To buy a classic car or not to buy a classic car…

Ever since I sold my house down in Champaign, I’ve had a fat wad of cash sitting in my bank accounts, taunting me. The smart thing to do would be to take that money and save it away, possibly in the stock market while the economy slowly recovers, and take it back out when I’m ready to buy another house, possibly here in the Detroit Metro area or wherever life decides to take me in five years.

But you can sleep in a car, but can’t race a house, or the saying goes. So I’ve been doing the stupid thing and looking at all sorts of classic cars that I can buy.

Now the sensible side of me (save money!) and the irrational side of me (buy a 3rd car that will get driven only a few times a month!) are doing battle.

The beginning

As I wrote on CICEnet when I started my search back in May:

Some of you who follow me on Facebook know that I unsuccessfully tried to convince myself to buy a 1987 Mazda RX-7 Turbo. This week, I went off to take a look at a 1986 Toyota MR2, bringing along with me a wad of cash, and ended up walking away with cash in hand and not a bill of sale.

While I and some friends were celebrating my fiscal restraint in not buying cars on impulse by blowing $100 on food and drinks at the Tilted Kilt, I realized that the ultimate reason why I walked away from those two choices was because I didn’t want another sports car, even if it was old and awesome. If I wanted to drive something sporty, I’ll drive my Miata, which my accounting software has shown that I’ve wasted $8k on in installing fancy suspension, a fancy diff, a complete exhaust, a set of pimpy wheels and multiple sets of tires. And all that work was done mostly with used hard parts stripped off of other STR Miatas.

No, what I really want is a GT or a luxury car. Truth be told, I would have rather had Nick’s Subaru SVT over the MR2 or RX7. As I speak right now, I’ve got eBay and Craigslist searches going looking for a nice example, and I’ve started lurking the SVX forums again.

I’ve made friends with a fellow Ford engineer my age by the name of Kenny. I’m extremely jealous of his life. He’s just bought a small house on a picturesque property, but best of all, it’s got a massive garage. And in this garage, he has a supercharged NB RX7, a ’73 ‘Cuda, and a ’70 ‘Vette.

After looking at my finances for the past three years, I can only conclude that he is doing it right. He has cool cars. He pays less for insurance on all of them per year than I pay for my 2012 Ford Focus alone. He can sell a car and won’t get hit with massive depreciation like I would if I was forced to sell my Ford Focus, which at only 2 years of age, is already out of its bumper-to-bumper warranty and probably half of its retail value. If I had to sell the Miata right now, I wouldn’t get any of the $8k I “invested” into the car back unless I went through the pain of returning it back to stock.

So I’m thinking about buying a nice old car that I can enjoy for a while, then sell when I get bored and buy something else nice.

Here’s the criteria that I have for this car:

  1. Must be “collectable” and insurable with classic car insurance and plated as a historic vehicle. I might be able to make exceptions for vehicles slightly more modern than 25 years old.
  2. Must make me feel special. I don’t feel all that special blasting around in a Miata with stickers and numbers, slammed to the ground. And while my Focus is pimp yellow, it also doesn’t make me feel all that special either. Not in Dearborn at least, where the mantra seems to be “This is my Ford, there are many like it, but this one is my own.” The car doesn’t have to attract women, but that would be a nice bonus. Hell, I’d settle for attracting the attention of dudes – a honk or a thumbs up every now and then would be nice.
  3. Must look good. But this is an easy requirement. I think that the SVX is a stunningly beautiful car, after all.
  4. I don’t get taken to the cleaners by depreciation. If the car appreciates in value, that’s a nice bonus, but I know better than to expect an increase in value when buying any car.
  5. No rust and completely stock. Or, if it is modified, easily returned to stock if need be.

The candidates

So far, the cars that I’ve looked at in person are, in order:

  • Toyota MR2
  • Mercedes-Benz 560SL
  • “Bullet Bird” Ford Thunderbird
  • BMW 733i
  • BMW Bavaria
  • Triumph TR6
  • Ford Model A
  • Ford Mustang GT

Where I am now

Earlier this week, I took my friend, Mike, who is a good resource on old Mustangs, seeing as how he daily drives a 1966 Mustang with a T5 transmission swap and is building up a monstrous Mustang track car, to take a look at a 1966 Mustang GT.

Well, in theory, anyway. For all we know, the car is an actual GT with all of the correct equipment, but there’s no documentation proving that the car is, in fact, a GT. Because Ford managed to lose the records for the 1964.5-1966 production run, you can’t run the VIN against a database to find out its true origins.

On the bright side, it’s a Mustang with its original 289 built up into a 302. And because there’s no documentation proving that its a real GT, it’s a more reasonably priced $15k rather than $20k or $25k.

Mike looked over the car and gave it a clean bill of health, noting that it was actually fairly priced at $15k.

I took the car out for a test drive with the owner and we cruised down Woodward Avenue. Car sounded awesome with that V8 noise bellowing out of the exhaust in the back. Steering was as tight as a car from the 60’s is ever going to be, and the brakes were adequate. Fortunately, this car being a GT, had disc brakes standard on the front, which while a far cry from what is on cars today, did well enough to stop the car. Mike noted that if I were to get the car, I should get a dual chamber master cylinder for the car for safety purposes.

The dilemma

So I know that the car is solid, it drives well, and is priced right. No brainer to just go and buy it, right? Not so fast. There are a lot of things I can do with $15k. Let’s consider the options.

Option 1: Keep the money in the bank and do nothing with it. It would serve as a nice rainy day fund. Problem is, the money isn’t doing anything then, so this is arguably the worst option.

Option 2: Pay off all of my debt. The only debt I have right now is the note that is on my Ford Focus. Payoff amount is around $7k. Interest rate is very low. There are only a year’s worth of payments left to go. This makes more sense than Option 1, but it’s still not the best option out there.

Option 3: Buy a 3rd car. Once again, the money isn’t working for me, but at least I have a toy that I can drive and enjoy. And if I buy it right, the car is a non-depreciating asset (unlike my late model cars). Do note that non-depreciating does not mean the same as appreciating, the point being that I’m not considering this car an investment at all. And if I do get a car, there will be associated expenses such as maintenance and insurance to consider. This option is the most fun.

Option 4: Take the money and invest it in the stock market. I would only need a return of 6% to make this option much more attractive than Option 2. Should I go this route, I’d likely put my money in investments for a few years at least, meaning that any chance of me taking this money out for the purchase of another car goes away. I’d want the money to stay in investments for at least some time so I can get some decent returns, and the only situation that I can think of that would prompt me to remove the money would be getting money for a down payment on a house.

The overwhelmingly smart choice is Option 4, and that’s what the rational side of me keeps screaming to do. But I still want another car, as stupid as this sounds, with a lot of shiny chrome and a thin-rimmed steering wheel, to tootle about town with.

Never mind that my Miata will be better in almost every conceivable way except for size than any 3rd car I could ever buy. Especially since I’d be looking to do some road trips and long-distance touring in this 3rd car. There aren’t many old cars that are really at home on the interstates of today, the realization of which is putting a damper on my enthusiasm for certain cars.

The search continues. I’m still thinking about that Ford Mustang. In the meantime, I think I will take a look at an Alfa Romeo Spider…