Classic car finance is not transacted like “normal” car finance.
Most high-street lenders will not finance a mainstream car that is over ten years old at the end of the agreement so it doesn’t take much imagination to figure out the appetite they have for a fifty year year old car that they really don’t know anything about – especially when it is well into six figures. The process is more complicated for the brokers and lenders, even if that isn’t obvious to you the customer.
Over the last 12-18 months a greater number of finance companies and intermediaries have entered the classic car finance market due to the increased value of classics. Almost all of these have little or no experience of financing classic cars – what they do have experience of is taking customers out of the market quickly with some employing a number of tactics (reported to us by customers) which may surprise you:
Demand you apply for finance to get a quote.
Why? To stop you getting a competitive quotation. There a limited number of lenders in the classic car finance sector and these lenders will not accept the same application from two brokers. This is a great way for a broker to prevent the competition from dealing with a shared customer.
What should you do? Only allow a finance proposal to be submitted once you are happy with the deal and ready to proceed.
Claim you are”pre-approved” for finance.
Why? Customers are far more likely to make an application if they think they are already approved. There is no such thing as “pre-approved” finance. Think about it – would you lend someone money without knowing anything about them?
What should you do? Ask them which lender has approved you – if only for the fun of it.
Ask you to post your drivers licence.
Why? To prevent customers from being able to apply elsewhere. You must provide your drivers licence as proof of ID to activate a finance agreement. If someone else has it then it will at best slow the process down dramatically – at worst you could lose a deal on the car you wish to buy.
What should you do? Only send your licence once you have signed the finance documentation.
Offering a rate you may not qualify for.
Why? To get you to make an application. By law, lenders are only obliged to offer their lowest advertised rate to 51% of applicants – which means that 49% of applicants could end up disappointed, but by then it may just be too late….
What should you do? Get them to confirm the quotation in writing – something they may be unwilling to do.
Offering a deal you didn’t ask for.
Why? Easier and more profitable. If you are encouraged to take a deal other than the one you asked for, there is usually a reason. In some instances there will be a good reason but in others it may be for the convenience of the broker or finance company. For example, agreements with balloon payments yield bigger commissions and unregulated agreements might save a trip to get you signed up but may end up costing the customer more money.
Offer investment advice.
Why? To make a sale. This is a relatively new phenomenon. Some organisations may try and convince you that a classic vehicle will appreciate faster than the interest payments on the car. While this may have been true for some models in the past, what buyers need to consider is why they would do this and are they right. We have seen some pretty poor classic car “investment” advice from third parties in 2015 so make sure you get a second opinion as settling certain types of finance agreement early can be cost prohibitive.
This one doesn’t need any explanation. If you are under pressure from a broker or finance company to provide your personal or financial details and it is making you uncomfortable then you probably shouldn’t be dealing with them in the first place. Pressure is a poor substitute for good service.
What should you be looking for?
Simple: A transparent process – Sound advice – The right deal for YOU – No pressure.
If you aren’t being offered all of the above then you should probably be looking elsewhere…..