Car as an investment – is it viable?

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Many people know about investing in stocks, bonds and shares – but what about cars? Is it a viable investment? Today, we’ll explore this topic with Stoneacre Motor Group that are nationwide dealers across the UK specialising in car finance. We’ll cover whether cars are worth the investment, collector’s market overview, how to know which vehicles will turn into the future classics, as well as investment risks associated with cars.

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About collector’s car market

According to Investopedia, the collector’s car market Top Index consisting of car makes, such as Ferrari, Porsche and others were up 33.78% for the year 2019, and more than 500% over the preceding ten years. Insurance company Hagerty also measures the performance of the market and has released a North American collector’s market trend overview, which shows that affordable classic cars under $30k consisting of the 60s and early 70s models keep climbing up since 2016 and have reached a record increase since the last 12 months.

 

Picking the right car for investment

If you’re set on investing in cars, then look for rare, limited-edition models that have a low depreciation rate. New cars are notorious for typically losing 60% value within the first three years of ownership, so you need to pick the right car carefully.

Classic and vintage cars from the 50s – 70s have long been sought-after by collectors and can make for a good investment if you’re knowledgeable, particularly if it was owned by someone famous or has a racing pedigree coupled with good looks. Also look for cars that are barely used and in a good condition, to save money on restoration and repairs costs which can ultimately end up in a loss.

 

What to look for when choosing a future classic?

To pick a future classic car, you should think ten years ahead – what cars do people want to buy but can’t afford right now? Sports cars, such as BMW 6-Series & Aston Martin DB7, can make for a good future investment, however, this depends on a variety of factors still.

Also, check out limited-edition supercars that are produced in low numbers and higher prices, like McLaren. If you want a cheaper option than luxurious & exotic cars, then look for a top-condition used car with minimal depreciation and the one that will hold its value in the future, but also has that blend of desirability, rarity, looks and quality.

 

Investing risks

Most of the cars for investing purposes don’t come cheap, and knowing which car will turn into a classic requires a lot of research and market knowledge, and even then it’s not guaranteed that your predictions will come true.

Additionally, classic cars can require a lot of maintenance and change of different components, so that can cost a hefty sum if you’re not maintaining the car yourself. Factor in servicing costs, road tax if applicable, insurance, fuel, and it can all add up, deeming the car a loss. The cars also can’t be left to rust in a garage for long and need to be taken out for a drive once in a while, and you should switch the engine on at least once a month to keep them in a good condition.

 

Conclusion

If you’re a car enthusiast who has deep knowledge of the cars, trends and the market, as well as the know-how to carry out the essential repairs and have the cash to spare, it can be a worthwhile opportunity. Always keep in mind that investing means also accepting that there’s a risk of losing the money. The good thing with cars is that even if it depreciates and you don’t make a profit, you can always enjoy it yourself.

 

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