So you have spent hours watching “Fast and Loud” and “Dallas Car Kings” and “Chasing Classic Cars”, and the Mecum auction runs in your house like CSPAN runs at Nancy Pelosi’s house – all of the time. After such a glut of classic car buying shows, you are finally onboard – and you have come to a classic car insurance expert to help you decide if you can even afford to own a classic. Insurance is expensive, right? Wrong. Assuming you aren’t purchasing a $3 million dollar classic, your insurance will be fairly inexpensive, as I have said before. However, there are other things you need to look out for when buying a classic that can certainly cost you money in the long run. Hopefully your humble author will help you avoid some of those pitfalls.
1. The first thing you need to do is research. It’s not hard to find a classic that you like – heck, I see a few cars that I’d like to buy just about every day – and sometimes, I have acted upon that impulse. Since buying my first couple of cars (and learning afterwards what kinds of mistakes I made) I have instituted a firm “You had better research it” rule before purchasing anything. Yes, classics look supercool, but a lot can be masked by a good cleaning – you can get so impressed by the car that you overlook all of the bad stuff. In todays internet age, it’s very easy for you to find a group of enthusiasts for every car. Take advantage of that; look, learn, and chat a little. Unless you are looking at a car that is only available every 20 years or so, take a breather and do some learning. My first ‘classic” was an automatic Porsche – and the piece that makes the automatic run is a giant rubber bagel. That giant rubber bagel is 2 things; expensive and fragile after 30+ years. Had I known that before buying the car, I would have bought a standard, and saved myself a $3500 repair bill. That’s where the research comes in. Learn before you buy.
2. Inspect the car. This may seem like a no brainer, but with a lot of classic car purchases, the car might not be close enough to you to easily do an inspection in person. Photos can be deceiving, and might not show you all of the little things that the car may need. Tires can be cracked, there can be small rust and dings that aren’t readily apparent in the photos, and paint will shine even on a bad car if the photo is taken in the right light. It’s important to look under the car, check for rust and leaks, and etc. If you are not local, there are services close to most major cities that will inspect the car for a fee. However, before you pay one of these services, you should ask them what their inspection entails, and go over the specific items you are looking for on the car you are considering.
3. Purchase your car. Most people buying classics have been saving up the money for a while – and whether your budget is for a “project” or complete car, you need to move pretty quickly, especially if you are looking at a rare and/or desirable model. If it’s nice enough for you to buy, there is probably someone else considering the purchase as well. Once your inspection questions are answered move quickly; make an offer right away. If for some reason you don’t’ have the cash to make the purchase outright, there are companies that will finance a classic – but you want to have that all lined up before you find your car. Then once you find it, you don’t have to wait for approval. If at all possible, try to negotiate with cash, because waving a preapproved check doesn’t get you the best deal – but fanning a handful of hundreds tends to get the seller’s attention.
4. Arrange to get it to your house. There are multiple shipping companies out there that will ship a classic (or anything else) you want to get across country. There is even a chance you will get on TV if you accept the right bid. That’s assuming your car is an ultra low mileage example, or undriveable. If it’s a good, road worthy car, simply ensure you have roadside assistance on your policy and fly in to get the thing and drive it home. Enjoy your honeymoon with the car, plan a vacation around it, and enjoy your new purchase. There is nothing quite like a road trip in a classic, and there will never be a road trip that is more exciting than your first trip in your new old baby.
5. Arrange for storage and maintenance. This should probably be done first, but it’s an important consideration. I assume you have a regular car that you will be driving on the regular, and that it probably lives in your garage. ?Unless that car (or the wife’s car) is getting the boot, you need a place to store your presumably expensive new toy. There are many storage facilities and many levels of storage – everything from air conditioned storage with “car exercisers” to start your car and keep it running, to places that have enclosed storage with nothing more than a roof and 4 walls. In addition to storage, you need to arrange for maintenance. Lots of mechanics have no idea how to work on a classic – so you need to find a specialist. Ask around at car shows and see who your new friends use.
6. Get insurance. I guess this should have happened when you bought the car, but you do need insurance. Don’t just “put it on your regular policy”, because most “regular” policies don’t cover classics as they should – you will most likely end up on an actual cash value policy – which means that your car is paid out on the cost to purchase another – less depreciation. That’s the part you need to be worry about. Depreciation is the killer there; by definition a classic is an old car. If they depreciate it at the minimum of 1% a year, you are losing value there. Instead, do it right and call a classic insurance expert. When you put a car on a classic policy, you arrange for “Agreed value” coverage – which ensures that you are covered for what you have in the car. It’s a good idea to think realistically as well and remember that while you got a good deal today, you might not be able to get one in six months. Plan (and insure) accordingly. Most classic cars tend to appreciate in value, so insuring for what you paid today could make it hard to find another should something happen.
Obviously, these aren’t all of the things you need to consider when purchasing a classic (or exotic) car. These are the mechanicals you should consider. I’ll do another post soon that delves into the best ways to make an “investment” in a classic. There is much more to consider on that front, but for now if you already know what you want, this list should help you make a wise purchase. When you find your dream car, I look forward to talking to you about how best to protect it.