limited to CA and it appears as though each state handles it a bit differently.
It depends as dealers may mark up interest rates. If you’re offered a lower rate even with the dealer markup, then you might be better off with dealer financing. However, applying for a loan directly from the bank might help you get a better rate.
