If you own a vintage or collector vehicle, then you know how important insuring your classic car is. However, before you purchase classic car insurance, you will need to consider how much your car is worth - especially if you want to have adequate coverage. With a modern car, you will need to account for depreciation when evaluating its worth, but with a classic car, it’s the opposite. Below, we explore whether classic cars appreciate in value and how this works.
Classic car appreciation
One of the main advantages of car collecting is that they are valuable assets. In contrast to brand-new, modern cars that depreciate in value extremely quickly, sometimes by as much as 20% in the first year alone, classic cars have the opposite trajectory.
A retro or muscle car actually gets more expensive every year, with some studies suggesting that classic cars can generate as much income as stocks or real estate investments. For instance, high-end vintage sports cars, such as Alfa Romeo or Bentley may appreciate by as much as 20% truly the opposite of a modern car’s depreciation pattern.
As long as you maintain your vintage car well, it is very likely to appreciate in value over time. Why? Largely due to the fact that collector cars have limited supply, as well as historical significance, both of which increase desire and demand.
For more information on classic car insurance and the costs of insuring a classic car, contact BrokerLink.
What makes classic cars go up in value?
If you want to make sure that your old car appreciates as much as possible from the time you buy it to the time you sell it, be sure to read through the list below. This list outlines the most important factors that contribute to classic car values:
Perhaps the most significant factor that determines the value of a vintage car is its condition. You could have the rarest Bentley on the planet, but the paint is chipped, it’s rusting, and it isn’t roadworthy, you will have trouble selling it for a profit. The reality is that most classic car collectors still want a car that they can drive - even if just for certain times of year.
Thus, vehicle maintenance on a classic car is of the utmost importance. If you do not have time to maintain the vehicle yourself, be sure to have a professional restore it before selling. One of the main things to look for when buying a classic car is a vehicle in excellent condition. For this reason, one of our top tips for buying a classic is to have a professional inspect the car you are interested in buying before the deal is done.
How rare the vehicle is
Rarity is the second factor that can make a classic car go up in value. The rarer the car is, the more valuable it’s likely to be. A car is typically determined to be rare if only a limited number of the vehicle were ever produced or if there are only a few that still exist in the world today. Further, the older the vehicle is and the fewer that are around, the rarer it becomes, and the more it increases in value. You should think about how rare the vintage car you want to buy is before you purchase it, especially if your goal is for the vehicle to appreciate as much as possible.
How popular the vehicle is
Contrary to what is written above, a popular classic car can also appreciate in value quickly. Generally, you want your classic car to either be rare or popular - both will serve you well in the long run. The reality is that iconic collectible cars, even if they aren’t rare, can still appreciate in value. The reasons for a car’s popularity range widely. For instance, the car could have experienced success in the racing world, it could hold historical significance, or it could have been featured in pop culture, like a famous movie or television show. If you don’t have the money to buy a rare classic car, and you’d prefer to purchase a cheap classic car model, consider one that is popular, as demand is likely to be higher for these.
The year that the classic car was produced
Age is a factor that comes into play, whether you are evaluating the worth of a modern car or a classic car. However, again, age has the opposite effect on value for both types of cars. Whereas an older modern car will be less valuable, the older the classic car, the more valuable it will be so long as it’s in good condition. That said, there are also specific years of cars that may be more popular than others, regardless of which one is older. For example, there are often tiny, subtle differences between models that come out in consecutive years. Some of these minor details could be enough to increase a car’s rarity, which means a car produced two years later than another might actually be worth more in the classic car category. Make sure that you research your classic car’s specific year to determine whether it is viewed as more or less valuable than the models produced in the years before and after it.
Mileage on the vehicle
Next, mileage can also determine a car’s value. This is one factor that applies to both modern and classic cars. The more mileage a car has on it, the less valuable it will be. Why? Due to the fact that mileage shortens a car’s lifespan. Thus, the more miles that have been racked up, the fewer miles remain on the car. That said, classic car owners tend to be forgiving when it comes to mileage, as high mileage is often expected given that many of these vehicles are decades old. Thus, a vehicle’s mileage won’t be factored into the same degree as it is for modern cars.
Upgrades or modifications
If any upgrades or modifications have been made to the classic car, it could increase the car’s value even more. However, not just any modification will result in appreciation. For collectible cars, there is a specific set of upgrades that will serve to increase the vehicle’s value. For example, new tires, a fresh coat of paint, a new air conditioning system, or swapping out the drum brakes for disc brakes are all examples of upgrades that are likely to contribute to the appreciation of your vehicle.
Buying the right classic car insurance for your vehicle
When you purchase a classic car, you will also need to buy classic car insurance. There are many types of auto insurance to choose from, as well as different deductibles and coverage limits. You will need to select the coverages, deductibles, and limits that suit your needs and budget, as well as reflect the rising value of your car.
For instance, when purchasing comprehensive car coverage for your car insurance policy, you will need to consider how much your classic car is worth to ensure your investment is protected. This way, if your car was stolen or suffered extensive damage while parked, you would receive an insurance payout that accurately reflects the value of your car, allowing you to fund a new car purchase if need be.
Further, it is worth noting that classic car insurance is a little bit different than standard car insurance. For example, most insurance companies have an age limit for classic car insurance it is usually around 25 years old. There are also other conditions that must be met to qualify for this type of policy, such as that the classic car cannot be your primary vehicle, which means that you may be required to purchase multiple auto insurance policies, or that the policyholder cannot drive it more than 8,000 kilometres each year.
To receive a free classic car insurance quote, contact BrokerLink today.
Get in touch with BrokerLink to learn more
If you’re ready to purchase an Ontario car insurance policy for your classic car, get in touch with BrokerLink today! We can explain how classic car insurance works, what you need to qualify, and how much it will cost you to purchase this type of policy. We can also outline how mandatory coverage, like liability car insurance works, and offer advice on what types of optional coverage might be worth adding to your policy.
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