When many people think of investing, they think of stocks and bonds. But there is a whole world of different assets to invest in, like rare cars. Rare cars are usually collectibles that may appreciate over time. They can also be great investments because if you ever need cash or want to sell your car at some point, it will likely be worth more than what you paid for originally.
Discussed below are five secrets to investing in rare and collectible cars.
1. Do Your Research
When it comes to investing, knowledge is power. For example, when buying a laptop, you will do your research. That is where you will find out about the features and specs and also other additions. And when you are looking at rare cars as possible investments, knowledge is even more important than usual.
Conduct extensive research to find out if the car you are interested in is an investment or not. One of the great things about rare cars is that they are very well documented. You can usually find out all sorts of information about a specific model, including how many were ever made and what it sold for, both new and used.
As you do more research, think of ways you can use knowledge of the car to your advantage. For example, if there was only one model year of a certain car, or if it is very rare, that means the supply is low, and the chances are good that you will be able to sell your car in the future.
2. Consider the Rarity of a Model
Different models may or may not be rare. Some cars were made in very large numbers and might still appreciate over time. However, certain cars were only made for one year, such as the Corvette ZR-1 from 1990, which was only made for one model year.
These cars were highly sought after, largely because of their performance capabilities and the limited production numbers. If you can buy a ZR-1 at its MSRP price now, it is likely that if you ever wanted to sell the car, you would be able to make a profit off of it because so few were made.
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Other models that are considered rare include the Porsche 959 and the Bugatti Veyron because only around 300 examples of each were ever produced worldwide. Even if these cars depreciate over time, likely, they will still appreciate because there are so few on the market. If you can get one at an affordable price, it might be up to you how long you want to hold on to the car.
3. Consider Supply and Demand
As with anything, supply and demand are something you need to consider when buying rare cars for investment purposes. If they made thousands of examples of a certain model, the supply is likely high, and the demand is low. Because of this, the price might depreciate over time if you ever wanted to sell your car.
However, if only a few examples were produced that no one knows about or sees as valuable, those cars would likely retain their value or increase value over time. The majority of rare cars fall somewhere between these two extremes, where there were enough made that the supply is still high, but the demand is also relatively high.
4. Look for Good Deals
While it might be tempting to buy a specific model just because it is considered a valuable car, don’t let it blind you to the possibility that there could be better deals out there. If you can find a rare or valuable model that is in good condition and has low mileage, then you might never again see such an opportunity.
If the car isn’t in your local area, you may need a car transport company like Montway or a similar provider to deliver it to you. As long as all the math works, the transportation cost is worth it. Just make sure that you know that all types of cars depreciate as they get older, even those referred to as “investment grade” or “collectible,” so apply that to your financial equation.
5. Do Your Due Diligence
Doing your due diligence goes a long way to ensure that you won’t end up paying too much for a car and that you will be able to get the most accurate information available.
This means consulting classic car values, asking the local dealer for numbers, and getting appraisal estimates if you know the history of the car, who originally owned it, why they are selling it. You are more likely to make informed purchase decisions than any other factors that might affect value.
The amount you pay for a car will depend on its condition, options, color, and rarity. If the car has low mileage and is in mint condition, it can retain value over time. Although all cars depreciate at some point, the consensus is that rare models tend to hold their value or increase in price because there are so few of them available. Regardless of what you decide to buy, remember that the value of your car is only one piece in a larger puzzle that includes factors such as the condition, options, and mileage.