Do you fancy buying a classic car, a grey import vehicle or something outside of what you can typically buy from a car yard? Wanting to finance the purchase? That could prove even more difficult than actually finding what you want to buy. Why?there are Ta number of reasons.
1. The major banks want to process loans in volume and their systems are set up for quick turnaround. They value later model cars using the Red Book or Glasses Guide systems to assess the value of the motor vehicle and ultimately their risk. Less common vehicles require them to allocate more time and staff resources to obtaining valuations on goods and often older vehicles and less common models are difficult to value because they can’t use these systems to determine the real worth. They are also harder to dispose of should the loan turn bad and will be harder to recoup any outstanding funds. Hence risk and viability of the transaction plays a big part of whether they wish to do a secured car loan or not.
2. The lack of sales volume of classic cars can hinder accurate valuations. Specifications of your classic cars like Chevy or Mustang, plus modifications added by enthusiasts, mean few cars will have the same value to another and are harder to finance using secured car finance because of this. If you are looking to purchase a classic car, why not taking a look at our list of the most sought after classic cars.
3. Grey imports suffer a similar fate at the hands of the bank’s lending guidelines. Unfamiliar models ( not manufactured and sold in Australia ), higher depreciation and unusual specifications cloud the issue for the bank on their risk. Australian import car buyers are disadvantaged now through the historical restrictions placed on imported vehicles. These restrictions placed on imports to protect the local vehicle manufacturers of which very few remain today. The outlook for these imports may be about to change? The same issue applied in New Zealand up until the 1980’s when restrictions were lifted and the market was flooded with cheaper, higher spec’d cars from Japan. Initially banks would not lend on them but the rapidly growing acceptance of these imports meant banks had to change their policies to accommodate buyers of these vehicles. Quickly they became part of the landscape there and now are viewed by the banks in the same way as any other vehicle.
How to win the banks over and get your finance approved on these vehicles!
Well it’s not all bad when wanting to finance these types of vehicles. Obviously banks need to lend money to make profits for their shareholders, so on most occasions, they are looking to find a way of helping you borrow the money but at the same time meet their risk guidelines.
Here is what they are looking for to reduce their risk and approve your car loan on these types of vehicles;
- A strong borrower profile i.e. home buyer, good equity in your home, stability of employment, good surplus income & previous good credit.
- Unblemished credit history. No defaults or late payments.
- A history with the bank you are applying to e.g. past car loan or home loan
- A 20% to 30% deposit goes a long way to proving to the bank you are a safe bet. You are less likely to default on a loan you have put some of your own hard earned money into, than if you wanting to borrow the full purchase price.
Should you need further information regarding classic or imported motor vehicles and the pit falls in obtaining finance for them – why not give the team at 360 Finance a call. We can discuss ways an experienced car loan broker can help you navigate the dangers and get your car loan approved at the lowest interest rate and repayment possible.