Is Purchasing a Classic Car a Good Investment?

January 10, 2023

Is Purchasing a Classic Car a Good Investment?

Are you looking to diversify your portfolio with something more interesting than stocks or bonds? What about a classic car? Below, we’ll explain whether purchasing a classic car is a good investment and what to consider when buying a vintage vehicle.

Yes, But It’s Not a Given

While there are certainly plenty of people who collect automobiles as a hobby or as an investment opportunity, it’s far from a sure thing a guaranteed win. We generally think of cars as dubious investments, and for a good reason. But while a new car loses value the second it leaves the lot, it’s different with classics.

Buying a classic car is closer to buying an art piece than a new vehicle—its value can steadily increase and is a good opportunity to diversify an individual’s portfolio.

What To Consider When Investing in a Classic Car

Purchasing a classic car can surely be a good investment, but there are many things an investor should consider before buying.

Condition or Potential

The number one factor in determining a classic car’s current value is its condition, so if you’re not buying a vintage vehicle for its condition, you should invest in its potential. The oldest cars that are also in quality condition will be the most expensive. If you’re looking for an investment with high potential, consider a car of lesser quality but with strong restoration potential.

Maybe the car doesn’t look amazing now, but what if you put some elbow grease and money into a restoration project? Look at the restored market for a vehicle in poor condition and how much you’d have to invest to earn a profit on the vehicle.

Rarity or Desirability

Next to condition, the rarity of a vehicle is the biggest factor in determining desirability. Like any collector’s market, the rarer a collectible car is, the more prized it will be among collectors.

You may have a dream car in mind, but if there are still thousands available in quality condition, it’s not likely to fetch a high price at auction. But you also don’t want to go too rare with a vehicle where it doesn’t have any desirability. There are plenty of rare, experimental classics out there, but if they’re not particularly attractive or well-known, then their rarity is more of a hindrance than appeal.

Long-Term vs. Short-Term Investment

It’s nearly impossible to make money investing in classic cars if you’re looking for a quick flip—unless you have an incredible amount of money. Even then, there are probably better options to put your money in. It’s not like buying a house that can be flipped in weeks and sold for a profit.

There are some opportunities to restore a rare vehicle and reap the profits at auction, but the ones who do make money collecting cars do so by being patient and waiting for their vehicle’s value to rise as it gets older and rarer. The market viability at the time of purchase is also key, so consider looking at the Historic Automobile Group International index or the Hagerty index to get a feel for the classic car market.

If you’re ready to start investing, we can help! Ideal Classic Cars have plenty of valuable custom vintage cars for sale online or in our showroom in Venice, Florida. Browse our online inventory or contact our staff to set up a test drive today.