Profiting from classic cars

Posted by Elizabeth Harrison in Personal Finance on 24 July 2014 - Elizabeth is a Senior Credit Analyst at checkmyfile.

When you buy a new car, you drive it out of the showroom and lose thousands of pounds from its value. A few years later and your new car may only fetch half of what was paid. But buy a car that’s 20+ years old and the reverse may be true. Show it a bit of love, care and attention and chances are you’ll be adding to its value. This may not apply to the average, beat up jalopy but classic cars are proving a profitable asset attracting the attention of investors wanting to move away from more volatile markets such as gold.

At the top-end, classic cars are doubling in value in just a few years, with the value of some increasing tenfold in just a decade but it’s not just the fancy pants Porsches, Ferraris and Aston Martins. Don’t rule out the humble Ford Fiesta and the good old VW Golf just because they’re a little more humdrum. The value of earlier models of these is also on the rise and a classic car from the 60s, 70s and even 80s bought for a few thousand pounds a decade ago could be worth far more now.

The better the condition, the higher the price and only those in immaculate condition are going to fetch top dollar but an increase in value of any amount is surely welcome. So, your car’s worth more than you thought. That’s good news isn’t it? But what if something were to happen to the car? Is your insurance going to cover the car’s increased value?

Unless you’ve kept on top of market trends then you may not be aware of the increase in value and even if you are aware, has this change in circumstance been updated with the insurers? Automatic renewal of insurance policies doesn’t just mean you may miss out on better deals. It also means the car’s value is not being readjusted. So if worse comes to worst and the car is damaged or stolen, the value covered is far less because the limit of the cover has not been amended. When the difference amounts to thousands of pounds an up-to-date valuation may not be such a bad idea.

True, the cost of insurance will likely increase but classic cars are often more than just a means of getting from A to B for their owners. Even though a replacement may not have the same sentimental value it’s good to know that if the car were to be involved in an accident, any claims would be based on the car’s true value. Plus it sure is nice to find out that the car which you may have spent a lot of time, effort and money restoring and maintaining is now paying you back. So, tempted to find out what your car’s worth?

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