Loan for project?

[saunacrank]

How many guys out there have taken a loan out to build their car? I bought my car when I was 16, but put it in my dad's name to keep insurance cheaper. I'm 21 now, so insurance is still expensive, but cheaper then when I was 16. I was thinking of taking out a loan to "buy" my car from my dad. That way I can just use the money to finish my build. I've been just piecing it together as I go. I was going to buy vette brakes and just do tubular suspension and cat 5 rear springs, then eventually do a AM front subframe and G bar rear, with wilwood sl6 brakes. But if I take out a loan I can just buy all that now, mini tub it, not have to rebuy everything including wheels. Sound like a good plan or no?

[Balance_Point]

In my opinion its not a sound financial plan. It doesn't make sense to me to pay interest on a depreciating item like a toy. Having said that many people take out sendonds on their home to finish their project so to each their own.

[saunacrank]

it isnt really a depreciating toy though....

[danbob67]

obviously your not married so go ahead and do it if it makes you happy.:Alchy:

[shizzy]

repeat after me CASH

once more CASH

pay for it with cash and cash only. there is nothing like being 30 year sold, tens of thousands of dollars in debt and nothing to show for it.

[Young Gun]

im gonn have to agree and say dont get a loan...you wanna pay for cash for your project...dont go into debt on it...really just not worth it..

[fletcherscustoms]

I have a different look on it, but I also own my own shop and do everybit of my work by myself, and I flip the cars as soon as done. I built a new home 3 years ago, for over 250K, I had a nice deposit to put down when we built. Last year when I built my silver 69, I took out a interest only 6 month home equity loan, built the car sold it as soon as done with 118 miles on it. Then take the profit which was about $30k ad put it right back into my mortage, done that twice so far. So now I am in my $250k house with ony about $100 k left on it in 2 years. Doing it again on my challenger I am building. Loans can work but only if flipping the car, ou have minimal money in it, do most of the work, and pray the market doesn't take a dump.

This is just what has worked for me, and I might lose my but on this car, but so far so good

[brownz]

do not take a loan out i pay cash for all my parts that way if something in life goes bad you can sell it to help you out. iam 23 years old so iam in the same place trying to get it together but it takes time dont let that guy that has everthing cause you do make a bad choice.

[Vegas69]

Sound advice.

[gmjj13]

not sure if i missed it or not, but how much of a "loan" were you thinking about taking out?

[BonzoHansen]

Too many things can go wrong, projects are hard to sell mid stream (at least for what you have in it).

IMO, no.

[John McIntire]

don't do it. This way when times are tough and you're scrappin' for some money, you won't be forced or tempted to sell your car/project. If you just own your car outright, it doesn't owe you anything. It may take you longer to build your car this way, but in the end it will be worth it.

[Chewy72ss]

I'd advise against it. I'm only 19, so I'm in a similar situation.

Depending on how much you plan on taking out, you won't enjoy it when you burnt up all the money you just borrowed, and the car's not finished because the little things added up (they always do.). Then you'll be stuck payin' off the loan rather than puttin' money into the project. Like others have said, it's just not worth it in the long run.

Take your time, be patient, and do it right the first time. ;)

[Ron S]

If you can't pay cash I wouldn't buy it.Although I've been known to push my Visa card to the limit a few times,I always had the ability to pay it off,and the card kept my wife from seeing.LOL.Ron

[shizzy]

don't do it. This way when times are tough and you're scrappin' for some money, you won't be forced or tempted to sell your car/project. If you just own your car outright, it doesn't owe you anything. It may take you longer to build your car this way, but in the end it will be worth it. no doubt. there have been many times money got tight and since the car is paid for and I dont carry a balance on a CC, it was simple to just let the car sit in the garage till money got better.

[Rob68427]

I agree you should try to pay cash for everything.
But I was thinking of taking out a loan for about 6,000 to finish my project. This Oct. will be 4 years, & I'm real close to having it on the road. I'm hoping to have it finished midsummer. If I can come up with the money.

Opinion:
When you buy a new car, do you pay for it in cash?
Or when someone buys an already finished car do they pay cash?

So, if your taking a 5 year loan out to pay for a car. Why not take a loan out for a project?

[Mr.VENGEANCE]

is there an echo in here...

[wiedemab]

I subscribe to the pay cash mindset, but I can see in certain cases where it may make sense to borrow to make it happen - case-in-point, Boilermaker.

The big thing is that you don't want to the get stuck in a situation where you've borrowed $X,XXX dollars and end up running over your predicted costs which leaves you with a loan on an unfinished car that you couldn't get your money back out of if you needed to.

Unless you do this for a living and have a very good handle on the costs, I'd say there's a pretty good chance that you are going to spend more than you planned to.

As I'm typing this, my mind drifts to the fact that I've probably got $25K in an '89 Mustang that I'd never be able to get any where near that out of - so I guess it's also highly dependent on the car model too.

[Mr.VENGEANCE]

and that IS if you ever sell the car..

oh dont fall in love with your ride and want to keep it..

thats the diffrence in my opinion.. guys like boilermaker realistically CANT keep the ride..

that would be hard to me.. id see it and wanna cruise and keep it.. Give it to my son when im done... so he can cruise.. keep it.. and give it to his son..

on and on and on..

[vp23271]

BoilerMaker sounds like he has it together! He is using his home equity like a small business loan or revolving credit, but also gets to right off the interest come tax time! Before you know it, your house will be paid off and your monthly expenses are next to nothing. Sometimes it not about make more $/hr at the 9-5, sometimes it about decreasing you cost of living so you can put more $$ into the bank account. Good Stuff and it sounds like your getting yourself out of the Rat Race!

... but as a 21 year old, my 2 cents would be to pay as you go. If you can keep the car drivable and on the road, I would go that route. Make upgrades to the car as you can afford it and drive it/enjoy it for a while and then do the next upgrade. Hopefully a new job/career will put some extra cash into your account and you can buy more upgrades or put a nice paint job on it, but do everything you can not to put yourself into debit.

[mdprovee]

I would definately try paying cash up front for the car. It helps when you have reached your loan amount, and the car is still not done. Then your left with a car, that might not run...and you owe a amount on it.

[gearheads78]

Pay cash for everything. Car related or not. The only thing thats OK to borrow money on is a house. It has taken me 35 years to figure that out but if I knew at 21 what I know now I would be in a ton better position in life.

We have become a have to have it now society at a great cost to our nation. If you can't afford it save until you can.

[jackfrost]

as much as it hurts to do it, wait until you have the cash.

the reason people take out loans when they buy cars is because the car has market value. if something goes bad, you can sell the car you just bought and pay off the loan. a half-done project car and a pile of parts does not have anywhere near the market value that it cost to buy it all. only a completed car will. if something goes bad, and you have to sell your project, you could be upside-down and still be paying off the loan with nothing to show for it.

[Steve68]

Diesels over $4.00 a gallon, gas is $3.50 a gallon, Foods UP 5% this year alone, When analysts were polled in late Jan early Feb " is our country going into a recesion" 8% said yes it is, the ratio polled yesterday says 30% says our country is sliding to a recession,

CASH, CASH, CASH,

Watch the For Sale adds, and see how many guys are selling there project because there 30K in debt and have no ride, just lots a parts waiting to be assembled, and they need another 25K in work and there's no more funds, so now there dumping, not a good way to get a dream going,

My car sits till I have cash for the parts, and my body is 95% done! just needs paint

[saunacrank]

do you get in trouble for paying off a car loan early? Like is there usually a penalty fee? I can finish my car easily for about 6k, but I'm going to take a loan for 15 and do it the way I want. The plan is to get it on the road and how I want it. I have an 04 E46 M3 that I own outright and plan on selling once this car is done. Its going to be my daily driver, I just can't sell the M, and not have a car for the next 6 monthes while everything gets ordered and installed.

[eville]

Just make sure and ask the loan company if there is a prepayment penalty. Usually not. But don't expect to save any money on payments.
If you get a loan for 8% simple interest, you'll repay 108% of what you borrow regardless of prepayment. (assuming no prepayment penalty).

don't get a compound interest loan.

[venturabeachpup]

Pay as you go. However, if you just can't resist the temptation take out small loans that you can pay off in 6 to 12 months. That way if you feel you screwed up by taking a loan you will not be in bondage forever. Good luck and build it like you like, even if it takes a lifetime!

[Chad-1stGen]

Generally, any borrowing for something that doesn't produce income or appreciate is fiscally dumb.

People will always come up with exceptions, usually justifications, but that is how it is.

[shizzy]

borrow for a house, pay cash for the rest.

[class67]

I know your frustration, I think we all do...but it is not worth going into debt for. Hell, it took me just over 4 yrs. to complete my car by waiting and paying cash for all of it and believe me, I wanted to finish too.