When you begin to consider a car purchase, particularly when that car is an investment like a classic car, you will be faced with the decision to pay cash or finance. While that are certain advantages for each option, the case for classic car financing is pretty strong. Some of these pros and cons will not be a big deal for you; however, you may find that some can be deal makers or breakers. The informed consumer is the happy consumers so before you sign on that line or shell out the cash, take a few minutes to weigh your options.
Paying Cash for your Classic Car
Some people feel that paying cash for a car is the optimal path to car ownership. This is not always the case, though, particularly when dealing with classic cars. While most classic cars are investments and not likely to depreciate in value after purchase (as is the case for most current car models), there are still some significant cons.
Pros: You pay the exact price with no interest. If the car is $100,000 then that is what you pay. You don't have a monthly payment to worry about.
Cons: If you take that same $100,000 and invest it over about the same amount of time that you would finance you could find yourself walking away with more money that you would pay for that car were you to finance it. It's like making that money back.
Paying for a vehicle up front can put a substantial dent in your savings. If you suddenly find yourself in an emergency where you need money and your savings is depleted it could put you at financial risk.
Paying in cash means that you have no opportunity to build your credit. It also means that you miss out on the opportunity to build a rapport with a lender so if you need a future loan at a later date, you will be starting from scratch.
Getting Classic Car Financing
There can be great advantages to getting classic car loans. Yes, you will be paying over time, but you will also be building your credit and will have room in your budget to jump on other investments that will make you even more money. If all of your savings is tied up in a single purchase you could miss out of some great investment opportunities. There are other advantages though, so let's take a look.
Pros: A classic car loan will give you a smaller monthly payment instead of making one huge lump sum purchase.
Financing allows you to purchase a better car that you may otherwise not be able to buy outright. In other words, it would allow you to pay for a better investment and a nicer classic than you would if you just paid cash.
You can get lower interest rates and build your credit while establishing a relationship with a lender who can help you down the road with other investments.
Cons: You are locked into a payment plan for as long as you are paying off the car.
Until the vehicle is paid off the lender owns the title. This can create some difficulty if you decide to sell the car. However, if you are working with a great lender, that typically is not a problem.
Take the first step and find out what you can afford when financing your next classic.
If you own a collector car then do look for collector car insurance from Leland West Insurance. Collector car insurance will ensure you afford any possible damage which can occur with unfortunate incidences such as accident or like that, which can weight your pocket. Believe us you'll never regret putting the time and effort in, and your lovely new motor will certainly thank you for it, too!
To learn more, please visit here: https://www.lelandwest.com/