Finance an old car? Are you nuts?!?

Ok, I was just wondering how many of you have financed your project cars, either through credit cards or an actual outright loan, and what the potential pitfalls are that I may be missing. The situation is this, the woman and I bought a house this year and have had 6 months of settling in time to make sure our budget is ok and it is, even paying our 30 year mortgage as a 14 year. We both just got raises and we've been sharing my jap pickup truck for a couple years now, so we're thinking of buying a driver - the Olds prolly isn't gonna be on the road for awhile. My thinking is that, since we don't really NEED a driver, we could buy something old and cool that runs and drives and, if there's an issue with it, we'd be right back where we were - sharing the truck. I've had my eye on 49-54 Chevy sedans, mostly due to my irritation at getting parts for our 'one year only' 1958 Olds and desire for a 'prefin era' car. They seem to be reliable, put down reasonable fuel mileage, have plenty of aftermarket support, and look great. So, what are the downsides? I have no credit cards, so financing it would be me walking into our credit union and leaving 30 minutes later with a check. I wouldn't put our house up for collateral, my credit's fine for a $3k signature loan, which seems to be around what I'd pay for a solid driver. And the payment would be well within our means. I don't know about insurance, can you really get insurance to drive these things everyday? Am I nuts to be thinking about this? What do you guys think? I'm usually a 'don't buy anything on credit' type of guy, but the temptation is strong...

 

its just like financing ANY used car....

 

Got mine thru financing. The wife and I drive to work together in the daily driver so the '53 is really just a for fun vehicle so insurance is only $150 a year.

 

yes- you can get insurance for daily driving, just like any other car and it will be cheaper, it's all based on value

do I reccomend it? No. You said you didn't NEED it, so if the cash isn't in hand, it is not reccomended to finance a toy, let alone one that you KNOW will need work (and thus $$$) to keep going on the road

If the vehicle sharing is bad enough buying a car with a great track record for reliability, value, and resale is a better choice

my 2 cents......

 

Let me clarify. The car we share is completely reliable. I'd jump in it and drive to California right now with no doubts whatsoever. It's a toyota with 80k miles, so with oil changes and a timing belt, we should be driving it for another 6 years at least...

 

Also, I don't care about resale on my dailies, I drive em til they're dead...

 

try to ge a secured loan, get a better interest rate. get a little more than what you think you're gonna spend on the car, use it to get it on the road.

you shouldn't have a problem with insurance. just get it appraised and shop around.

 

you are just buying a used car. (just a little older one) whats wrong with driving a 3K car? - go get approved at the bank & tell them you need a new USED car & when you find something you will just write a check for it & then call the bank & tell them to flop some money in your acct. this way you can take your time & find a real good deal instead of running out & getting the first bone you come across.

 

I did, back in '86, I financed a '61 Cadillac, it was $1500, the payments were $80 a month. I can't believe I got away with it, it actually established my credit.

 

I was planning on getting an extra $500 to cover the registration, insurance, and AAA Gold membership.

 

I can't get a standard used car loan, though, because that loan ***umes that you have something worthwhile to repo - blue book on a 1950 Chevy is prolly $100. My credit union actually offers 5% on a used car loan (I actually have a lower APR on my truck than the house), so I'd love to, but this isn't an option when we're talking cl***ics, the cutoff is like 6 years old or something. I was actually planning on getting the approval, then shopping around until I find what I want, putting $1-300 in the owner's hand to hold it for 24 hours, and then getting the final loan. I'm very good at denying myself things when necessary, that's why I don't have a credit card, so I'm not gonna jump on the first 'bone' that comes along...

 

I've had my eye on 49-54 Chevy sedans, mostly due to my irritation at getting parts for our 'one year only' 1958 Olds and desire for a 'prefin era' car.

This is exactly why I bought my 48 Ford. That 58 olds wagon of mine is just too hard to find parts for. Robert

 

If you can afford to make a payment for the project Car. Then I would suggest instead of getting a loan just take the money you would have for the payment and put it in savings, when your budget meets your wants then you can just pay cash for it. Also just keep putting that money into savings so that you can support your newly aquired habbit. Pateince does pay off.

 

I completely agree with Thorkle Road. Any money person will tell you that you should have at least three months income set aside for emergencies. Save your money and than borrow from yourself and pay yourself interest. Learning the secret of no debt whatsoever is a tough one to learn, but the most rewarding. That being said, buy a toy that will grow in value. A collector car can be a great investment if you have the knowledge and forethought to pick an appreciative model. It costs as much to restore and fix up a loser as it does to pick a car that will appreciate in value.
As with all old guys advise, feel free to ignore me, my kids do!

 

yes, i agree with thorkle rod and hot rod 1940. save up your money , and pay cash for it. a wise man (my father) one told me that hobby stuff and toys should be paid for

 

Is your Toyota paid off? If so, borrow the money against it to get the old one. This is what I did, then ended up selling the daily, paying off the loan, then borrowed on the new daily I bought later. Now I have a payment on my daily but my toy is paid for.

Mootz

 

I never buy anything I can't pay for in cash. The *only* exception to that will be when I find another house. Everything else...cars, computers, business ****...all of it...cash.

Debt free is something that I have worked hard on for the last ten years or so. I'm not *totally* debt free, but close. Having payments for every****inthing really, really ****s on yer soul.

Olson

 

Financing a project is going to eat you alive! Are you going to buy a car that is finished and ready to drive, or, are you going to build it? Sounds to me like you plan on buying a car that is complete from the statement about registration and insurance. Every month when you get that bill/payment, you're going to look at your project with different eyes. Pay cash to get the car and then pay as you go.

EDIT: The borrower is slave to the lender. So true.

 

Someone's been listening to Dave Ramsey...

 

Think I read that in a book somewhere. Ramsey uses it on the radio too.

 

The key to evaluating your debt load tolerance is to look at your debt to equity ratio. Look at it this way. If you own 20% of your home, the other 80% the bank owns. If you had 3000.00 in cash in hand you have a choice. Buy a car, pay down the loan, invest it elsewhere, or keep it. The nice thing about older cars is that they do not depreciate and you can consider them equity. My opinion is that if you don't own at least half of your home, don't buy a play car regardless of how you choose to pay for it.

 

I built my first T-bucket 20 years ago with a credit card and a $1500 credit limit.

I never buy anything on credit anymore. If I can't pay cash for it I don't need it.

 

I'm basically the same way with the exception of my driver and my house, but I feel like I've done such a good job watching my *** financially the last couple years that I deserve it. I know that's stupid, it sounds like some spoiled kid with a sense of en***lement, but that's how I feel. Add in that the woman's gonna wanna finance something as a driver any which way we do it and it almost makes sense. I have about 40% equity in our house, we bought an FHA foreclosure and got a smoking deal on it. I'm basing this 40% figure on the tax auditor's value, which actually tends to run low in our area...

 

Credit cards are typically 15-30% interest rates.
Insurance should be low...$500 per year should more than cover it.
There are companies that SPECIALIZE in loans on older "cl***ic" cars.
Check in Hemmings and you will find them easily.
Glenn

 

I think it is a differant thing to finance a completed car over a project. I would not do it with a project car.

Save your money up and do it with cash.

Hyfire

 

My last 2 old cars were financed the Capital One Auto Finance, fixed rate, low payment easy paperwork. Didnt have the cash on hand to outright buy the car so I let the bank buy it for me. If you can swing the payment go for it, just keep in mind that the auto finance will require it to be a runner as well as fully insured.

 

Also, to stipulate. This car will be a driver and around $3-4k, so I'm shooting for a mostly to completely original car and it has to start, stop, turn, run, and drive or I'll never get permission from the boss. I'd love to buy something that has the hard stuff done, but that's not even close to realistic unless I wanna finance more money than I'm comfortable with owing. The idea will be in the short term to lower it, do some minor body mods, and drive the hell out of it. I'm perfectly happy with a stock driver for now. Eventually, we'll replace the drivetrain with something more powerful, but that's prolly years off. I'm SICK of having unroiadworthy projects...

 

Always pay cash.
Period.
r

 

Borrowing $$$ is not a bad idea ... IMHO.
I have done it in the past. Just do not overload yourself.

The bad thing about paying cash is WHEN you really need credit ... you have none ... because you paid ca$h for everything. Years ago I owed on my home, I had a El Camino payment and the usual expenses ... power, phone, insurance, food ECT ... But along came the 32 Ford Roadster body and I only had half the money ... so I borrowed the rest. I had to sit and wait and get the 32 PAID OFF before I really made progress on it ... but I had it . I had a house payment, a El Camino payment and a 32 Roadster payment. The wife also had a car payment. WE ... held true to the plan we had made and got everything but the house paid off in 12 months or so. We had to sacrifice a few good times but now we have the car we wanted ( and still have 30 years later ).

 

I have to finance every move I make one way or another because I don't really make a lot at my real job.

I charge all of the parts I can on my credit card. I just make a large payment to it every month to keep it from getting out of hand. I try to save all of my cash for car deals. If I can turn something and make a buck or two I will pay my credit card off.

The "gold chainer" approach to building a car and refinancing your house is pretty smart with interest rates being low and all. Most people pay interest on a car that is worth less and less every year. At least your hot rod will appreciate a little. I also just look at paying interest like tipping a bartender. They are providing a service you may be able to do without, but it sure is convenient!