The siren song of classic, or collector, cars has lured many an automobile fan onto the rocks. “Why settle for a car that goes down in value when you can drive one that goes up in value?” you might tell yourself as you buy a vintage vehicle you think has lots of potential.
But turning an antique bucket of bolts into a cherry ride takes know-how. “The reality of car collecting is that for every investor who cashes in big, there are hundreds who lose far more money than they make,” writes Kelley Blue Book editor and Forbes contributor Karl Brauer.
It’s a used car
At Money Talks News, we are big fans of driving used cars. (Read 10 Tips for Buying Your Next Car for Less and Why Your Used Car is Greener (and Smarter) Than a New Hybrid). Here’s why: The average new car loses 36 percent of what you paid for it in the first year, and 60 percent from the original price in the first five years, according to Kelley Blue Book.
A classic car is, strictly speaking, a used car. A special used car, to be sure. State Farm Insurance defines a classic as:
- A motor vehicle 10 or more years old, which is rare or of special historical interest because of exceptionally fine workmanship or limited production. A classic motor vehicle 25 years old or older is covered as an antique.
- Antique Automobile: A motor vehicle 25 or more years old.
Purchased thoughtfully and restored knowledgeably, some classic cars do appreciate. Plenty depreciate, though. You can’t know the market value of a vehicle until you sell it, and lots can go wrong before then. The market for collector cars, like markets for stocks or corn futures, is subject to unpredictable forces, like the larger economy and the changing tastes and emotions of buyers.
It’s not an investment, it’s a hobby
Money Talks News founder Stacy Johnson is a classic car fan. He loves these babies. He has owned and restored a 1958 Triumph TR3, a 1968 Mercedes 280 SL, an Austin-Healey 3000, a 1957 Thunderbird and a 1972 El Dorado convertible.
Stacy can testify to the pleasures of owning and driving a classic car that turns heads and starts conversations. He loves the thrill of restoring a vintage car to its former glory.
Yet he is the first to advise slowing down if you’re considering spending big bucks on a collector car. Think of it as a hobby, not an investment, Stacy says. If you make money, you can be pleasantly surprised, but don’t count on it.
Here, from the hard-won experiences of Stacy and others bitten by this bug, are 10 rules of the road for buying a classic car:
1. Get a professional inspection before buying
You can go online and research prices that restored vintage vehicles are commanding. There’s so much information out there that it’s possible to delude yourself into thinking you know what you are doing. You start dreaming of a slam-dunk deal when you find an old hulk at a bargain price.
Making a nice profit isn’t simple, though. Don’t buy a vintage car without having an experienced mechanic, whose credentials you know and trust, evaluate the vehicle’s condition and assess the cost of the renovation, Brauer writes.
2. Say “no” to rust
When you see major rust on a vehicle’s body, run. Rust damage makes it unlikely you’ll be able to restore a vehicle to classic condition, car-flipping expert Jeff Allen (of CNBC’s “The Car Chasers”) tells Mens Journal. However, Allen adds, “If I saw a bubble or two on a quarter panel that would not bother me.”
3. Research insurance costs
Surprisingly, insurance can be cheaper for antique cars. But there’s a catch: To get low rates you can’t drive your collector car much. Specialized policies for antique vehicles often have lower premiums because the cars are babied and driven less.
“When it comes to insurance, there are a lot of different options based on how the car is valued and driven,” writes Property Casualty 360, in an article exploring those choices.
Even if you drive your classic, shop to compare policy options. You may be paying too much with a traditional auto policy.
4. Decide whether to drive it
You’ll have to decide if your classic car is too precious to drive. A vehicle’s worth depends on its condition, so taking it on the road risks damaging its value.
At Newsday, Steve Linden nevertheless urges collectors not to be so fussy that they miss the joy of ownership. Get out and drive it, he says:
Generally speaking, when it comes to classic cars, Americans are obsessed with perfection. So much so that we are willing to trade it off for the enjoyment that the car might otherwise provide.
5. Factor in the cost of upkeep
If you are thinking of buying a vintage vehicle to drive, remember that it is one old car. Brauer tells of buying a 1970 Plymouth GTX for $4,000, driving it for 24 years and selling it for $24,000. Sounds like a decent deal, he says, until you realize that he spent $15,000 on upkeep, including rebuilding the engine and refreshing the interior, repainting and repairing rust and dents, insurance, fuel and regular maintenance. His profit on the “investment:” $5,000.
“Now ask your accountant ‘Is a $5,000 return on a $19,000 expenditure, over 24 years, a good investment?'” Brauer writes.
6. Understand the cost and availability of parts
Parts for these rare old beasts can themselves be rare — and pricey. Again, do your research to be sure you’re ready for that expense.
7. Find a mechanic before you buy
Buying a collector car means that, unless you do the work yourself, you could be at the mercy of a few experts who command high rates. Scope out the availability of these mechanics in your area who can do the job, and learn about their rates and background.
8. Follow your heart
Because you realize that car collecting is a hobby, not an investment, don’t ever buy a car that you’re not deeply passionate about.
Don’t buy a vehicle that you aren’t aching to drive, says Allen. “Don’t buy a car just because it seems like a great deal,” is how Brauer puts it. “If you don’t have the love, don’t bother,” Stacy says.
9. Muscle cars are having a moment
If you love “gas hogs” you are lucky. Today, big, vintage American “big-block” cars with enormous motors are very hot, Allen tells Mens Journal.
“Camaros, Corvettes, Chevelles, Mustangs … those are considered the big blocks,” he says.
10. Run the numbers — these numbers
Although few things guarantee you’ll make money on a vintage car, one factor helps enormously: ensuring that numbers on three of the important vehicle parts — the engine, transmission and rear axle — all correspond to the car’s VIN (vehicle identification number) that is stamped on it in the factory:
Allen explains where to locate these numbers on a car:
- Engine: Most engines are stamped with the last six numbers of the car’s unique VIN.
- Transmission and rear axle: Look for date codes stamped on these parts and make sure they correspond to the VIN’s date.
Are classic cars on your shopping list or your list of things to avoid like the plague? Share your experiences with us in comments or on our Facebook page. And if you like this article, share it with your car-loving contacts on Facebook.