HUGE RISE IN LOANS AGAINST CLASSICS COVER
Rocketing values prompts increase in loans taken out against classics
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.