Could you own a classic car in 2020?

This month’s blog provides some insights into the world of classic car ownership and we talk about some changes that have come about during the first half of 2020.

Read on if you want to know about the opportunities for expanding your classic car collection.

The Classic Car Market is Booming!

We have seen prices for classic cars start to level out now after they dropped over the last 12-18 months. Our dealer partners have seen an increase in enquiries since the UK went into lockdown which means we’ve also arranged more classic car finance and prestige car finance than ever.

We think this is because our clients have more time to search for their dream car (there’s nothing like losing yourself in a fantasy world of stunning cars to while away the time in lockdown). Given that there’s a lack of foreign holidays and weekends away, our clients now have the funds available, the time to search and have decided that there’s no better time than now to invest in a classic car or supercar as it’s brilliant fun and a sound long-term financial investment. 

Car Financing Checks Are Now More Robust

Since motor finance became regulated by the Financial Conduct Authority (FCA), there has been an increased commitment to ensure that all customers are always treated fairly. It’s our role as independent car finance specialists to explain all the choices available to the customer regarding the types of finance agreement they can enter in to, plus the options available to them at the end of the loan, such as ownership/return the vehicle etc. As standard, Fast Car Finance will provide any prospective customer a copy of our Terms of Business as soon as we begin to talk to you about your classic car finance options.

The FCA’s role in car finance is set to increase further, which means greater scrutiny of prospective borrowers to make sure they have robust financial backup in place to ensure they always meet their monthly payments. As an independent car finance specialist, we need to provide lenders with detail of serviceability and evidence of income. We need to demonstrate that our clients have a good credit history and a sufficient deposit as a credit scoring model will be used to approve your finance.

What Does a Finance Lender Want To See?

Three months bank statements and proof of income (i.e.: P60 if you’re employed or company accounts if you’re a Company Director). This will be needed at the application stage.

For higher value/exotic car finance, many lenders now require a minimum income of £100,000 per annum. Bank statements and the specific entries. Lenders are looking closely at bank statements to see where disposable income is spent. Any connected accounts, such as your Limited Company bank account. They will want to see that the company is profitable and that it can pay the dividends needed to sustain your lifestyle.

How Has COVID-19 Changed Classic Car Finance?

COVID-19 has just exacerbated the need for lenders to advance monies responsibly. They need to understand if an applicant or their business has been affected by the pandemic. Has their income fallen, are they furloughed, is their business taking government support (deferred VAT/PAYE/forbearance on current loans etc).

Using a bounce back loan as the deposit for your classic car or supercar is not something we would advise, so you’d need to be able to demonstrate how you’ve funded your deposit. Lenders need to know that if they agree car finance today the customer will be able to meet the repayments next month and beyond.

COVID Impact Assessments are sometimes being asked for to demonstrate that your business is viable despite the current situation.

Fast Car Finance welcomes this level of regulation as it demonstrates who the reputable lenders are and raises the standards across the industry, for the benefit of our customers. Responsible lending is crucial in making sure our clients do not get into arrears if they aren’t able to make their payments. 

Is Now The Time To Invest In a Classic Car?

If you are interested in investing in a supercar or classic car because you’ve read the industry analysis and believe that prices are as low as they’re going to, then be prepared that we might need to ask you for a lot more proof about your eligibility to pay your finance arrangement. The benefit of using an independent car finance specialist such as Fast Car Finance is that we can hold a lot of data about you from other purchases or transactions, so we try to avoid coming back to you for information all the time.

However, the FCA requirements on lenders are changing, so please bear this in mind when talking to us about your classic car finance or supercar finance.

Get in touch with our team today on 01635 785 400 or get in touch via email – info@fcfinance.co.uk.