Nowadays, there are plenty of investment options to help your money grow, whether on a short-term or long-term basis. One that’s growing in popularity with many investors today are classic cars. This is because they have proven to yield high returns in the long run.
If this is something that interests you, whether you’re a sole trader or a buy-and-sell company, here’s a helpful guide on classic car investment and how you can earn from it.
Are classic cars sound investments?
Yes, it’s still wise to invest in a classic car. Historically, it has been one of the top-performing investments during the last twenty years. Many investors, not just in Australia, have included classic cars in their long-term strategies. One great example is the Ferrari 250 GTO sold in 2016 by the K500 Founder Simon Kidston. The exact purchase amount was not disclosed, but rumour has it for more than $60 million.
Another classic car that gave a massive investment return to its owner is the 1977 four-door Holden Torana SLR5000 A9x sold in 2018 at Lloyds Auctions on the Gold Coast. It sold for $365,000, an Australian record price and double of the previous record.
In Australia, the classic car market has low spreads and volatility, but with high liquidity. The prices are barely affected by supply and demand. That’s why classic cars will continue to be great investments in the future.
What’s more, the classic car market is just like any old capital market that has economic cycles. It has 4-6 years of economic cycle and the last start was in 2017. We can expect the cycle to reach its peak this 2020.
Lastly, while other types of cash-related investments are affected by inflation, tangible assets like classic cars are not. And although most cars easily depreciate as years go by, classic cars are rather good in retaining their value. This is the reason why many investors are switching to classic cars for investment.
What should you look for?
When it comes to investing in classic cars, not just any old car will do. You must look for a vehicle that is either rare or unique. The Holden Torana A9x has only 100 hatchback units sold, so it’s difficult to find anywhere. In other words, it’s a collector’s item. That’s why it has such massive purchase value when sold in 2018.
Another good criterion when looking for a classic car is desirability. You should get the pulse of most car buyers to find out which car make and model they desire. The higher the demand for a classic car, the higher it’s purchase value will become.
Most classic car experts also agree that condition also matters. Find a classic car in good condition because it will be worth more compared to those with rust and faulty engines, no matter how unique or rare they are. If the car has also retained its original paint, parts, and specifications, then it will also have higher market value. Don’t forget to add documentation to your checklist, because they will prove the authenticity of the car and prove its value.
Additional costs and risks
Classic car investment also entails risks as with other types of investment. Since it’s a long-term investment, a lot of things can affect the condition of both the market and the classic car. Specifically, the car is at risk of damage and theft. If you’re investing in a classic car, then you should also get classic car insurance to safeguard the asset.
Aside from the cost of insurance, this investment will also cost you extra cash for adequate storage space. Most classic car collectors buy humidity tents, which are dry and capable of preventing corrosion build-up on the vehicle.
Caring for the engine and other car parts will also incur an additional cost. You will need to hire an expert to maintain the classic car in great condition. If any of the parts degrade or fail, you’ll also have to spend money on restoring the car.
Before you decide to invest a large sum on a classic car, make sure to consider all these risks and additional costs because they’ll affect the overall profitability of your investment.
Classic Cars to Invest In
After weighing the pros and cons of a classic car investment and you decide to go full speed ahead, the next thing to know is the classic cars with great investment potential.
Some of the vehicles you can consider include the Series One Land Rovers, which were made from 1948 to 1958. These Land Rovers garnered high demand when the Land Rover Defender temporarily stopped production in 2016. These classic cars could sell up to $35,000.
Another classic car you can start searching for is Honda NSX. In 2018 red coupe with manual transmission and 43,000km mileage sold for almost $149,000. This is a huge jump from its 2016 value of $75,000. If you can find a similar model with a fixed roof, then you could be in for the biggest treat of your life.
Other rare and in-demand classic cars that you can prospect include the Mk1 and Mk2 Ford Escorts, VW Kombi campervans, and Mazda RX7. You’ll never go wrong with vintage Ferraris and Porsches, Shelby GT350s, and Mercedes 300SL Gullwings.
Read our other helpful article: Cars That Can Appreciate In Value And Make You Money
Classic Car Loan with Aussie
Despite the risks, investing in classic cars is still worth it for the high returns they can yeild. Now that you know what to look for in a classic car and specific models worth investing in, you can start working seriously on a classic car investment this year.
To help finance any classic car you find at an auction or in the market, you can reach out to Aussie Car Loans for the best classic car loan deal that suits your financial standing. We offer flexible interest rates on car finance with terms for up to 5 years.
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