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I hate new cars. Sure, they smell nice, offer a pleasant ride, get good mileage, and feature fancy electronic bells and whistles. But they do something intolerable for something so expensive: plunge in value the instant you leave the lot.
One solution to the depreciation dilemma is to buy used, something I’ve written about many times in stories like Why I Don’t Buy New Cars. But that’s only a partial solution, because you’re still buying a depreciating asset – you’re just losing less money.
The ideal answer? Drive a car that goes up in value, not down. Also nice would be a car that’s fun to drive and – let’s be honest – makes your friends green with envy and starts conversations at every stoplight.
That’s the appeal of the classic car. More than transportation, it’s both a link to your past (or more often, the past you wish you had) and an investment for the future.
If you like cool-looking cars, you’ll love the following news story – we shot it at a private car collection belonging to a wealthy friend of a friend. See how the other half drives, then meet me on the other side for more…
When I graduated from college back in 1977, my parents gave me a used Toyota station wagon. Within weeks I’d sold it, used the money for a down payment on my first house, and gotten a loan from a credit union to finance my first classic car: a 1958 Triumph TR3. From that day to this, I’ve never been without an old car in the garage. In the video above, you saw the one I own now, currently undergoing a complete restoration: a 1968 Mercedes 280 SL. Over the years, I’ve also had an Austin-Healey 3000, a 1957 Thunderbird, and a 1972 El Dorado convertible, among others.
Not for sissies
Thus far I’ve mentioned the reasons to own a classic: They’re cool to look at, fun to drive, and can potentially go up in value. Add to that another surprising benefit: They can also be cheap to insure. If you can qualify for classic car coverage by limiting the mileage and keeping your car in a locked garage, you could pay a fraction of what it costs to insure your everyday ride.
So much for the good stuff. But there are numerous potential problems – and the older the car, the greater the potential. Buy the wrong car and you’ll be opening a can of worms the likes of which you’ve never seen. Parts can be expensive and hard to find. Mechanics familiar with the car may be few and far between and, as a result, charge a lot. In short, this is not an impulse buy.
Where to start
As with most major purchases, start with a budget. Forget traditional financing. While your dream car may be a classic to you, it’s just an old car to the bank. When I bought my Triumph right out of college – the only car I’ve ever financed – I used a signature (unsecured) loan from a credit union. While there are other ways to finance a purchase like this, from a second mortgage to credit cards, in my opinion this is something that should either be done with cash or not at all.
What to buy
Don’t approach any collectible – car or otherwise – as strictly an investment. The reason is simple: It might turn out to be a bad one. If you’re going to put money into any collectible, make sure you’ll genuinely enjoy owning it. Think of cars you’ve always wanted, or ones you’ve seen that made your heart skip a beat. And if you think it’s odd that a car could make your heart skip a beat, stop reading. You don’t belong in a classic car.
Here are the five cars from the video above. There’s no magic list of cars guaranteed to increase in value. These cars are on this list because they might.
Corvettes: There’s only two kinds of men: Those who have wanted a Vette and those who lie about it. While a fully restored mid-’60s model can easily cost more than $100,000, there are still plenty of later model cars out there for less than $15,000.
Mustangs: As with Corvettes, restored mid-’60s Mustangs, especially convertibles, are super-expensive. But late-’60s/early-’70s hardtops can be affordable. And you never know. As I showed you in the video above, in the same shop where my Mercedes is getting restored, there’s a rough ’65 Mustang convertible that someone had just bought at auction for $10,000.
Firebird Formulas: 1970-1974 Firebirds were cited in one article I read as being a potential collectible. And they’re certainly affordable.
Porsche: 1966-1969 Porsche 912s are mentioned by Popular Mechanics (link below) as being both collectible and affordable. Most 914s are also available for less than $15,000.
Mercedes 280 SL: While my car isn’t mentioned in any of the articles I found in researching this story, it’s an affordable car that’s well built and fun to drive. You can easily find a clean one in the $15,000 range.
And these are just the tip of the iceberg. For more ideas, check out these articles:
- MSN: Affordable Collector Cars
- Popular Mechanics: 10 Fun, MPG-Friendly, Cheap-ish Collector Cars
- Collector Car Market Review: Ready to Rise? Collector Car Sleepers
- Hagerty (classic car insurer): 5 Affordable Sports Cars to Buy Now
What to do before you buy
As I mentioned above, a classic car is not something to be approached lightly or impulsively. Best way to go about it? If there’s a car you’re interested in, first read whatever you can find. Then find a local car club specializing in your dream car, go to a meeting or two, and start talking to people. They can tell you what to look for, what to look out for, and maybe even hook you up with a car for sale.
Another great resource for the same type of information is a mechanic familiar with the type of car you want. How do you find one? Here’s a trick I’ve used as I’ve moved around the country over the years…
When I move to a new city, I look in the paper or online and find cars for sale similar to mine. Then I call the owners, explain my situation, and ask them for a referral. Once I find a mechanic, I visit them in person and shoot the breeze. I’ve not only found cool cars this way, I’ve made a few friends as well.
One last bit of advice: This should go without saying, but I’ll say it anyway. Don’t even think of buying any used car, especially not a classic, without a detailed and complete inspection by a mechanic who’s intimately familiar with the type of car you’re buying. I don’t care if the car is free. No inspection, no deal.