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by Rick Jensen  More from Author

Part II: Financing

Photos courtesy of J.J. Best and the CC&P staff.


Part I: Pre-purchase Inspections and Appraisals



Last month, we started you on a journey to buy a classic vehicle by explaining how pre-purchase inspections and appraisals work. Hopefully, the information gave you a broader understanding of the ways you can protect yourself before and after a sale.

This time, we’ll be discussing another important subject in the collector-vehicle industry: collector car financing. We’ve seen many enthusiasts get very creative when it came time to purchase a new toy without all the necessary cash–tapping a home-equity loan or raiding the 401(k) were two biggies. Unfortunately, chances are that both your house value and your 401(k) has taken a huge hit in the last year, so that route may not be the best way to go. However, even though most people are familiar with how regular vehicle financing works, many don’t realize that there is another option out there for the financing of specialized rides. And those who are aware of it may not be up to speed on how it differs from standard financing.

To get some answers, I contacted a leader in the classic auto financing industry, J.J. Best Banc & Co. Finance Manager Al Maranda was happy to answer all of our questions, and in doing so, he revealed a great way for to guys like us who need–hell, deserve–a new toy. So pay attention: you might just learn something that will save you some money!


AutoTrader Classics: Thanks for your time Al. To start us off, can you tell us what the biggest advantage is to an enthusiast getting collector car financing?

Al Maranda: The biggest advantage is simply that it allows them to buy the car! In a lot of cases, a customer may not have 15 or 20 grand available to them right away. We allow them to finance it at good interest rates.


ATC: How does collector financing differ from standard financing?

A.M.: It doesn’t differ much; the biggest difference is the collateral itself. When someone is buying a new car, it immediately depreciates by driving off the lot. But in the case of classic vehicles, they appreciate. We ask for 10 to 20 percent down, we base everything off the purchase price, and someone with excellent credit can finance up to 90 percent of the purchase price.


ATC: Do interest rates or loan terms differ from standard vehicle financing?

A.M.: Our normal term is five years, and rates are in line with a normal car loan. Everything is tiered on an applicant’s credit and how much they are borrowing. Terms can go out as far as 10 years. For 10 years, they would need to borrow at least $100,000.


ATC: Are your loans’ interest rates always fixed?

A.M.: Yes.


ATC: Do some people refinance from a regular vehicle loan?

A.M.: Sure they do, but not as much on very new vehicles–let’s say 2008 or 2009 models. We have good rates, but dealerships or banks may have good incentives on newer cars.


ATC: How does refinancing from a non-collector loan company work?

A.M.: It’s easy: call in with your information, and the bank can be paid off in three to four business days.


ATC: How do you determine which vehicles can be financed?

A.M.: We don’t put an age limit on the vehicle; instead we finance any specialty-type vehicle. So we distinguish if it’s a collector vehicle or not to determine if it will be approved.


ATC: What shape should a vehicle be in to be eligible for financing?

A.M.: We like to see vehicles in good-running condition: no projects, it has to start! If a collector vehicle is in factory condition, it is eligible already. If it is a hot rod or kit car we require an appraisal due to all of the included parts, the modifications, etc. We send someone out to do what is called a collateral verification: they verify the VIN and make sure the vehicle is in decent condition, and price guides like the NADA are checked.


ATC: Are there any application fees?

A.M.: There is no fee to apply.


ATC: What are the processing fees if someone takes a loan?

A.M.: The total fees amount to around $230-$255. They include the collateral verification, a $99 documentation fee, a UPS fee, and a required VSI insurance fee.


ATC: How long is the approval and rate good for?

A.M.: Both are good for 30 days.


ATC: Are there any pre-payment penalties for the loan?

A.M.: There are no pre-payment penalties after four months.


ATC: What kinds of approvals can you provide your customers?

A.M.: Our financing itself is the same, but there are a couple of letters that we offer. When we offer a letter of guarantee, it tells an auction company that we guarantee a customer’s loan so they can get a bidder’s pass. The other is a pre-approval letter.


ATC: What personal and vehicle information would someone need to start a loan application process?

A.M.: Their name, address, social security number, employment info (we like to see income verification as well), copy of the bill of sale, and vehicle details like the size of the engine, options, etc.


ATC: Can you explain how the credit check/background check works?

A.M.: We look at the credit history and the debt-to-income ratio. Because of the current economy, high revolving debt is scrutinized more, which makes approval tougher.


ATC: What happens if, for whatever reason, a customer is not approved?

A.M.: In those cases, if their credit is borderline or the debt-to-income ratio is not great, we might have them add a co-applicant or put more money down to try to get them approved. Of course, there’s a point where some applicants just can’t be approved.


ATC: What credit advice do you have for people who might have some time before trying to get approved?

A.M.: Pay everything on time, and don’t charge up the credit cards.


ATC: What is the maximum amount that you can lend, or have lent in the past?

A.M.: The maximum we have lent is around $500,000, but we’ve approved people for upwards of a million dollars.


ATC: Which major shows or auctions does J.J. Best attend?

A.M.: The Silver Hot August Nights auction, the Kruse Auburn auction, and the Daytona Turkey Run.


ATC: Why do you think potential buyers should consider working with J.J. Best?

A.M.: In today’s market, going with a company like J.J. Best is the way to go. Our main staff has been here for over 10 years. We all know the vehicles inside and out and are enthusiasts. We go to lots of shows and do on-site financing. In many cases we’ve detected fraud and helped the customer out. We’re always looking out for our customers.



GET FINANCED
With some money to put down and a good credit score and credit history, that classic that you’ve always wanted is within reach. J.J. Best gave us the lowdown on how collector car financing is done.

APPLY YOURSELF
There are several different methods to apply for collector car financing: it can be done online through www.jjbest.com, over the phone at 800-USA-1965, or even faxed in to 508-991-8329.

SWEAT THE DETAILS
Time to divulge your personal details: all of the specifics relating to you, your residence type and number of years there, its location and value, your monthly payment, your employee information and income, and information related to the proposed vehicle to be financed. Be as accurate and specific as possible.

SUBMIT IT
Your information is processed in as little as five minutes.

FILL OUT THE LOAN DOCUMENTS
Next, J.J. Best sends out or emails the loan documents to you. They must be signed, notarized, and sent back.

PROCESSING…
Their in-house processing department goes through your documents to make sure everything is complete and filled out correctly. They verify your income, and make sure they have the insurance binder (normally from a classic car insurance company).

APPROVED!
Once everything is verified, your package goes into the funding department for the check to be cut. In most cases, the check is made out to both the customer and the seller. This is done for fraud protection. Once it is endorsed by both parties, it can be cashed and you’ve just financed a vehicle. Just don’t forget to list the lien when registering your new ride.


A few examples:

1969 COPO Camaro
Cost: $109,400/$82,050 financed
Rate: 7.75%
Term: 8 years
Payment: $1,154/month
*Based on a $75,000 annual income and 700 credit score

1969 Pontiac GTO Judge
Cost: $44,300/$39,870 financed
Rate: 8.49%
Term: 5 years
Payment: $824/month
*Based on a $75,000 annual income and 700 credit score

1970 Dodge Challenger R/T Convertible
Cost: $33,100/$29,790 financed
Rate: 8.99%
Term: 5 years
Payment: $625/month
*Based on a $75,000 annual income and 700 credit score

1986 Buick Grand National
Cost: $13,850/$12,465 financed
Rate: 9.99%
Term: 5 years
Payment: $371/month
*Based on a $75,000 annual income and 700 credit score


SOURCE
J. J. Best Banc & Co.
60 North Water Street
New Bedford, MA 02740
800-USA-1965
www.jjbest.com

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