Most people view their cars and automobiles as liabilities instead of assets. And, when you’re paying down the loan on your car, it could be true that the vehicle is a liability (especially if you owe a LOT on that principal).
Once you pay off the loan, though, that car could represent an asset that could be sold for profit (or used to secure a loan). Vintage cars are often perceived as money makers, but The Age cautions buyers about viewing these cars as an “investment.”
Many buyers collect and restore vintage cars for fun or nostalgia—not necessarily to sell for cash. Although some restored models may command a decent amount of money on the resale market, the serious cars that score the highest price tag are likely luxury models that were part of a limited production line.
In the movie, “Cruel Intentions,” Sebastian drove a 1956 Jaguar XK 140 that is easily worth six figures. According to Motor1, a 1962 Ferrari 250 GTO sold for more than $38 million.
So should you still buy those unique old autos? And is every old car a diamond in the rough? If you need the ultimate buying guide to vintage cars, look no further! Here are a few things to keep in mind:
Value is variable.
Not all old—or vintage–cars are created equal and values vary greatly. Again, the price depends on the condition, make/model as well as other issues. You may score an old Mustang in poor condition for very little, and, if you can fix it up, you could have a fun project that is worth a little money. Then again you may sink more into that car than it’s actually ever going to fetch on the market.
Are you passionate about a particular model/make/manufacturer?
Collecting or buying vintage cars may be rooted in a passion or fascination with a particular auto manufacturer or make/model. Maybe you love old Chevy’s from the 50s? Or a classic VW Beetle. If you want to invest or buy vintage automobiles, you need to figure out what type of vehicle resonates with you.
What’s your budget?
You probably don’t have millions in the bank to buy up any car of your dreams (not many people do!). So you’ll need to shop on a budget.
This will dictate how much you can invest on bidding wars via auction sites or what you can purchase at a dealership or private seller. Don’t push your budget, especially if you know that car needs a LOT of work. You must keep room in your spending for repairs, parts, etc.
Pay attention to the title.
If that car is really old and not drivable, it may have a salvage title. Some cars can later receive a title that allows it to be driven on the road, but others may never be legal for roadways.
If the title is salvage, you need to figure out if the vehicle can be repaired to make it safe for driving. If you just want the car for collector purposes or maybe even just as a cool piece of décor (yes, some people pull front ends off of classic cars for artistic pieces), then the title might not matter. Research the laws in your state as they pertain to salvage car titles.
Are you handy with tools?
If the car needs a lot of work, are you able to fix it? Or will you need to invest in repairs? If you can fix up the car solo—for many, this is a true passion—figure out how much you plan to spend on parts.
And some parts might require a hunt, depending on the car you’ve purchased. You’ll also need to think about how much work the car needs and how long you will need to spend actually handling all those repairs. That classic car may mean months of weekends spent tinkering, repairing and repainting.
Don’t forget about insurance.
If you plan to drive your new car, be sure you have adequate insurance coverage. Talk to your insurance company to find coverage that meets your needs and ensures the value of your vehicle is covered.
How much is the finished product worth?
So what happens when you’ve completely restored an old vintage clunker into a shiny masterpiece? The value should go up, right? Not so fast.
You’ll need to get an appraisal of your automobile to figure out the real resale value. Again, some classic cars are highly collectible and fetch lots of money at auction. Before you try to resell the vehicle, you need to pin down the value of your restored vehicle.
Are motorcycles collectible, too?
If you’re a motorcycle enthusiast, your passion may lead you to pursuing classic bikes. Like automobiles, you should figure out what motorcycle manufacturers and makes/models you wish to collect and restore.
For many, Harley Davidson or Indian Motorcycles are preferred brands. And, again, you should always set a budget for how much you wish to spend.
Can a classic car be used for a title loan?
Classic or vintage cars may represent a money source in the form of a title loan. As long as the car’s title is clean (not salvage), you can use a vintage car to back a title loan. This means that the resale value of your car is used as the collateral for your loan. And if your car is really rare or just highly collectible, your car’s value may be quite high.
But even if you are sitting on a really amazing collector’s item, there still may be a limit to how much you can borrow (per certain state laws). Of course, motorcycles (classic or new) also can be used for title loans. However, motorcycle title loans have a $4,000 maximum loan value.
Before you begin amassing a collection of vintage cars and/or motorcycles, take a step back and decide what type of vehicles interest you most. Don’t enter any auction or sale until you have a budget, though.
And remember that your budget should account for any repairs. Don’t max out on just the vehicle, otherwise you may be left with a classic car that has little value.
The title also is important, and you need to know if a salvage title can be repaired to make it safe to drive (and, of course, legal to drive). Always research your state’s laws regarding salvage titles.
If you plan to sell your vintage find, have the vehicle appraised so you know the value after repairs/restoration. No matter what vintage masterpiece you purchase, have fun with the restoration process. Many buyers take great pride in transforming an old dirty classic car into a shiny beauty that turns heads on the highway!