Classic Car Finance UK: Your In-Depth Guide

Why This Guide Matters

Classic cars occupy a unique space in the world of motoring. For many, they are more than vehicles—they are investments, passions, and pieces of history. Financing a classic car is unlike buying a modern vehicle, with its own set of challenges and considerations. Whether you are eyeing your first vintage motor or looking to expand your collection, understanding the nuances of classic car finance is essential. The right finance solution can make your dream car attainable, while the wrong one can saddle you with unexpected costs or restrictions. This guide breaks down key aspects of classic car finance in the UK, demystifies the process, and arms you with the knowledge to make confident, informed decisions.

The Basics Explained

Classic car finance refers to the range of financial products designed to help buyers purchase vehicles typically considered ‘classic’—often more than 20–30 years old, rare, or of particular historic interest. Unlike standard car finance, lenders assess not just your creditworthiness, but the car’s provenance, value stability, and market desirability.

Key classic car finance products include:

• Hire Purchase (HP): Spread payments over a fixed period, with ownership at the end.

• Personal Contract Purchase (PCP): Lower monthly payments with a balloon payment if you want to keep the car.

• Personal Loans: Borrow a lump sum to buy the car outright.

• Specialist Agreements: Some brokers offer bespoke plans tailored to high-value or rare vehicles.

Lenders often require independent valuations and may restrict which cars qualify. Interest rates can vary significantly, reflecting the unique risks and rewards of the classic car market.

How It Affects You

Choosing to finance a classic car comes with distinct implications. First, the eligibility criteria are stricter than for standard vehicles. Lenders scrutinise the car’s condition, history, and authenticity, sometimes demanding detailed appraisals. This increases due diligence but also safeguards your investment.

Monthly repayments are typically higher due to the perceived risk and the often higher value of classic cars. Some agreements, such as PCP, may not be available for all models, especially if the car is particularly old or unique. Depreciation is less predictable than with new cars—some classics appreciate, while others do not.

Insurance is another key factor. Classic cars usually require specialist insurance policies, which can be more expensive and may influence your eligibility for finance. Maintenance costs are also higher, as parts are rarer and servicing expertise is specialised.

In summary: Financing a classic car affects not just your wallet, but your responsibilities as an owner. Make sure you budget for the total cost of ownership, not just the monthly payments.

Our Approach

At Kandoo, we understand that classic cars are more than possessions—they are passions. Our approach to classic car finance is shaped by this understanding and by the complexities of the market.

Tailored Solutions: We partner with a panel of specialist lenders who appreciate the nuances of classic vehicles. Each application is assessed individually, taking into account the car’s provenance, condition, and market demand, as well as your financial circumstances.

Transparent Process: We believe in transparency throughout. You will receive a clear breakdown of interest rates, fees, and total repayment figures before you commit. Our advisors explain the implications of each finance product, from HP to personal loans, so you know exactly where you stand.

Expert Guidance: Our team provides guidance on necessary documentation, such as independent valuations and proof of ownership. We can also recommend trusted classic car insurers and maintenance specialists to support you throughout your ownership journey.

Aftercare: Our service continues after you drive away. If circumstances change—whether you wish to upgrade, refinance, or sell—our advisors can help you navigate your options.

In short, our approach is about combining financial rigour with a passion for motoring heritage, ensuring you enjoy the journey as much as the destination.

Before You Decide

Before committing to classic car finance, consider:

• Budget: Calculate the total cost of ownership, including finance repayments, insurance, maintenance, storage, and potential restoration.

• Future Value: Research whether your chosen car is likely to appreciate or depreciate.

• Usage: Some lenders and insurers limit annual mileage or require the car to be stored securely.

• Documentation: Ensure the car comes with a full history file, logbook, and, ideally, a record of restorations and maintenance.

• Inspection: Arrange a professional inspection to assess the car’s mechanical and structural condition.

It pays to be thorough. The classic car market is less regulated than the new car sector, and enthusiasm can sometimes cloud judgement. Take your time, seek expert advice, and do not rush into any agreement.

What’s Real, What’s Hype

The classic car world is awash with stories of dramatic price rises and celebrity auctions. While some models have indeed soared in value, many do not appreciate significantly—or may even lose value after restoration costs are considered.

Be wary of promises of guaranteed returns. Classic cars can be rewarding investments, but they are also subject to market whims, evolving tastes, and unforeseen expenses. Focus on buying a car you love and can afford to enjoy, rather than relying solely on future profits.

Pros & Cons

Other Options to Consider

If traditional classic car finance is not suitable, consider these alternatives:

1. Equity Release: If you own property, releasing equity can fund a classic car purchase—but seek independent advice.

2. Peer-to-Peer Lending: Some platforms match borrowers with investors, though rates and terms vary.

3. Leasing: Rare, but some companies offer classic car leasing for fixed terms—ideal if you want flexibility.

4. Saving and Buying Outright: While slower, this avoids interest costs and gives you full ownership from day one.

5. Joint Ownership: Pooling resources with friends or family can lower costs, but formal agreements are essential.

Each option has its own risks and benefits. Assess your financial situation and preferences before proceeding.

FAQs

Q: What qualifies as a ‘classic car’ for finance purposes? A: Typically, a car over 20–30 years old, of historic interest, or limited production. Lenders vary in their definitions.

Q: Can I get PCP finance on a classic car? A: Some lenders offer PCP on newer classics, but it is less common for older or rare vehicles.

Q: What documents will I need? A: Expect to provide proof of identity, address, income, car history, and an independent valuation.

Q: Is classic car finance more expensive than standard car finance? A: Often, yes. Higher risk and specialist nature of the cars mean interest rates and deposits can be higher.

Q: Will I own the car outright? A: With HP or a personal loan, yes—once repayments are complete. PCP requires a final balloon payment to take ownership.

Q: Can I finance a restoration project? A: Some lenders allow finance for restoration, provided you have a clear plan and reputable specialists involved.

Q: Are classic cars a good investment? A: Some appreciate, but many do not. Buy for enjoyment first, potential profit second.

Next Steps

If you are considering classic car finance, start by researching your ideal car and setting a realistic budget. Contact a specialist broker like Kandoo to discuss your options and arrange a pre-approval. With careful planning and the right support, your classic car journey can begin with confidence and clarity.