Rock­et­ing val­ues prompts in­crease in loans taken out against clas­sics

Classic Car Weekly (UK) - - This Week - Mur­ray Scul­lion

Lend­ing com­pa­nies are of­fer­ing loans to clas­sic car own­ers be­cause clas­sics are eas­ier to val­i­date as gen­uine than many other as­sets.

Pawn­bro­ker HNW Lend­ing says that the num­ber of en­quiries from clas­sic own­ers rose by more than a third be­tween Oc­to­ber and March 2016 com­pared with the pre­vi­ous six months, and 27 per cent com­pared with the same pe­riod in 2015.

Ben Shaw, founder and di­rec­tor of HNW Lend­ing, says: ‘ We are very happy to lend against clas­sic cars be­cause they are eas­ier to val­i­date as gen­uine when com­pared to other valu­able as­sets, and have been ris­ing in value. This means any po­ten­tial risk we face in terms of re­pay­ment de­fault is lower than in other ar­eas.

‘Our cus­tomers tend to have bought the car in last five years from a recog­nised dealer or auc­tion house. You can see that it’s reg­is­tered with the DVLA and we can check to see who owns it. ‘ With di­a­monds, for ex­am­ple, you’ve got to get a spe­cial­ist to have a look at them and it’s much harder to prove who owns them.’

Since its launch in 2014, HNW Lend­ing has pro­vided loans worth over £1 mil­lion against clas­sic cars, with the big­gest be­ing £150,000 against a Lin­coln Ze­phyr, a Porsche 911 and a Volk­swa­gen Type 2.

With HNW’s loan­ing process, clas­sics are moved to stor­age be­fore funds are moved to the bor­rower.

Log­book loan lenders – who of­fer loans against the value of a ve­hi­cle and use it as se­cu­rity – are also re­port­ing in­creases in clas­sic cus­tom. Patrick Martin, se­nior mar­ket­ing ex­ec­u­tive of log­book loan lender, Va­rooma, says: ‘ We are see­ing ris­ing in­ter­est from bor­row­ers look­ing to raise money against clas­sic cars. We have found that own­ers who have one or mul­ti­ple cars look to lever­age the value of their ve­hi­cles if they need to raise funds quickly. A loan against a high value car can of­ten be quicker and eas­ier to ar­range than a re-mort­gage or other type of fi­nance.’

Ac­cord­ing to the Knight Frank Lux­ury In­vest­ment In­dex, the value of clas­sic cars rose on aver­age by 467 per cent in the ten years to March 2016, 161 per cent over five years, and by 17 per cent in the 12 months to March last year.

Car own­ers are be­com­ing more aware of their ve­hi­cles as as­sets, ac­cord­ing to Ash­ley Mad­dox, co­founder of car sourc­ing spe­cial­ist, AG clas­sic au­to­mo­biles. He says: ‘Clas­sics are one of the best value as­sets you can own and many of our clients are look­ing to make in­vest­ments here and di­ver­sify away from stocks and shares.’

HOW IT AF­FECTS YOU A 45-year-old male (mar­ket­ing man­ager, ac­cess to an­other car, no claims or con­vic­tions, club mem­ber, liv­ing in SP2 0HL) want­ing to se­cure a loan against his 1955 Tri­umph TR2 val­ued at £40k could bor­row £30k.

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