Financing a classic car can definitely be an investment opportunity if done right. You will need to do your homework, but it can be very rewarding if you are able to own an old classic car and it becomes an investment. Typical cars lose value due to depreciation, but collector cars usually do not lose value. I'm not saying that all gain value, but they generally do not go down in value. In this article I will help you understand the classic car market, how to find investment opportunities, and how to secure a low rate loan making the classic car purchase a real investment opportunity.

The most highly collectable classic cars are original stock models. Cars with unique and rare options or limited edition models add more value to the original stock model. Take the 1971 Hemi 'Cuda as an example. Only 119 of these were built, with 11 of them being convertibles. The original coupes command $100,000+ but the convertibles value are off the charts. The last auctioned 1971 Hemi 'Cuda convertible commanded 2.2 million dollars in 2007, and I believe there are only 5 known convertibles in existence. If you were able to find one of the other 6, which is highly doubtful because they have probably been crushed and destroyed, you would have a truly classic and valuable car.

Of course you won't find a model this rare, but that doesn't mean there are not other opportunities in the market to make an investment. There are many old cars that need to be rebuilt to be a sweet ride, and finding original cars to be restored is not that hard. Even though more and more are being restored, they can still be found. Generally the bigger the engine, the more valuable a car can be. Putting a larger engine in a car that was originally built with a smaller motor will not increase the value of that car much more. What engine the car was originally built with can be determined by the serial number of the car and/or the body plate tags. On many models there are other codes on other hidden parts of the car, like the firewall. Do your homework on the models you are shopping around for to know what to look for.

Many times, the engine will also be stamped with a serial type number denoting when it was manufactured, and the number may coincide with the VIN number of the car. This is another great way to figure out if you are dealing with a pure stock model or not. Many muscle cars of the late 1960’s and early 1970’s had their engines pulled and bigger engines were put in for racing. Today, these cars are being converted back to stock form by hobbyists, but it is almost impossible to find the original engine to put back in. A car that has all the original parts is usually termed “Matching numbers car” or something similar. These are the cars that can be the most valuable once restored.

Clones are reproduced versions of rarer collector cars. Some clones that are often reproduced a lot are Yenko’s, Buick GSX (especially Stage II’s since there were only a handful built, and the original’s command $500,000+), and Chevrolet SS models. Usually a basic level model of that series is used, and the larger engine, badges, and colors are used to reproduce the rare model. Don’t be fooled by these. They may be cool, but are not worth that much, at least not as much as the originals. Mostly fans and hobbyists create these. I am not a big fan of them, but they are what they are. What irks me the most is when owners do not come outright and tell this about the cars in auto shows. On a closer inspection especially if you are ready to buy, these clones should be easy to spot. Most buyers who have done even a little bit of research know how to spot an original model, and if you are buying something that expensive thinking it’s the real thing, you will likely want to have a professional appraisal and inspection on the car as well. They will do a detailed analysis and confirm whether it is original or not.

So the two options you have on finding an original stock model is to buy a car that needs restoration, or buy one that is already restored. Both have their positives and negatives, although those positives and negatives may be different between purchasers. Buying a car that needs to be restored will obviously be cheaper in the beginning, and likely you will not need to finance the purchase if it is only a few thousands of dollars. The big question then becomes, are you ready to do the restoration? Do you have the money to do this, or will you finance it? Are you mechanically inclined and planning to do most of it yourself, or know a good mechanic or buddy that can help? Or are you a clutz when it comes to mechanical work, and want to have it fully restored professionally? You will save a lot of money if you can do the work yourself, and I’m willing to say you will probably love and appreciate that newly restored ride just that much more with your sweat and blood put into it. Professional restorers can cost quite a bit of money, and it is not always worth it on every car to use. You will want to price check and do the research on how much your restored car will be worth before determining if a professional restoring company is the right choice for you.

So the title of this article is questioning how a classic car loan can be an investment. Considering the value of classic cars over the last 15 years or so have gone up 10% to 15% a year, borrowing money at 6% to 8% (A typical classic car loan) can be an investment if what you are purchasing is rising in value twice as much as that interest you are paying. You do need to do your homework carefully, and with the economic uncertainty we are currently in, there are no guarantees. But then again there are no certainties in almost any investment. The only other big tip I can give is to shop around classic car and collector car lenders if you choose to finance a purchase. You will find lower rates, longer loan terms, and overall you will have a better experience than going through a traditional lender. Specialty car lenders know how to value a collector car, and they specialize in the area so the transaction will be smoother.