When it comes to the world of loans, these days you don’t need to go down the traditional bank route. Instead, you can use your personal assets to secure a loan.

In recent years, there has been a rise in loans being secured through more unusual items, such as classic cars. If you’re a classic car owner and you’re in need of a short-term financial boost, you can find out all about how this kind of personal asset loan works below.

Classic Car

The valuation process

First things first, let’s take a quick look at the valuation process. It’s important to bear in mind that only classic cars worth over a certain sum can be used to secure a loan – a figure that can vary from one lender to the next. Typically, though, you’re looking at around £15,000.

Even if you’re certain that your vehicle is worth that much, you’ll need to have your car assessed by one of the firm’s specialists, who will take care to ensure an accurate valuation. Among the factors that will be taken into account are the year, make and model of the car, as well as its overall condition.

Your ownership of the car will also need to be verified, while its auction history records will be checked too. Typically, this type of lender does not require a personal credit check, so the overall loan process is still much faster than that of standard bank loans.

How your loan will workSecured loan

So, how will your loan work? Well, the first part of the process is submitting your application, which you can do online and then having your car valued as above.

Provided your car is accepted, you will then be presented with an offer. As a general rule of thumb for classic cars, you can receive up to 50 per cent of their trade value in the form of a loan, while the usual term of the agreement is six months.

Your next step will be to accept the agreement, provided you are happy with the terms. More often than not, the agreed sum will be transferred to you within the space of a day. You’ll then begin the process of repaying your loan! Once you’ve done so, your car will be returned to you.

Key facts every classic car owner will want to knowquestion-mark

Below, I’ve taken a quick look at the burning questions on every classic car owner’s lips. Bear in mind that this is intended as general information, as conditions can always vary from one lender to the next.

Q: How will my car be stored?

A: Your car will be stored in a specialist facility. As well as being secure, this will provide the optimum environment for keeping your car in good condition. For example, it will be kept under a protected cover and in a dehumidified environment.

Q: Will my car be insured during this time?

A: Yes! As soon as you part with your car, it will be covered by the company’s insurance policy, and will continue to be so until you are reunited with it.

Q: What happens if I can’t repay my loan?

A: If you are unable to repay your loan, your classic car will be sold to cover your debt, as well as expenses incurred by the company (for example, auction loans). If there is any surplus, though, this will be returned to you.

Q: Can I extend my loan if needed?

A: This is something that’s assessed on a case by case basis. You’ll discuss it with your account manager and, if a new term is agreed, you’ll need to pay off any interest accrued up until this point before the new agreement can go ahead.