Investing In Classic Cars
Classic car values can vary widely by year, condition, and mileage. Subtle differences can have a big impact on price. Investing in classic cars takes more than money. It's important to familiarize yourself with the market so you know what you're getting into. Before you lay out any cash, arm yourself with knowledge.
Before looking at today's collector car market, it's interesting to look back on it's history. Thirty years ago, only car lovers were buying and selling old cars. Today, collector cars are being bought and sold by a wide range of enthusiasts.
Rare, Desirable, Or Both
High-grade collector cars are typically rare, limited production models. Several factors play into desirability, including year, model, engine, and color combination. Original components and historical documents also increase an old cars value. Options such as air conditioning, power steering, power brakes, power windows, etc., are nice to have if you're planning on driving the car. They also add value.
A novice collector may believe that year, make, and model is most important when determining value of a classic car. In reality, it is the condition of the car that is most important.
Research Your Choices
Almost every car made has dozens of websites devoted to them, with the more popular ones having hundreds. While time consuming and confusing, doing some homework on the Web will help you gain information about the particular year and model car that you're interested in.
Read and Study Classic Car Price Guides
Price guides generally convey reliable information on car conditions and their corresponding values. They also list what different components should be valued at. Modified engines, custom interiors or paint often decrease the value of a classic car. Automotive valuation sites, such as NADA Guides and Kelley Blue Book, are good places to see real data on pricing for classic cars for sale. As the price guide will reflect, every condition is valued differently.
Muscle Car Collectibles
The original American muscle cars, such as the AMC Machine, Buick Gran Sport, Chevy Chevelle, Dodge Charger, Ford Torino, Olds 4-4-2, Plymouth GTX and Pontiac GTO, are highly-sought after by classic car investors. Surviving muscle car models are rare, with certain models commanding prices rivaling vintage European sports cars. The Ford Mustang, Chevy Camaro, and Dodge Challenger, originally called pony cars, and now grouped in the muscle car category, are also very desirable.
Classic Car Auctions
Have you been spending hours watching Barrett-Jackson, Mecum or other car auctions on TV? Once familiar ground for anyone wishing to purchase cattle or old furnature, auctions are now a huge marketplace for collectible cars. They are places of serious business masquerading as a social function.
For the seller, auctions offer the possibility of getting much more than a private dealer would offer. On the flip side, those final auction sales always include a healthy cut for the house. Some auction houses may take 10% from the seller and 10% from the buyer.
Classic car auctions are not the place to start old car shopping. However, they they can be used as a barometer for what other collectors have paid for similar cars in similar condition. The best deal for the savvy buyer will always be avoiding the middleman and buying directly from the seller.
Restored vs Unrestored
An unrestored car in the same condition as a restored car is always worth more. However, unrestored cars in good condition are very rare. The days of finding an unmolested SS396 Chevelle in a barn are probably gone. So quality of restoration will most likely be the single most important factor in evaluating value.
Generally speaking, the less a car has been driven, the higher the value. Low-mileage classic cars are harder to find, but will most likely be in better condition than high-mileage ones. Proof of accurate mileage is key selling point. Documentation can include repair bills or old registration receipts with mileage figures on them.
Oh Yeah, Buyer Beware!
The maxim "paint and chrome sells cars" has been around a long time and still holds true. But what's underneath that fresh bodywork and paint? We've seen plenty of advertised "fully restored" cars that still had the original brakes and suspension!
Pricing A Classic Car
How important is it to focus on price when buying a classic car? The old adage says that the initial price for a car, house, or any other investment is where the profit is made. But that's not necessarily true when investing in classic cars. When you're buying something that you expect to appreciate, the price is of secondary importance.
To gauge what a fair market value would be, check several places and average them together. These include auction results, ebay SOLD results (some "Buy It Now" prices are ridiculous), and local Craigslist listings. Assess the car's originality before pricing.
VIN Number and Body Tag Codes
Body tag codes tell you a lot of details about the car. Is the color original? Is the engine original? The seller may not really know, or may be misinformed. If the seller can prove it, matching-numbers cars will always cost more and always be worth more. These cars don't drive any better or faster than a non-numbers-matching car, but certainly make it more valuable.
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When you buy a new car, it starts to depreciate the moment you drive it off the lot. But you're buying a new car to be a utility vehicle, to be driven daily and haul goods. A classic car is the opposite. You seldom drive it and (sooner or later) it increases in value.
Classic vehicles don't need to be expensive to maintain, but you just don't know what will go wrong with a 50 year-old vehicle. It would be wise to factor in annual maintenance costs.
Will You Be Driving Your Classic Car?
How many miles a year do you plan to drive the classic car that you bought for an investment? Using it as your everyday vehicle is a bad idea. A rule of thumb is the more valuable it is, the less you'll be driving it.
Classic Car Insurance
Shop around, there's quite a few companies that specialize in vintage and classic vehicles. You will find that, compared to your everyday driver, classic car insurance is not expensive. Get a few quotes, but don't shop for the best price - it's not the place to save money. Having the right insurance protects your classic car investment.
Most collector car insurance companies allow between 500 to 2,000 miles a year of pleasure driving. The most agreed-upon definition of "pleasure driving" is anything except driving to work and racing. Errands like getting groceries and such is usually acceptable. Don't abuse your insurance policy - it hurts other collectors who abide by the rules.
Selling A Classic Car
Much the same as stamps, vintage wines, or rare coins, a classic car is grouped into the "collectibles" segment of investments. That means if you sell one, the U.S. government wants 28% tax on the capital gain of that sale.
Best Classic Cars To Invest In
Properly maintained and restored, classic cars make fair to good investments that appreciate over time, but there is no guarantee. This is why should follow your heart and invest in a classic car that you are passionate about. Even if the market crumbles, you still have a great old car.
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Project Car Help
My E-book "Finish Your Project Car" offers practical tips to help you get on track and stay on track with your project car. Topics include planning, ordering parts, overcoming obstacles, and staying motivated.