Insuring and financing your collector car
By Terry
Jackson • Bankrate.com
So you've found the perfect collector car for yourself
and at the right price. Before you buy, don't forget to factor in
the other two money issues behind any car -- insurance and financing.
It's mostly good news. It's just as simple to finance
and insure a 1968 Camaro as it is to do the same with a 2004 Malibu,
and normally less expensive. You just have to know where to go.
Insurance
Let's take insurance first, because that involves really good news.
It's cheaper to insure a $50,000 1967 Corvette than it is to cover
a new Toyota Camry. Rates for the Corvette can be as low as $350
a year.
"Insuring collector cars may be the big bargain
of the hobby,'' says McKeel Hagerty, CEO of Hagerty
Insurance, the nation's largest insurer of classic cars.
The reason: People who own collector cars take better
care of their toys than they do that 2004 Camry. "They love
them,'' Hagerty says. "It's like a member of the household.
They take care of them, so the risk is less.''
Here are the highlights of the types of coverage you
should get on a collector car:
- An agreed-value policy.
Simply put, you and the insurance company agree on what your car
is worth. In the event of an accident, you're covered up to the
dollar value of the policy. Don't get an actual cash value policy,
which is how most everyday insurance policies are written. That
allows the company to decide what your car is worth and that's
the maximum they'll pay out.
- Limited annual mileage.
Most collector car policies assume you will only be driving
the car for pleasure, largely on the weekends. On average, policies
have a 2,500-mile annual limit. Don't expect to use your collector
car as your everyday vehicle. The basic premise of collector car
insurance is that you have a daily vehicle that's insured elsewhere.
- Towing. No matter
what condition your collector car is in, at some time or another
it will break down. Get a policy that includes towing -- specifically,
flatbed towing, which makes it far less likely your "baby"
will get damaged in the process.
Also take into consideration whether the insurance
company is skilled at servicing collector car claims. When the fender
on that 1967 Corvette gets cracked, will the insurance company pay
for a top-level repair to return the vehicle to its original condition?
"A collector car program should have dedicated
claims adjustors who know collector cars,'' says Hagerty. "It's
not in the total loss -- it's in the partial loss. It's where the
better programs shine.''
Financing
When it comes to financing that collector car purchase, there are
a wide range of options, though most buyers pay cash.
If you're not swimming in cash, it might make sense
to tap a home equity line of credit. Not only will the rate be competitive,
but the interest may be tax deductible, unlike a conventional auto
loan.
Companies such as J.J.
Best Banc and Putnam
Leasing offer yet another alternative, specializing in financing
collector cars. And MBNA, the credit card company, even offers a
card that provides a line of credit that can be used to buy a car
at auction.
Some of the more structured finance options include
loans with terms to 84 months, or loans with smaller monthly payments
and a large balloon payment at the end.
Another intriguing option? Leasing that classic car.
Much like leasing any other car, this alternative calculates payments
for a set period based on an agreed residual value. But since classic
cars generally don't depreciate, the residual values are much higher
than with new cars.
One potential drawback to leasing: If the value of
your car goes up markedly, it could be the leasing company, not
you, that reaps the windfall.
| 
