Collectible cars can have surprisingly affordable prices, even down to the low five digits for heartstring-tugging models. But, like a sleek shiny body that masks an underperforming car, these price tags are just one factor to consider in the flourishing collector car market.

At Volo Auto Museum sales are strong for collector cars, generally regarded as any model 25 years old or older that has some level of a dedicated fan base.

Co-owner Jay Grams said that the museum, a major seller of collector cars about 50 miles northwest of Chicago, is on pace this year to come close to its best-ever annual sales total of roughly 800 cars, largely because prices that plummeted a couple years ago have not fully recovered and have created a buyer’s market.

There are a variety of opinions about why financing costs more for collector cars, but what it boils down to is that this is a discretionary purchase in a niche market.

“Most lenders are not playing in this space at all,” said Mitch Shatzen, executive vice president of Woodside Credit, a California company that specializes in financing collector cars. That makes for a relatively small pool of funds available for collector car loans, he said, which gives lenders less wiggle room and forces higher financing costs.

To mitigate the extra expense, Woodside and other creditors offer loans with extended terms – sometimes up to 10 years depending on the price of the car. The idea is that owners can pay for the right to own a car for a while, then recoup their investment by selling before the loan is up, much like home buyers getting into a 30-year mortgage.

And these cars usually will appreciate over time, making them a solid investment, said Grams, who has been involved in the family business for about 25 years.

“The market we’ve seen when the bottom fell out a couple years ago was the first time I’ve seen prices go backward,” he said. “That’s something that I don’t blame on the car. The whole country felt that one.”

While financing will cost more for collector cars, insurance is considerably less expensive. Often it is a fraction of insuring a new car, largely because collectors have already run through their depreciation and even have the potential to go back up in price.

“People getting into car collecting think it’s got to be too good of a deal, but the reality is it’s not. It’s true,” said McKeel Hagerty, CEO of Michigan-based Hagerty Insurance, which promotes itself as the largest firm specializing in collector car insurance.

But price alone doesn’t tell the whole story of collector car insurance, as