NEW YORK (MainStreet) — Lots of people want to own classic cars. Few are able to make it happen. Even fewer know exactly what they’re in for when they sign on for the job. While owning a classic car can be fraught with challenges, it can also be one of the most personally fulfilling and rewarding purchases a person can make. If you’ve ever thought about buying a classic car, here’s everything you need to know about financing, finding the right car and predicting how much it’s going to cost you to maintain your new dream come true.

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How to Pay For Your Classic Car

“There are a number of options short of paying cash,” says Todd Nelson, chief business development officer with LightStream.com, a division of SunTrust Bank. You can liquidate your savings or investments, or even tap into the equity of your home. However, none of these is a super attractive option. A better one is to directly finance the vehicle. The problem? A lot of traditional, brick-and-mortar lenders aren’t into giving out loans for classic cars.

“Most lenders approach car loans from a collateral perspective,” Nelson explains. The problem here is that for cars, the value is based on the Kelly Blue Book value -- at least as far as the bank is concerned. However, it can be very difficult to get an accurate assessment of a classic car. The market value isn’t so much anyone’s guess as it’s a less objective measure, especially if it’s not fully restored.

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LightStream.com offers unsecured loans for classic cars starting at 1.99% interest.

Finding the Right Car

Now comes perhaps the most difficult part: finding the right car. John Kraman of Mecum Auctions points out that even in a specific era, there is a wide array of choices. Kraman points out, however, that in the Internet age, it’s easier than ever to narrow down precisely what you’re looking for.

Karl Brauer, a senior editor with Kelly Blue Book, a name virtually synonymous with the value of a car, raises a basic question to help you narrow down what you’re looking for: “Is this a long-term investment or just a hobby?” If the latter, you don’t need to be as selective -- you just want something that you like that isn’t going to be a money pit.

On the other hand, Brauer points out that if you’re investing, you want something that’s going to increase in value. In this case, it’s far more important that you know exactly what you’re getting. “If you’re buying a fully restored, all-original 1965 Mustang, you need to make sure that it’s actually a fully restored, all-original 1965 Mustang,” he said.

Doing Your Due Diligence

Any time you buy a used car, especially from a private seller, you need to be sure that you’re buying a car that isn’t going to be a massive money pit. This is even more crucial when it comes to buying a car that might be 40 or more years old.

Other than just tire kicking, Kraman suggests that you ask for any documentation that might exist on the car, starting with that most basic of information, the VIN. VINs were formulated differently in cars before 1980, so obtaining things like a Carfax report can be difficult when you’re buying a classic car. In the final analysis, unless you’re a gearhead yourself, you want to find a seasoned mechanic who specifically deals with classic cars and have him take a look at it. The couple hundred bucks you spend can make all the difference in the world, saving you thousands or even tens of thousands of dollars in the long run.

Insuring Your New Old Car

The good news is that it’s significantly less expensive to insure a classic car than a late model vehicle. According to Kraman, this is in part because you just aren’t going to drive a classic car as much as a late model vehicle. “Insurance is a surprisingly straightforward process,” he says, adding that you should always go with an insurance company specializing in classic cars for the best price.

Brauer concurs, suggesting Hagerty and Grundy as two insurers for classic car owners. “You’re going to get a much better rate, especially if you don’t drive it a lot and it’s in a locked garage,” he said.

--Written by Nicholas Pell for MainStreet

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