Keep your Classic Close
It’s every boy’s dream to one day own a high-performance car, but it’s every man’s ambition to have a classic car parked in the garage. And after a decade of sustained growth, investing in classic and vintage cars is no longer the risk it once was, with the global market now running into billions of pounds.
“Classic cars are increasingly being seen as a sound and sensible investment,” explained Mark Walker, Head of Sales at Close Brothers’ Leasing division. “They’ve outperformed more traditional investments, including equities, fine art, watches and real estate.
There are only a finite number of vintage cars and with ‘barn finds’ becoming far less common, demand is outstripping supply. Add to that the global growth we’re seeing with investors from new markets showing strong interest, it’s easy to see the appeal of classic cars.”
According to a recent report by insurer Footman James, the increase in classic car values in recent years is attracting more to invest. It claims one in five of those it polled were considering buying a classic and three in five who had bought one said low returns on their savings encouraged them to take the plunge.
Take for example classic marques like Ferrari and Porsche – these returned their owners 10.95% and 19.81% respectively in 2015.
But even more modest classics, for example the Peugeot 205 GTI and Morris Traveller have also all risen by more than a third in value. They join a collection of expensive but potentially achievable classics such as the Jaguar E-Type, Austin Healey 3000, Porsche 911 and Fiat Dino on the list.
“We’re currently operating in a historically low interest rate environment,” continued Mark, explaining the rise in returns. “The traditional financial market is also not as stable as it used to be, while globally there has been large increases in personal wealth.”
Let’s not forget the fun factor; these are enjoyable vehicles that owners love to show at an increasing number of sporting events and shows.”
According to Mark, there is no such thing as a ‘typical’ investor and every deal the company structures is unique, which is typical of Close Brothers’ approach in all the sectors it operates in.
“The business appreciates that each individual will have their own requirements,” said Mark. “Our job is to present our customers with a solution that they recognise as being exclusively for them."
Close Brothers Leasing can finance vehicles either through customer’s businesses or as an individual, with typical profiles ranging from 12 months to as long as five years.
“The loan-to-value is typically between 50-80%, dependant on the covenant supporting the deal,” explained Mark. “Hire Purchase is our preferred funding method and can be on a fixed or variable rate basis, but interest-only repayment terms are also available.”
By way of example, the company is working with someone who has a collection of well over a 100 cars in the UK. In the current low interest environment, wanted the cars to work for him to raise funds to expand his property portfolio.
“We understood that the best way for this to happen is a sale and lease back of his vehicle portfolio, similar to what you would do on property and buildings,” said Mark. “But speed is also hugely important; we can appraise a vehicle or collection and agree an advance against that very quickly because we have many years of experience in structuring these sorts of solutions.”
The team of five, all with over 30 years’ experience, have their own collection of cars and a lifelong interest in classic vehicles, with some of them racing on the weekends.
“We’ve created a solid reputation for ourselves for dependability and flexibility,” continued Mark. “We deal with some of the UK’s leading classic car dealers and retailers and are proud of our heritage.”
And with the classic car market set to continue its stellar growth, expect to see more and more garages being home to the dram car.
If you would like to know how Close Brother Leasing creates tailored funding solutions suited to your needs, please contact Mark Walker on 0161 888 2811.