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NEW YORK (CNN/Money) - If you just love the idea of owning a 1970 Plymouth Superbird but you have trouble with the $100,000 price tag, some auto financing companies offer a different approach: leasing.
It still isn't cheap -- an estimated $1,080 a month for '70 Superbird, according to one company -- but it at least saves you from having to lay out all that cash up front. And if you're willing to part with your dream car after 3 years or so, you may never have to lay out the entire cost at all.
Leasing classic or exotic cars is different from leasing ordinary new or nearly-new cars. The major difference is that payments on an ordinary lease, one on a new Lexus or Honda, say, are based on the expected loss in the value of the vehicle during the term of the lease.
If you lease a moderately priced new car for three years and the car is expected to be worth $15,000 less at the end of that time than it was when new, you pay a total of $15,000 plus a percentage called the "money factor" and other fees, over your three years of lease payments.
As long as it stays in good shape, a popular collectible car will lose little or no value over a few years. In fact, there is a good chance it will actually be worth more as time goes by.
As a result, in a classic car lease, you generally agree with the leasing company on an amount of money that will remain unpaid at the end of the lease term. You make a substantial upfront payment, take physical possession of the car, then start making your regular monthly lease payments.
At the end of the lease term, you can elect to either purchase the car, refinance the remaining buy-out amount and keep making monthly payments until the full price is paid, or allow the car to be sold.
If you elect to sell the car, the leasing company will take the agreed upon buy-out amount from the proceeds of that sale. The remainder goes to you.
If the car had increased sufficiently in value, you could actually end up making money on the deal. Since leasing costs substantially more than simply financing an outright purchase, however, the car would have to increase considerably more in value to make a profit possible.
Also, there's no guarantee that any car will go up in value at all. And. if the car is poorly maintained or damaged, if could lose value.
Two companies that lease classic and high-end exotic cars under terms like these are Premier Financial Services and Putnam Leasing. (CNN/Money has not investigated and does not endorse either company.) Other companies offer similar programs.
Both Premier and Putnam say their customers are more often interested in leasing new or late model exotic cars, like Lamborghinis and Rolls Royces. Exotic car buyers typically keep their vehicles for only a few years, making a leasing product like this simply a more convenient way of doing what they usually do anyway.
Leasing can appeal to someone who's always dreamed of having a certain car in their garage but isn't sure they're ready for the commitment of owning a classic car for the long haul. Or they may simply not want to tie up a lot of cash in something they may tire of after a few years.
If you are interested in leasing a classic car, it's up to you to find the car. You would then apply to a leasing company.
The leasing company will purchase the car at an amount agreed upon by you. If the car is being sold at an auction, you would bid on the car, with all payments calculated based on the amount of your winning bid.
Once the sale price is decided, it's the leasing company that actually purchases the vehicle. You would pay the leasing company a percentage of the purchase price up front, take physical possession of the car and start making your monthly lease payments.
The leasing company maintains legal ownership of the vehicle until the term is completed, just like any other lease.
If you decide to try leasing a collectible car, it's important to get every financial detail and option in writing, said McKeel Hagerty of Hagerty Insurance, which specializes in insuring collectible cars and also offers standard, non-lease, financing for car collectors.
It's especially important to get the terms of a possible early termination of the lease in writing, said Hagerty. Both Premier and Putnam say their customers can back out of a lease early with or swich cars with little penalty.
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