Is it worth investing in a classic car?
From Porsche to Ferarri, prices of these vintage and luxury vehicles have sky rocketed in recent years – but before we decide that this trend is set to continue, it’s worth remembering both the 1980s boom and the subsequent bust afterwards, there probably isn’t anyone out there who’s owned one of these classic cars who hasn’t regretted selling them off. It’s not purely for emotional reasons that people regret this type of decision but because if they had held onto them, realistically they would be worth a great deal of money at the moment.
A tale of caution: the 1980s Classic car boom
The classic car and vintage car markets boomed in the 1980s and for the collectors out there, it was a marvel to see. Unfortunately though, they fell back to Earth with a crash in the early days of the 1990s, with some car prices collapsing as much as 50%. Vintage cars that have become household names such as the Ferrari F40, which cost £190,000 brand new in 1989, saw its value reach almost double…but just 28 years later, even the best of them are only getting sold for around £850,000.
Supposedly, this time the price growth of classic cars is different. It has been speculated that the price rises of recent years are not typical of a bubble that has been financed by borrowing money and other clever financial packages but rather people are actually spending tangible and ‘real’ money. With an ever growing interest from emerging countries and economies such as China and India, there’s potentially even more buyers after a limited number of cars. So the question needs to be asked, should you blow your savings on something like a Ferarri? Just how do these classic cars measure up to other forms of investment such as property and ISAs?
Some industry experts have speculated that the value of some classic cars has risen 257 per cent between 2005 and 2013.
Last year the Historic Automobile Group International, industry leaders said that the value of ‘exceptionally historic’ classic cars climbed 12 per cent in one year alone. When this is compared to the beginning of 2009, prices increased by an eye watering 164%.
So at the moment investing in classic cars is looking like an increasingly good choice.
Getting classic car finance in a tough economy
These days any form of finance is especially hard to obtain, This is due largely to the hang over of the financial crisis back in 2008. It can be especially difficult to get classic car finance, these are typically luxury items that banks do not necessarily view as something that they are prepared to take a risk on.
Fortunately for the classic car and vintage car lovers out there, a number of financing companies have stepped in to fill this void. As with applying for any form of finance there are a number of conditions and stipulations that a would-be owner needs to meet.
Getting classic car finance
It can be a little tricky to get classic car finance if you have previously defaulted on any type of loan, or have a bad credit history. This is especially true if you’re seeking financing from banks rather than some of the specialist car financing companies out there. Even if you are turned down by your bank, It is still worth checking with the specialist companies, because they often are able to provide their customers with a little more leeway and tend to be a little more understanding of a less than perfect credit score.
So what type of classic cars can actually be financed at the moment? Well Believe it or not there exists a bespoke and tailored finance package for each and every classic car out there on the market, It is worth doing your research first however as some finance companies have better reputations than others. These companies are also able to assist you in sourcing your vintage car, helping you decide which one it may be best for you particularly if you are using it as an investment.