Car Financing 101: Auto Loans

One major problem that a lot of Luxury car purchasers face is financing. Purchasing a luxury performance car can be quite expensive, and many enthusiasts simply don’t have the cash up front to finance their hobby.

Show Car Automobile Loans

Financing is available to purchase luxury cars, but you have to look hard to find lenders willing to offer loans on these vehicles. Traditional lenders are leery of lending customers—even those who already have mortgages and other loans with them—money to purchase a luxury performannce automobile.

One of the major problems that traditional lenders like banks and credit unions have with lending money for luxury vehicle purchases is that their staff is often not well-acquainted with the high end car market. The luxury performance market is a small niche segment of the auto market, and few banks have staff members experienced in weighing the risk of such loans.

Also, in many  luxury car transactions, the amount of money borrowed will also be much more than the average car. If you have a great relationship with your bank, you might catch a break and get a loan, especially if you work with a small-town bank that has less formal bureaucracy than big corporate banks; otherwise, you’ll need to find a specialty lender.

Finding the Right Lender

There are a number of specialty lenders who deal exclusively in financing purchases of luxury cars.. In addition to these lenders, some car dealers may have financing programs of their own. These lenders have greater experience in evaluating the value of luxury vehicles and a greater tolerance for the risk involved with these loans.

The process to obtain a loan for a luxury car is a lot different than the process of financing a new or used car purchase. Buyers will need to submit an application, and the lender will evaluate their credit rating and history to determine whether they’re a safe bet to extend financing to.

When purchasing a luxury car, you can expect to be required to put down a substantial down payment. Typically, your lender will ask for a down payment of 10 to 30 percent.


10 Most Expensive Luxury Sports Cars Sold at Auction

Vehicle Price Auction
1961 Ferrari 250 GT SWB California Spider $18,500,000 Arcturial, Paris, 2015
1939 Alfa Romeo 8C 2900B Lungo Spider by Touring $19,800,000  RM Sotheby’s Auctions, Monterey Sale, 2016
1955 Jaguar D-Type $21,780,000  RM Sotheby’s Auctions, Monterey Sale, 2016
1956 Aston Martin DBR1 $22,500,000  RM Sotheby’s Auctions, Monterey Sale, 2017
1964 Ferrari 275 GTB/C Speciale by Scaglietti $26,400,000  RM Sotheby’s Auctions, Monterey Sale, 2014
1967 Ferrari 275 GTB/4*S NART Spider $27,500,000  RM Sotheby’s Auctions, Monterey Sale, 2013
1956 Ferrari 290 MM $28,050,000  RM Sotheby’s Auctions, New York City, 2016
1954 Mercedes-Benz W196 $29,600,000 Goodwood Festival of Speed, 2013
1957 Ferrari 335 Sport Scaglietti $35,700,000 Arcturial, Paris, 2016
1962 Ferrari 250 GTO $38,115,000 Bonhams, The Quail, 2014



Preparing to Borrow

There are a number of things you can do to obtain favorable treatment from lenders who issue loans to purchase collector’s vehicles. Improving your credit is a great way to ensure you’re able to get a loan and to get the best interest rate available. These tips can help you improve your credit before seeking out a lender:

  • Pay down your debt. If you have large outstanding debts, pay them down before taking on new debt to finance the purchase of a classic car. Your debt burden has a big impact on your credit score and, if you’ve maxed out several credit cards, it can impact your ability to find financing.
  • Pay bills on time. A large portion of the formula that determines your credit score depends on your timely payment of bills. Lenders view timely payment as evidence of personal responsibility and financial security. They reward timely payers of bills with more favorable interest rates and terms.
  • Pay off old debts. If you have an old credit card balance or student loan that you’ve been making minimum payments on for years, go ahead and knock them out before taking on new debt. Old debts that have only been minimally paid over time will drag your credit score down.
  • Inspect your credit history. Sometimes the credit bureaus err and assign the wrong debt to the wrong consumer. Pore over your history to ensure all information is accurate.


Now Is the Time

Right now it’s a buyer’s markets for collector’s cars. The market experienced a tremendous price surge that hit its peak in 2015 and is now in the middle of a correction. The Hagerty Market Rating Index tracks the collector’s car market and shows that vintage automobile prices have fallen considerably from their September 2015 peak.

The Hagerty Market Index is based on changes in dollars and volume of the collector car market and is adjusted for inflation. The index fell considerably during the Great Recession but surged considerably during the recovery before peaking in 2015.

Prices are low now, but the market is cyclical, and they are sure to rebound. Because collector car prices are so low right now, this is an ideal time to purchase a vintage or classic car for sale. Investors can improve their chances of turning a profit by buying now while prices have taken a dip, and collectors can also benefit by picking up the car of their dreams at a bargain price.

show car on display

Show Cars of Boca Raton provides a specialized buying experience for customers seeking vintage cars, classic cars, or muscle cars for sale. In the automobile business for over 40 years, Show Cars of Boca Raton has the experience and connections to help you find just about any collector’s vehicle you may have your heart set on purchasing.

Show Cars of Boca Raton has an inventory of more than 100 collector’s vehicles and is always looking to purchase more. Our company makes buying easy and Show Cars of Boca Raton can even help with financing. Call or click here to contact us today to find out how to get your dream car in the garage.


Buy and Sell New and Used Vehicles - Show Cars, Classic Cars, Muscle Cars, Collectible Automobiles and much more!