Many motorists invest in classic cars because they are passionate about vehicles and want to have the satisfaction of owning a luxury, beautiful vehicle. This makes a lot of sense if you have a passion for cars, but are classic cars actually a good investment? Keep reading for all that you need to know.
What is a Classic Car?
First, it is important to define exactly what is meant by a classic car. In America, classic cars are defined as those that were produced between 1915 and 1948 and produced in limited quantities. This is slightly different in the UK with HMRC defining a classic as a vehicle that is older than 15 years with a value of £15,000 or more.
How Much Do They Cost?
How much a classic car costs is not a straightforward answer because the price can vary drastically based on many different factors. Age, condition, desirability, rarity and the current economic climate can all influence the cost of a classic car. As above, HMRC defines a classic car as one with a value of £15,000 or higher, but you will find classic cars selling for millions at UK auctions. In 2021, the average auction sale price was £45,648 (up 17%).
What are the Risks?
As with any kind of investment, there are risks that need to be considered. It can cost a lot of money to restore a classic car and issues can arise, so there may be ongoing costs that you need to make. Additionally, you need to consider where the vehicle will be stored to protect it from the elements and criminals. Capital gains tax could also impact the amount that you take home. You will also need to make sure that you have classic car insurance in place to protect your investment.
Are Classic Cars a Good Investment?
So, are classic cars a good investment? As this article outlines, the average sale price is currently high for classic cars and it is not clear if the market will continue to rise or not. Additionally, the extra costs mean that investing in a classic can be expensive right now. Despite all this, classic cars can still be a good investment if you plan on holding onto the vehicle. On top of this, if you are a car enthusiast then investing and tending to a classic car can be good fun and highly rewarding.
Ultimately, whether or not a classic car is a good investment or not will come down to your personal choice and financial situation. The costs can certainly be high, but there is the potential for profit and owning a classic car can be a great feeling for those that have a passion for cars.