- Car Loans
Your Guide to Buying a Classic Car
When searching for classic cars for sale you will also come across an array of classic vehicle finance offers. Unless you have researched the size of the classic car market you are likely to be surprised, very surprised. The worldwide market is currently worth around $34 billion annually and is expected to rise to more than $43 billion in 2024 (data Statista website). It is safe to say that New Zealand plays its part and has a very healthy classic car market.
In recent years the value of classic cars has increased significantly, and while there may be a short-term pause, many experts believe there is further upside in the longer term. So, what do you need to know when looking to buy a classic car?
What is considered a classic car in New Zealand?
When looking at the car collectors market in New Zealand, you will come across three specific groups:-
While the definition will vary slightly, in general, a car is deemed a classic car if it has been around for between 20 years and 45 years. To some people, this may seem relatively young for a classic car, but things change so quickly these days that you will be surprised!
An antique car is one which is more than 45 years of age. However, there is one more condition, like classic cars, they must also be maintained as close as possible to the original production model. This ensures that the body and characteristics of the vehicle remain relatively unchanged.
There is some debate over the definition of a vintage car. This was typically defined as a vehicle manufactured between 1919 and 1930. However, the definition has been extended to vehicles manufactured between 1931 and 1949.
This article focuses on classic vehicle financing, but much of the information is relevant to antique and vintage cars.
Why invest in a classic car?
While the appearance of classic vehicle financing on the Crester Credit website may surprise many people, there is a reason. The business owner is a collector with a deep understanding of the market. He has positioned the company in the collector car finance market, an area which is expected to show grow for many years to come. So while it is essential to look around for the best classic car financing, you will undoubtedly receive a competitive quote through Crester Credit.
There are three main reasons why people like to invest in old cars:-
The classic car sector is often seen as a luxury market and the exclusive domain of the rich and famous, but this is not the case. The K500 website provides several useful indexes which monitor the value of classic, antique and vintage vehicles. If you click on the link, you will see that, by far and away, the most lucrative vehicle in recent times has been the Ferrari pre-1958 model. This has increased in value by a staggering 700% since 1994!
Classic vehicle financing
Classic vehicle financing is easily the most popular, seen as an investment in style and a potentially lucrative asset for the future. As the market is very competitive, it is vital to research the terms and conditions available for your situation. Here at Crester Credit, we appreciate that not all customers will have a perfect credit history. However, since the vehicle will be used as collateral, together with additional security where required, we are open to negotiations with all potential clients.
Car restoration financing
We have also seen a significant increase in car restoration financing over the years, a potentially lucrative means of acquiring classic vehicles requiring repair. The idea is simple, buy a rundown car, restore it and sell it for a significant profit. If only things were that easy!
There are several issues to be aware of concerning restoring a vehicle. First, do you have the required experience? Could you afford a professional restorer? Will the appropriate spare parts be available? In theory, classic car restoration can be lucrative, but it is certainly not as easy as many would have you believe.
Popular classic cars in New Zealand
Such is the size of the New Zealand classic car market; it can be challenging to know where to start. The Hagerty website publishes an annual bull market list of classic cars to watch out for. Some of the vehicles from the current list, expected to be popular on a global basis, include:-
• Maserati 3200 (1998-2002), price range NZ$18,000 to NZ$53,000
• Porsche Boxster (1996-2004), price range NZ$9000 to NZ$25,000
• Volkswagen T3/T25 campervan (1979-2002), price range NZ$10,000 to NZ$47,000
• Mini Cooper (2001-2006), price range NZ$1800 to NZ$13,000
• Renault 4L (1961-1994), price range NZ$5600 to NZ$16,500
• Rolls-Royce Camargue (1977-1986), price range NZ$50,000 to NZ$140,000
This is just a small selection of classic vehicles which are proving to be popular amongst New Zealand car collectors.
Classic cars for sale – what to look out for
Like many other investment sectors, the Internet has brought the classic car market to homes and offices across New Zealand. A quick search of the Internet will see thousands of vehicles for sale. While many of the offers seem “too good to be true”, it is vital that you go into the transaction with your eyes wide open.
Here are some quick tips for those looking to invest in a classic, antique or vintage car:-
Make sure you get a professional inspection
Whether you can take a friend along with vehicle experience, or a professional third party, this is very important. Unfortunately, we have encountered scenarios where individuals are blinded by the prospect of owning a classic car, ignoring a simple professional inspection. This won’t take long and is unlikely to be expensive, but it could save you from making a big mistake.
Make sure you have insurance
As many loans for classic cars are agreed upon in principle before making an offer, it is essential to remember insurance. Aside from the fact that driving any vehicle on New Zealand’s public roads is an offence without insurance, you need to protect your investment. Consequently, when looking at classic vehicle financing you should research classic car insurance at the same time.
Don’t skip the test drive
It can be very easy to get blinded by the occasion, a spick-and-span polished classic car, ripe for buying. “Make an offer before it goes” was the cry from the seller, but don’t skip the test drive. A relatively short test drive will likely help you identify potential problems. While some of these problems may not be insurmountable, they may allow you to negotiate a lower price. Don’t skip the test drive!
Research the vehicle
Remember, when researching classic cars for sale, the seller will fight for the best price possible. Whether they are an expert in this field or relatively inexperienced, you must do your research before making an offer for a classic car. In some instances, your research may force you to withdraw from any potential offer if the spare parts are unavailable or there is simply no demand for the vehicle. Many forums, blogs and websites offer advice and guidance on classic cars; make sure you use them.
Run the VIN (Vehicle Identification Number)
The process of buying a classic car is, in theory, no different from buying a modern vehicle. Consequently, one of the actions you must take is to run a check on the VIN and obtain a history of the car. Unfortunately, scammers occasionally switch VIN information, although a simple check will likely alert you to any potential problems. While we expect the seller to be honest and upfront, don’t leave yourself exposed by not carrying out simple checks.
Get an expert to do repairs/maintenance
As we alluded to above, there has been a growing demand for car restoration financing as many people look to make a quick buck. Unless you have extensive experience in this area, you should price the cost of a company to repair, restore and maintain any classic vehicle. Unless you have additional funds available, you could be left with a potentially restorable classic car left to rot.
Have you thought about storage?
You will often hear classic car collectors discussing storage facilities for their vehicles. This may seem like overkill to some people, but in reality, any classic car will need stable storage facilities. This ensures that the vehicle will be retained in the best condition possible. The better the vehicle’s state, the more valuable it will be if you consider a sale in the future.
Avoid the scammers
It is no understatement to say that scammers have become highly creative with their criminal activities in recent years. When considering that the cost of a classic vehicle could be in the tens or hundreds of thousands of New Zealand dollars, it is important to be on your guard. Some of the more common red flags include:-
• Meeting in a public place to discuss the sale
• Insisting on a cash payment
• Discrepancies with the ownership documents
While many potential issues with scammers are obvious with hindsight, you must take precautions and withdraw at the first sign of concern. There may be legitimate reasons for particular problems, but addressing these as soon as possible is crucial. Don’t part with your classic vehicle financing until you are sure everything is in order. It might even be an idea to use one of the many escrow services available as extra protection, for both parties.
What does the future hold for classic cars?
As you’ll see from the K500 classic car index, the performance of individual vehicles has varied widely over the years. In general, there has been significant growth over the last decade, although some cars have recently experienced a period of consolidation. However, demand is expected to grow as more vehicles drop into the classic car section.
Unfortunately, the ongoing cost of living crisis, and slow increase in base rates, may not help what is still seen by many as a luxury market. However, the sector has been through numerous difficulties in the past and survived intact. There’s also the fact that as time passes, vintage, antique and classic vehicles will become rarer. The scarcity of some popular older cars will help support prices. So there is the double whammy of the ever-growing interest in the classic car market and, in many cases, an ever-reducing number of older vehicles.
When looking to finance old cars, Crester Credit has expertise which is unmatched by many rivals. The company’s owner is a collector of classic vehicles; hence he has a deep understanding of the market. In addition, the fact that the car itself can be used as collateral has helped many people secure loans, even if you have a challenging credit rating.
by Mark Benson
June 24, 2022
Mark previously enjoyed 15 years as a stockbroker/financial adviser and still maintains a strong interest in all things financial. Over the years, he has written about subjects such as property finance, loans, pensions, insurance, stock market investments, tax planning and more. Mark believes it is essential to keep up with the latest financial regulations and adapt your finances accordingly, something he portrays in his financial articles.