Classic car financing

How does classic car finance work?

As with standard car finance, there are two varieties of classic car loan. The two types include:

Personal Loan

With a personal loan, you’ll receive the money up front from a lender. You’ll then have more freedom to shop around for a car of your choosing. You’ll enter a repayment plan with the lender, paying back the loan in instalments.

HP or PCP Finance agreement

You can apply to enter a finance agreement with a registered seller. Here, you’ll agree to pay back the loan over a set period of time.

You’ll likely have two options when purchasing a car from a registered car dealer or seller. These are called Personal Contract Purchase (PCP) and Hire Purchase (HP) and both options have different advantages and disadvantages.

Personal Contract Purchase

With a PCP agreement, you’ll effectively rent the car from the seller. You’ll pay monthly instalments to use the car as your own for a set period, usually a few years. Once this time period is up, you can either buy the car outright for the remaining value owed, called a balloon payment or return the car to the seller.  

These agreements can be beneficial if you need to keep your monthly payments to a minimum and don’t plan on owning the car outright, but you are locked into your payments and can usually only drive the car for an agreed amount of miles per year, without paying an additional mileage sum at the end of your agreement.

Hire Purchase

With a hire purchase agreement, you pay a deposit upfront for the vehicle. You’ll then agree to pay a certain amount per month as part of your contract. Once the full value of your car is paid off, you’ll own it outright.

You won’t be restricted to a certain amount of mileage as with a PCP agreement and you will eventually own the car should you pay off your agreement. However, repayments are generally more expensive.

Personal Loan

The money you borrow from the lender will either be a secured or an unsecured loan. A secured loan is secured against something you own, usually a house or similar property of high worth. If you default on your loan, the lender can take ownership of your property as payment. An unsecured loan is not secured against anything but tends to have higher monthly payments.

It’s important to remember that purchasing and owning a classic car is an expensive venture. You should be certain you can afford your loan repayments and any insurance you will need for the car before making an agreement with a lender.

If you fail to meet the monthly repayments on a secured loan, you could end up losing your home.

What makes a classic car?  

A car can usually be called a classic when it is over 20 years old, at which point it may start appreciating in value. A good low mileage example will generally be worth more than one with high mileage. A classic car value can range from a few hundred pounds up to several million dependent on the make, model and mileage.

Am I eligible for a loan?

Your eligibility for a classic car loan will depend on the requirements of your lender. However, we can help you find a loan that suits your circumstances. We help people from a variety of backgrounds who may not always meet some lenders’ loan criteria, including people with a less than ideal credit history, retirees and the self-employed.

Before applying for a loan, it’s important that you are sure you can comfortably afford the repayments.

Using our loan calculator

Take a look at our loan calculator to work out your budget for a classic car purchase. Choose the amount you'd like to borrow and for how long to get an idea of the monthly repayments.

Commonly asked questions about our loans

Still got a few questions? We’ve answered some of the more common queries below.

Are classic car loans the same as normal car loans?

Classic car loans work in much the same way as a loan for a regular car. However, you must specify that you are looking to finance a classic car when applying for your loan, as it will affect the terms of your arrangement with the lender, and how much you are able to borrow.

Does a classic car need an MOT?

You will not need to get an MOT for your classic car if it is over 40 years old and no substantial changes have been made to the vehicle since then, such as chassis, brakes or engine alterations and repairs.

Otherwise, your vehicle will still be subject to the legal requirement for a yearly MOT to be deemed roadworthy.

Will I need insurance for my classic car?

Yes, it is a legal requirement that all cars are covered by car insurance before driving on UK roads. Even if you don’t plan on driving your vehicle, it can be good to ensure your investment is protected with substantial car insurance. Most insurers offer a classic car specific insurance package.

How much can I borrow?

You can apply for a loan between £3,000 and £500,000 when financing a classic car.

What are the repayment terms?

Flexibility is important to us. Our repayment terms last from 1 to 30 years.

Are there any loan fees?

There may be a broker fee of 12.5% applied for secured loans - this is capped up to £3,995. We do not charge fees on unsecured loans.

What are the interest rates?

These vary depending on the lender you select, but typically, homeowner interest rates start from 6.59%.

Applying for a classic car loan

We work with a huge variety of lenders to find a financial solution that suits you. If you aren’t deemed eligible by some lenders, we can help you finance that rare find. With flexible repayments and more than 600 loan options, you won’t be stuck on the starting grid with Norton Finance.