What to consider when buying a classic car

Not all that glitters turns to a gold-plated investment

Buying a classic car is much like buying a house, you get an idea of what you want, look through the sales brochures, then go and view and if you see what you like, then your emotions kick in and your DA or ‘Desire to Acquire’ takes over.

Purchases of both houses and cars are concluded both privately and at auction, often subject to very specific contract terms, but at this point the DA kicks in for our classic car buyers and the paths converge, because a house buyer will almost always consult a surveyor to check over the property for defects and then a lawyer to negotiate the purchase contract and check the house for a valid title…. However, in our experience our classic car buyers do none of these things. The DA drives them on with the purchase of their chosen classic and often after spending well in excess of £100,000 they become the proud owner of a shiny classic car, without any real idea of its condition, the terms upon which it has been purchased, or its all-important provenance.

Initially, this may not appear to be a problem but when, after a short drive, frightening ‘clunky’ noises, or mechanical / electrical deficiencies can become apparent, the shiny exterior of the classic car that they have just purchased quickly starts to lose its patina. At this stage a specialist engineer is then engaged to comprehensively inspect the car and it is only then, after the purchase has been completed, that all sort of issues come to the surface.

Our classic car buyer then consults the seller, or the auction house where the purchase was completed, to receive a polite but short response which refers to the concept of “buyer beware”, or the fine print in the auction contract. At this very late stage lawyers are then instructed to advise about the purchase and often this is too late and nothing can be done.

So what do you need to do if you are considering investing in a classic car?

First and most importantly control your Desire to Acquire, and oddly enough, you do not need a therapist to do this!

Sound advice

My advice to clients is to adopt the following approach.

• Get a good understanding of the characteristics of the particular marque that you wish to purchase and its quirks and challenges. Much of this information is freely available on the internet, or from the secretary of classic car owners clubs;
• Having chosen your classic car, investigate the prices that are being paid for such a classic and have been paid at auction in the last few years. Auction houses keep tables of sale prices and classic car magazines have comprehensive prices tables which will give you plenty of useful information.
• Identify a specialist mechanical engineer who can advise you about your proposed classic purchase and who can carry out an inspection before the purchase. Once again they can be identified from classic car magazines, or classic car owners clubs;
• Consult with a specialist lawyer, who can advise you on which terms of purchase that you should impose if buying privately or, if buying at auction, what the auction terms actually mean! They may also have a stable of specialist motor engineers, of whom they have knowledge, to assist in the investigation and in obtaining the written valuation that you are likely to need, following the purchase, for insurance purposes!

This approach should not dampen your DA, but will help to control it and you will then be much better placed to acquire a worthwhile shiny investment.

Finally, I have referred above to the classic cars having an all-important provenance. This should be a very important consideration to any purchaser, because it will give the whole or part of the life history of the classic motorcar and when the car is sold will, if comprehensive, assist the sale and help it to retain its value.

So if you are told that the car has been rebuilt, you should ask to see the photographic rebuild history and then the receipts for the work that has been undertaken. This will identify the motor engineer who did the work and you will then have the opportunity before the purchase to identify if they have specialist knowledge. Also make sure that the photographs you are shown tie up with the actual car being offered for sale and that they will also be included in the sale! You should also check the engine and chassis identification numbers are correct, this is something which can often be done with the assistance of classic car owners clubs.

Taken from The Art Investor, 2012, Issue 1. 'Not all that glitter turns to a gold plated investment' by Philip Radford

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.