Investing In Cars: How To Avoid A Money Pit


Investing in cars

While most cars are straight-up money pits; it costs money to drive them, insure them, maintain them, and they depreciate like crazy! But not all! There are some cars in the world that can be considered an investment. They hold their value very well or even appreciate over time. This post is not about a list of cars you can buy as an investment (I’m creating a list as we speak, I’ll share it later with you). In this post, I’ll describe the common pitfalls when you are investing in cars.

1. Insufficient research

  • Mistake: Jumping into the supercar industry without sufficient homework and due diligence.
  • Solution: Supercars have stories, histories, and legacies attached to them. By researching, you can learn about model-specific quirks and issues. Some models are more expensive because of their rarity or historic significance.

2. Overestimating Future Value

  • Mistake: To believe that every supercar will appreciate in value.
  • Solution: Automotive markets are volatile. The future value of a vehicle can be affected by external factors such as economic downturns and cultural shifts. Review auction results, predictions by experts, and sales trends of similar models before investing.

3. Ignoring costs

  • Mistake: Underestimating the possible upkeep costs like maintenance, storage, insurance, etc.
  • Solution: Supercars and vintage models in particular require special care. The parts can be hard to find, and the labor is expensive. A brand-specific mechanic will often be required to keep the vehicle in top condition. And also don’t forget about the costs of storage and insurance.

4. Falling for Hype

  • Mistake: Adopting industry buzz without critical evaluation.
  • Solution: Modern marketing can make even the smallest car look like a big deal. A balanced view can be gained by comparing multiple sources such as independent reviews and established auto magazines.

5. The Importance of Provenance

  • Mistake: Failure to appreciate the significance of a vehicle’s history.
  • Solution: Vehicles that have a rich history, whether it’s due to previous celebrity ownership, or their participation in notable races can command a premium. Documentation of a vehicle’s history can be just as valuable as that car itself.

6. Buy In Poor Condition

  • Mistake: Choosing an inferior model that is in poor condition and hoping the restoration will be easy.
  • Solution: Renovation projects can quickly spiral out of control in both time and cost. Before buying, it’s important to have a professional inspect the car. It may be difficult to fix some issues, particularly with older models. This could compromise the originality of the vehicle.

7. Ignoring Rarity

  • Mistake: Failure to factor in production numbers
  • Solution Models that are produced in small numbers can become highly sought-after collector’s items. It is important to know how many units have been produced and, more importantly, the number that remains in circulation. This can give you an idea of their potential value. You can find such number by searching Google or on Wikipedia.

8. Being Impulsive

  • Mistake: Making quick decisions while under the influence of the allure of a supercar.
  • Solution: Supercars are seductive but you must make calculated decisions. Joining or consulting with collectors’ clubs or networks can provide unbiased feedback about potential purchases.

9. Neglecting storage

  • Mistake: Storing in unsuitable conditions
  • Solution: Environmental factors such as moisture and UV rays can degrade the condition of a supercar. A proper storage facility with climate control, security, and other measures will preserve the integrity and value of your car.

10. Failure to Insure

  • Mistake: Not getting specialized coverage.
  • Solution: Standard insurance may not cover the unique risk associated with supercars and vintage models. Look for insurers that specialize in luxury cars or collectors’ vehicles, and make sure your policy takes into account the potential value increase.

Ready to invest in cars?

Investing in cars is a complex and nuanced world. Understanding the art, engineering, and market dynamics is more than owning a piece of automotive history. You can avoid the above pitfalls and ensure that you get both an exciting drive and a potential return on your investment. Good luck and don’t forget to enjoy the actual car by driving it!

Do you need a hand to find the right car for you? Take a look at our car finder service.

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