Buying your first Car or considering a Collector Car?

Portions of this article were originally published at HiCharlie.com“.

Buying your first car is likely the second biggest purchase a typical person will ever make. If you have not yet purchased a home, then it is the biggest. Purchasing a Collector Car is a little different than buying that first car for everyday use. One is an instrument of transportation while the other is a toy.

Which ever type of vehicle you are intending to purchase, a collector car will follow a much different process than will a family driver.

From driving on an isolated country road, or picking up your friends for a cruise to the Dairy Queen, to taking a road trip with your partner for a romantic weekend getaway — personal transportation is the ultimate freedom and luxury for many. A collector car is both more demanding and rewarding and adds entirely new social opportunities from car shows to weekend touring. Eighty-eight percent of American households own a car, and the average household has 2.28 vehicles and four percent of people who set a savings goal are saving for a daily driver car. Collector car folks generally have more discretionary funds and many collectors have more than one classic in their garage.

Before you rush down to a new car dealership or used car lot, it’s important to consider a major factor — the total cost. We will begin with a typical family car. On top of the initial purchase of your new ride, realize that owners typically spend an additional average of $8,100 a year.

Cost of Ownership

For a collector car, their is no way to calculate an average annual cost that will be of any use. If you purchase a collector car in need of restoration the annual cost initially will be far higher than one purchased after a concours restoration. However, the acquisition cost will also be considerably different for the two cars.

You might be asking yourself, “Why are even the typical family cars so expensive?” Let’s consider three key factors that will help you determine if you’re ready to buy your first car or add a collector car to your family garage.

Dude, Where’s My Car?

Parking: Family Driver

Where will your car be living and driving? Whether you live in an urban, suburban, or rural area, your needs for wheels can differ dramatically. If you live in a rural area, a daily driver is a necessity, driving longer distances may also impact the mileage and type of car (four-wheel drive, all terrain, etc.) that is best for you. In a densely populated urban area, you may not even need a car. If you do, you likely will not drive it as often or as far, but traffic and parking are additional important concerns. (City dwellers: Take a peek at your public transportation options; this might be the best route for your wallet!) Climate and terrain should also come into consideration when estimating total costs of your new car. Regions with heavy snow, muddy roads, record high heat, and other extreme conditions can all take a toll on your daily driver car, and the kind of car required. As for a collector car usually means it goes into long term storage for the winter and will see limited use during rainy days.

Parking: Collector Car

Many of the same considerations apply here as well but with slightly different expectations. A collector car is for hobby use and relaxation. By definition, it will not be used daily. You may require a temperature and humidity controlled garage for such a car depending on you location. What you are going to do with the car and access to car shows, scenic roads and other hobbyist will also play a part in your selection. If you are going to be working on or restoring the car your needs change considerably. You simply cannot pull a car apart, restore it and reassemble it in a small single car garage.

It’s not “Used” It’s “Vintage”

Depreciation

You might be picturing yourself cruising along a windy coastal road in a brand-new, shiny car or a beautiful collector car convertible. But, the reality is you might need to take a good hard look at your income and budget. A new car, used car and collector car will all have different use limitations and expenses. The real risk takers may decide they want to use a collector car as their primary daily driver. When weighing the pros and cons of going new, used or collector, consider short and long term car depreciation cost. This cost can also vary considerably by the brand and model of car selected. Cars depreciate (decrease in value) the second they find a new home (or are driven off the lot). A brand new car is typically 20% less valuable as soon as you drive it for the first time. This factor alone could be enough to steer you away from going to the new route.

However, if you purchase a fully restored collector car and turn it into a family car for daily use the depreciation could even be more substantial. A used car will also depreciate but at a much slower rate.

Safety

Another factor to weigh when considering a used or collector car as a daily driver is the safety features included or missing in each vehicle. Some older collector cars may not even have seat belts, collapsible steering wheels or energy absorbing collapsible bodies and most certainly will not have air bags.

How do I find my car?

Also consider the time, effort, and vetting each requires. New cars can be easier to shop around for, and dealerships offer the safety net of warranties and other perks. Used cars may not offer the same warranties, and you’ll have to do extensive research to access the background and health of the car. Be sure to run a full consumer report to get a clear understanding of what issues the car may have had (or not had) in the past. Shopping for a used car or collector car can be a bit trickier, you may find better prices and lower insurance rates.

As for collector cars, you should have a very knowledgeable car person help you. Unfortunately, like used cars in general, there are many unscrupulous sellers of used cars and collector cars who purchased worn out, rusted vehicles and simply dress them up by making visual improvements such as new tires and new paint. These cars may be unsafe and not road worthy for regular use. You should also realize that the older the car the more regular maintenance will be needed. Fluids will need to be changed more often, tune-ups far more often, chassis lube, and higher priced fuel is likely.

Determining whether or not you’re ready to buy your first car, a second car or a collector car can be a big decision, but making sure you have the full picture on costs and how they may impact your budget will help you decide whether the time is right.

The Gift That Keeps on Taking  

After driving out of the lot with your new car that’s that… right? Think again! The used car and collector car will also demand additional expenditures. Here are some of the costs that might make you smash the piggy bank down the line:

• Parking: If you commute regularly to work or other don’t have free parking near your home, you may have to face consistent parking fees. In urban areas this can be extreme. In 2017 drivers in New York City spent an average of $5,395 on parking for the year. Drivers in Chicago, San Francisco, and D.C. spent an average of $2,000-3,000, and drivers in Atlanta spent $872. A valuable collector car can not be left on the street but could be stored in a commercial building away from your residence since it will only be used for recreational purposes.
• Maintenance: According to AAA, the average car owner will shell out just over $1,000 to keep their car in good shape every year. This will likely be higher for older and collector cars.
• Fuel: Drivers should be prepared to spend at least $1,500 a year on gas. Fuel is a necessary evil — you can’t drive your car if it won’t start! Most older collector cars require high octane full and many require fuel without ethanol all of which makes the price per gallon higher.
• Other Fees: Don’t forget about yearly license and registration costs, oil changes, and smog checks! These costs can vary wildly from state to state. Some states offer a very inexpensive collector car registration fee but also limit the annual miles the car can be driven and for what purposes it can be used for.
• Insurance: Car insurance is required in all states (except New Hampshire), but it can be far more expensive to risk paying for damages in an accident without it. And, it’s illegal! Standard insurance typically runs just over $100 a month for a family car. But depending on the type of car you purchase, where you live, and your previous driving record — your rate could fluctuate quite a bit. A collector car may also be eligible for special antique auto insurance at a drastically lower rate. Again, miles driven will be limited and other restrictions may apply as well. There are also tons of additional coverage options for injury, accidents with uninsured drivers, towing services, and more.

Paying for your car

If you have been diligent and saved up enough funds to pay cash for your car you are rare but smart. If, like most, you need to finance your car, one way to save lots of money on any large purchase is to shop for the best financing. DO NOT FALL FOR THE TYPICAL SALESMAN’S QUESTION: “HOW MUCH TO YOU WANT TO PAY PER MONTH?” SCAM!

Tell him politely that you want to lowest price of the car and then you will talk financing. You should even get pre-approved for a total amount you would like to pay for your car. That way you can focus on the price of the car and not worry about payments. The dealership may have a good financing option or your bank may have a special rate for regular customers. There are even special collector car lenders who finance collector cars at very reasonable rates. The amount of your down payment will always make a difference.

The biggest thing to watch for is the monthly payment scheme. The ploy goes like this: How much do you want to pay per month? A dealer can almost always make this work. They toss in a bunch of fees, raise the interest rate and extend the length of the loan. Your monthly payment may be slightly higher at one lender than another but the first one may be for 48 monthly payments while the cheaper payment is for 72 months! The total cost with the second lender will be considerably higher.

Now Have Fun

Once you have the keys to your car, go enjoy it and be safe.