Classic Cars — Still A Good Idea?

Interest Rates Are High — Inflation Is Out Of Control — Money Is Tight

Sound familiar?

Interest rates in the mid 1980s were 18%. 1980s Inflation was definitely out of control. Seemed like money couldn’t get any harder to get. We all lived through it. Looking back now, it almost seems like it was easier back then.

Just like any other item we spend our money on, an investment in a classic car needs to make sense. Reasons for those investments generally fall into one of three categories. Needs, Wants or Investment.

NEEDS: Most people consider a true “Need” as something such as a medical cost, home or vehicle repair, food, or some other thing that remedies an immediate cause for action. However, a “Need’ also includes something that either eliminates or reduces a future unwanted event, or situation such as a health issue. Most people reach a point in their lives, where they need a hobby, or goal in order to fill a void or extra time on their hands. Keeping your mind busy and your body moving, is one of the best medicines we have, regardless of age or youth. Giving a classic car attention and a little “elbow grease” is great therapy, even if simply keeping it clean. Attending car shows, and creating friendships with other car enthusiasts helps to keep a person’s mind and body healthy

WANTS: This is an obvious factor in financial decisions. Spending money on a something a person feels strongly about, justifies the reason for the hard work required to afford the purchase. Simply stated, you deserve it. So long as the purchase of a classic car does not create a financial burden, there is nothing wrong with filling a person’s wants.

INVESTMENT: We have all heard the stories of the guy that spent way more money on a car than it will ever be worth. I agree, there is a limit as to over spending on a classic car or anything else. However, since I do not golf, spending several thousands of dollars on clubs, memberships, carts, and trips seems financially irresponsible. Until you account for the experience, healthy exercise, and pure enjoyment a golfer takes pleasure in. You work hard for your money, and you should enjoy the rewards.

However, I firmly believe financial awareness should always have some role in spending. Any “project car” should have a realistic budget for completion. That budget does not necessarily have to be absolutely based on hard values, but should include any variables due to owner preferences, likes and dislikes. It is very easy to run over budget.

Many factors will affect the value of the car. Specific production year of the car can be a huge factor. A 1969 or 1970 Plymouth Cuda will always carry a higher valuation than a 1972 model. That does not make the 1972 a poor choice, just be very aware of the highest valued years of any car before making a purchase.

An all original car in excellent, low mileage factory condition will always retain a higher value than a restored car. Think museum quality. There are very few cars of that nature, whereas, you can restore as many others as you can find. The rarity of the original car carries a unique value that can not be duplicated.

Matching numbers refers to the casting numbers on the car body, frame, engine block, transmission housing and rear end housings all being the same. It is proof the car still retains the original components, which is a rare characteristic and adds a large value. Some cars will have a replacement component installed, but include the matching number component uninstalled. This is only of value if the original component is either functional, or can be made to be functional.

Customized cars will carry an undetermined valuation. They are normally subject to buyer appreciation of the customization. Customization by a reputable, possibly well known car builder will normally hold a higher value. Poorly done customizations will reduce, sometimes severely, the value.

Financially speaking, a classic car can still be a financial reasonable investment. Proper valuation and due diligence prior to the purchase is necessary. Retaining or even improving conditions is necessary. Remember, these are no longer being produced, so the ones that remain become more rare every year.

Most importantly, Enjoy Your Investment.

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All information provided is simply to assist any person. All facts and suggestions must be researched and verified prior to depending on them to make any decision. No information is designed to be considered as solid fact. Any reader is solely responsible for any and actions on their own.