Finance on a project?

Ridin-High · 21-05-2007, 04:27 PM

G'day all,

Wanted to get peoples thoughts on using finance on a project car. A person i deal through work with was telling me alot of his customers (when working in a performance shop) was using Bank money to pay for it. He thinks that if u are in stable employment that its a good idea so you can enjoy it now and not wait 4-5 yrs to save the amount.

It actually got me thinking, it would be good because then i would get a rating so i can burrow money for a house in the future, i would only get a small amount 10-15k.

All ur input is valued xD

apolloxbgt · 21-05-2007, 04:33 PM

What a great idea,use money that you need to pay intrest on to potentialy devalue your car.

plext · 21-05-2007, 04:35 PM

So long as you can afford the repayments, I see no real reason why you should not do it this way, assuming the interest rate is not too userous of course.

On a different tangent, so long as you have a keyboard, you should avoid SMSing us, it's very irritating.

4.9 EF Futura · 21-05-2007, 04:38 PM

OK well ratings are a bit of an american thing. We have defaults listed against us here in Australia... and some lenders may consider "oh, he/she has serviced a loan ok before"... but its not a deciding factor in 99% of loans.

Moving on.

If you're comfortable with the debt, then i dont see a problem. A LOT of people here on AFF are gonna shoot the idea down... but members of AFF are a fairly risk-averse group of people. But be prepared.

If youve gotta have the car done SO BAD you couldnt wait, then what choice do you have? Lol... i pity the fool who tries to talk a young person out of modifying their car.

Just accept - that in 4 years time, when you're still plugging away at the loan, the assets you bought with it will be worthless.

In the year 2007, a stable job... can only be SO stable.

In answer to your question, plenty of people have done it. Just decide now if you want to commit to 4 or 5 years of debt servicing. I suspect you will

Ridin-High · 21-05-2007, 04:39 PM

SMS is alrite, but i prefer to call people

My mate (22 y/o) borrowed around 40k for his Mazda 3 MPS and another 40k for 2006 WRX (about 6 months ago now)

10-15 isn't a massive amount and it would get me cruzin in my baby much sooner :P

Thnx so far

DOC · 21-05-2007, 04:40 PM

Quote:

Originally Posted by apolloxbgt

What a great idea,use money that you need to pay intrest on to potentialy devalue your car.

+ 1....

Unco · 21-05-2007, 04:44 PM

i have the same view as apolloxbgt. i would suggest you look into it very carefully. open your eyes to the fact that you'll be paying interest on the loan and understand that interest paid on a liability makes no sense financially.

work out exactly how much interest you will have paid at the end of the loan. and ask yourself if you can commit to making repayments for the duration of the loan.

if the satisfaction you get from driving your modified car is greater than the financial implications, then it's OK... but just for YOU. don't expect any sympathy from those who have a different view on risk vs reward.

sfr rob · 21-05-2007, 04:45 PM

Quote:

Originally Posted by Ridin-High

SMS is alrite, but i prefer to call people

My mate (22 y/o) borrowed around 40k for his Mazda 3 MPS and another 40k for 2006 WRX (about 6 months ago now)

10-15 isn't a massive amount and it would get me cruzin in my baby much sooner :P

Thnx so far

great way to dig your own grave i reckon, if you cant afford to paly with cars, then dont even think about it!

Ridin-High · 21-05-2007, 04:46 PM

Thanks for all your input so far, I think i'll just keep banging away the bucks so i can pay straight cash

4.9 EF Futura · 21-05-2007, 04:55 PM

Quote:

Originally Posted by Unco

if the satisfaction you get from driving your modified car is greater than the financial implications, then it's OK... but just for YOU.

Beautifully articulated.

Just because a couple of people here dont think its a good idea, what makes them right? They're not. But they're not wrong either

It all comes down to - do you think its worth it?

I note that not a single person asked how much you earn, what your current position is etc etc and im suprised they can speak in such absolution. CEO of Macquarie Bank taking a $15k loan is a bit different to a junior at maccas. If you get my drift?

mcflux · 21-05-2007, 04:56 PM

SMS language? I counted one "u", one "yrs" and one "ur". Unless he hastily edited the post after reading yours, in which case I take back my post

King Nothing · 21-05-2007, 04:58 PM

Yeah save up for sure. A mate of mine borrowed a fair whack of cash to do up a vl. Didn't bother insuring it as he had only just got the car, figured he would insure it when it was registered. The only place to store it was in the front yard. Can you see where this is going...?

Weeks later, he went out the front one morning and his car was gone. A white unmarked flatbed truck had been seen hanging around the suburb. The bastards had loaded it up, never to be seen again. The car was about 90% done as well. So now this guy has a 5 figure loan to pay off with nothing to show for it.

TZENU · 21-05-2007, 05:01 PM

I have kind of learnt the hard way... I built 80% of my car through all my credit cards... I have now got very little left on the cards...
During the time i was paying off 3 different cards and it would hurt, but everytime i jumped in the car i could easily justify it..

DOC · 21-05-2007, 05:03 PM

Quote:

Originally Posted by 4.9 EF Futura

I note that not a single person asked how much you earn, what your current position is etc etc and im suprised they can speak in such absolution. CEO of Macquarie Bank taking a $15k loan is a bit different to a junior at maccas. If you get my drift?

Well all fair in love n war, what i can speak from is every mistake i have made in my younger days, call it old heads on young shoulders, and the experience was real. Good luck for those willing to learn the hard the way.

RACINGdork · 21-05-2007, 05:31 PM

dude save your money, dont worry about fast cars till your older and you can afford them. wanna go fast? buy a rx7 with a 13b bridge port for 4k. you dont get rich making lots of $$$, you get lots of $$$$ by saving it!

Psycho Chicken · 21-05-2007, 05:40 PM

If you can afford the repayments (not just think you can) and can live with the fact that driving it now is costing you about half what the loan is worth rather than waiting a few years, go for it.

Personally I'd sit on it for 6 months, saving the money you would be spending on repayments then have another think about it.

The G6ET Spot · 21-05-2007, 05:47 PM

would like to know what sort of car the project will be and if you think it will be worth the final amount that you will have paid back if you finance. I have actually done projects, both by saving the money and doing the car along the way and also borrowing the money and doing the car in one go.Although it was great to get the car done and driving it around sooner, it was a bit of a bummer knowing that I still had 3 years payments to go. On the other hand when I saved and paid cash for the car I found that I saved harder and got the money together faster. When it was finished knowing that there was nothing hanging over my head was great.Another thing to think about is, how much more could you do to the car, if you sunk the money you pay in interest into the car instead of the bank.

Jason[98.EL] · 21-05-2007, 06:27 PM

Quote:

Originally Posted by Psycho Chicken

If you can afford the repayments (not just think you can) and can live with the fact that driving it now is costing you about half what the loan is worth rather than waiting a few years, go for it.

Personally I'd sit on it for 6 months, saving the money you would be spending on repayments then have another think about it.

that is about the best advice anyone can give

i would listen to what Psyco Chicken said there as you cant go wrong with that advise

jason

bob^ · 21-05-2007, 06:35 PM

Also have you bought a house yet? or are looking at buying a house some time soon?
Money spent buying a house is money well spent. It won't depreciate like a car will.

If only I knew then what I know now... :(

starwars_guy456 · 21-05-2007, 06:46 PM

I agree with Psycho Chicken. If you get bored of the car in a couple of years, you'll sell it (and more than likely lose money due to depreciation). The only thing you'll have to show for it is a debt. Once that's paid off, you'll be looking at getting another loan to get another car (because let's face it, a car is essential for getting around when you get older). The cycle continues.

Actually, i reckon you'll be more likely to get bored of it if you haven't really saved up too long for it and relied on a loan to get the car. Giving yourself some time to think about what you really want will help you choose the right car which you [probably] won't get bored of.

Good luck with whatever you choose!

trick_xd · 21-05-2007, 07:02 PM

AND yet People get a loan out to buy a car ....

I was in much the same boat as you .. never had credit as I had never needed it and always payed cash.
I took out a small loan (15k) to buy and build my car..

was it a good idea ??? So far YES
allthow I dont know if I will be the same in another 5 years

Racecraft · 21-05-2007, 07:11 PM

raising the money is the easy part.. Before you chase up the $$ sit down and really work out how much it will cost you and how much you want to spend on it. Even if you have to go and get quotes before you lift a spanner or spend a cent.

For example 15k might only get you a paint job, it might net you a 600hp stroker but no gearbox and diff.. See the point.. You could have a nice paint job, kick-**** motor, that doesn't run, rolls in and out of the driveway on 40 year old stockies while you and your mates steer it by sitting on a milkcrate.

Work out and stick to a budget, forecast the costs realistically and if you don't have that much coin then consider borrowing it..

I've seen mates get personal loans for modifying cars, only to go into it with rose colored glasses and visions of grandeur.. They ended up with huge debt and a half arsed, half finished car that often ends up in the trader for next to nothing because they either double handle everything costing twice as much as they are forever changing the 'plan' or the bank/missus/parents won't come to the party with another large cash injection..

All I'm saying is getting the money is your choice, but ffs at least put iit to good use..

sexr6tasy · 21-05-2007, 07:43 PM

I got a loan to get my car and have so far spent about 6-8thousand on it the 6-8thousand i spent i saved up for and did things in stages. Now that i think about it i would of prefered to just get a 6grand loan do it all at once then pay back an easily affordable fortnightly repayment of 60 bucks over 5 years. Althought ive spent the 6 grand in only 7 months and ive still got years left to build the car so my thoughts may change.

chief · 21-05-2007, 07:43 PM

I got a personal loan to pay for my stroker motor. That was back in September. I am nnow and have been saving for the gearbox, diff, tailshaft, radiator ect and everything else I need. The motor will make its way into the car. The best way of comptenplating a personal loan is work out the cost. How much will you end up repaying? What will you spend the funds on? If you buy a motor, will you have any money to save for the driveline?

GXL078 · 21-05-2007, 07:48 PM

We get ripped off with parts here compared with The States and you want to pay interest on them as well?

Zedjay · 21-05-2007, 08:56 PM

mate buy a house,pay it off for a few years then use the equity to fund your project,
or buy one already done it will save you heaps of $$$$$$

Poetic Justice · 22-05-2007, 08:59 PM

I say if you can afford it do it, however you need to be smart with how you do it... I'd say it's not so bad to finance a purchase of the initial car, or parts.. but don't finance anything to do with registration, insurance or labour involved in working on the car.

I've just got a very small loan (almost the smallest you can get) to build a VH Commodore because I found one that was setup just needed an engine and I got it cheap. Now Im just sourcing an injected motor to put in it, then I'll get it registered.

The joy is, once I've got it registered and engineered, it will be worth the same if not more than the amount I financed to get the project completed..