Investing in vintage cars to get a good payoff in future could be a bad idea if certain tips are not kept in mind. This is so because buying a fancy vintage car could be very alluring but, the maintenance of the same could be very expensive and sometimes you end up with very less returns. However, there are many cars which have fetched good money. So, this article discusses 10 tips which would prove to be important information before you plan on investing in a vintage car.
- Difference between classic and vintage cars: Classic cars and Vintage cars are the terms used interchangeably. However, they are not the same. A classic car is defined as an automobile manufactured between 1940 and 1970 and a vintage car is a car manufactured between 1919 and 1930. The insurance companies also follow almost the same definition so it is worthwhile to keep the definition in mind.
- Running cost of the car: It depends whether the car is going to be just hoarded in the garage to be maintained in a mint condition or it would be used on the roads for transportation. In case of the former investment is the clear agenda while people who choose the latter want to share the joy and pride of owning a classic car with others on road. Many people pursue driving vintage car as their hobby. Hence for this section of people who cannot keep their wheels under the wraps, running cost comes into play. This could be seen as the cost paid for maintaining the hobby. The existence of running costs does not mean that vintage and classic cars could be ruled out as an investment idea.The major running costs only involve insurance, taxes (that are usually on the higher side and are not exempt) and maintenance costs.
- Spare parts: The higher the cost, the rarer the car and more rare are the parts which further increase the cost of maintaining the car. Try buying a car whose parts could be found and are still in supply. In India Autojumble is organized every year by the Heritage Motoring Club of India which showcases a large number of buyers and sellers of spare parts of vintage and classic automobiles.
- Acquisition cost: The acquisition cost of a vintage and classic cars are high. It is very difficult to get proper loan for buying a vintage or classic car. The interest could be very high. Hence acquisition cost with labour and parts is a big hurdle while investing in a vintage car.
- Check for the right price: Price of a vintage or classic car is determined through factors like age of the car, condition (miles driven, condition of the engine, brakes, etc.), original parts (that means amount of original features and parts existing in the car) and scarcity (think something like 1962 Ferrari 250 LM which was priced at an auction for $6.9 million, so it is expensive because it is scarce as only 32 of this variety were manufactured.) hence it is very important to check an automobile before writing a cheque so that you do not end up paying more than the market value. This is explained in the next point.
- Run an expert check before buying: If it is a first purchase then make sure you take along an expert with you who could analyze the fine details of the vintage beauty. If not then at least take a test drive to check the condition of the engine, brakes, axle, etc. of the automobile. A lot of information could be grabbed through internet too. Run a casual check on Vehicle Identification Number (VIN) of the car. VINs tell a lot about the manufacturing and other details of the respective automobile.
- Insurance of the car: It is very important to insure a vintage or classic car and it is more important to get a specialized insurance for the vintage cars from insurance company. The factors that affect the premium are: age of the car, present condition of the car, expected costs due to repairs, distance covered by the car and ease of availability of spare parts and their cost. Pay attention to the coverage provided by the insurance. If the car is being taken out for events frequently then the insurance should cover damage caused during such an event. Some of the insurance companies providing insurance services for vintage cars are: Oriental Car Insurance, Tata AIG General Insurance, Bharti AXA General Insurance and New India Assurance.
- Storage of the car: When such a priceless beauty is bought for investment purposes then the storage has to be very appropriate. Firstly, the car cannot be left stashed inside the garage idle for a long time as it can lead to countless problems like seizing of engine parts, short circuit in wiring, batteries dying, brakes freezing, etc. You need to use it, that is, start the engine once in a while, prevent the car from moisture (be careful of any water leakages in the garage) and there is a whole procedure of packing the vintage car for winters (which includes draining the fluids, getting rid of the fuel, detaching the tyres, washing and detaching the engine, etc.)
- Selling at the right time: The car could prove to be an investment only when it is sold at the right time at a right price. There are ups and downs in the vintage automobile market depending on the demand, supply and consumer sentiments in the market. The demand and hence the price was low after the 2008 global crisis but, both are on the rise now. Selling at the right time and making the right return is more of an art than a science.
- Don’t buy just for investment: Finally don’t buy a vintage piece just for an investment purpose. Buy something which picks your interest and could be enjoyed by you. It takes some time for the prices to rise and for the car to prove as a good investment till then you need to maintain the vintage car in top condition which is possible only if you like it.
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