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Financing Antiques?


schlepper65

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Greetings/

I suppose this is a risky post, so hopefully I won't get bombed with piles of solicitations from various fly-by-night money lenders, butttt here goes. Anyone got any good recommendations on who to deal with on financing an antique car? I may be looking at getting something in the future, and I have noticed that several local banks do not offer loans on anything "Antique", and especially from the time period I am interested in. (1927-1941). The amount needed would not be very big, less than $10,000.00, so if anyone has had experience working with a bank (Wells Fargo, USBank, etc) on something like this, good or bad, it would be interesting to hear about it. Are there any antique car orgs or anyone else out there who specialize in this area? I know the old adage "if you have to ask about the cost, you can't afford it" applies to antique cars, but any info is helpful. Thanks!

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I agree that a home equity loan is the way to go. For one thing, it's the only type of loan, other than a home loan, that is typically tax deductible. That makes it a "no brainer". However, what if you don't have a home, or enough equity in a home to cover your need? That is a different situation altogether. I can remember when the Maryland National Bank (now MBNA)loaned on antique cars, but I don't know if they still do. I did it once long ago through my Credit Union, but you may not have one of those either. Last night I viewed a 1956 Buick Roadmaster 4dr hardtop for sale on eBay, and in it's description was information on borrowing money to buy it...I've forgotten the lender. So maybe if you can't go the home equity route you could go to eBay and look up that car and see what the information says.

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Guest imported_PackardV8

buying antiques on credit?????????? On a home equity loan????? Man, u guys GOTTA be joking!!!!

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Hey Packard, I bought some property a few years back, just in case I needed a place to "go" after my divorce. <img src="http://www.aaca.org/ubbthreads/images/graemlins/blush.gif" alt="" /> After the property was paid off, I've bought 2 antique cars, financed a piece of equipment for my company and was just offered 3 times what I paid for it. A great way to get started in the antique hobby, I'd say. <img src="http://www.aaca.org/ubbthreads/images/graemlins/smirk.gif" alt="" /> <img src="http://www.aaca.org/ubbthreads/images/graemlins/grin.gif" alt="" /> Wayne

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People borrow money all the time for vacations, so why not for an old car? When you get back from the vacation what do you have to show for it. Nothing. Zip. Nada. Well, maybe some pictures. At least you have a toy you can touch for your borrowed old car money and interest.

Personally I wouldn't borrow money for either option, but I can't see that it is such a bad thing to buy an old car that way. You would do it with a NEW car that depreciates rapidly, so why not one that will probably always be worth what you paid for it. Of course this does not apply to one or two cars I have bought. <img src="http://www.aaca.org/ubbthreads/images/graemlins/smirk.gif" alt="" />

Each generation has a different set of values as to what money should be borrowed for, so do what suits you but why put down those with other values.

They could be more right than we are. <img src="http://www.aaca.org/ubbthreads/images/graemlins/smile.gif" alt="" />

hvs

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If you're going to go into hock for a car, antique or otherwise, there may be another option better than a home equity loan. Some IRA plans allow you to borrow against them. You make payments back into the IRA plus interest <span style="font-weight: bold">[color:"green"] which you keep! <img src="http://www.aaca.org/ubbthreads/images/graemlins/cool.gif" alt="" /> </span>

A few years back we started buying our daily drivers this way. A number of people strongly objected, saying that the interest we were paying ourselves was 2-3% below what the mutuals in the IRA were paying.

They don't say that anymore!!!!!

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I know a guy up in my area that bought a '32 International oil truck (he bought it from my father) and painted it up with his company's name on it (he owns an oil business), and wrote the restoration off on his taxes for advertising purposes. I'm not an expert tax man by any means, but if you are a business owner, it may be a case where if you may be able to have a vehicle restored with your company's name on it and do the same thing (but do it tastefully if you intend on showing it). Speaking of which, hey Wayne can I interest you in a '60 B-model Mack? You can restore it and advertise your company. If you don't need the business, just put your ex wife's phone number on the truck <img src="http://www.aaca.org/ubbthreads/images/graemlins/shocked.gif" alt="" /> <img src="http://www.aaca.org/ubbthreads/images/graemlins/blush.gif" alt="" /> so she can get all of the phone calls. Now you know I'm only picking, but I couldn't resist jerking the chain of a trucker from the south. <img src="http://www.aaca.org/ubbthreads/images/graemlins/grin.gif" alt="" /> I'm sure you'll find a way of getting me back. <img src="http://www.aaca.org/ubbthreads/images/graemlins/smirk.gif" alt="" />

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Guest DeSoto Frank

I remember being just out of college (c.1990) and stumbling across a very nice un-restored 1930 Buick sedan for $6,000.

I went to my local bank to see about a loan, and when they asked what it was for, I naively told them exactly what it was for..... <img src="http://www.aaca.org/ubbthreads/images/graemlins/laugh.gif" alt="" /> they just barely contained their fiduciary laughter.... <img src="http://www.aaca.org/ubbthreads/images/graemlins/blush.gif" alt="" />....

Needless to say, the bank did not look favorably upon my loan application, and denied it.

In retrospect, given my circumstances at the time, this was probably for the best, because I had no savings, lived in an apartment, had no place to store this lovely Buick, and in general, it wouldn't have been a good thing for either the car or me. (I still wonder what became of it and hope it "got a good home", because it was thoroughly straight and presentable.)

In the ensuing years, I have used "personal loans" from my credit union for enough mad money to buy a couple of cars....but these loans were under $2k, and were secured against a savings acct. and were PIF within a year.

Generally, I would look at using any kind loan or credit for antique car purchase the same way I would for investing in stock: if you're in a financial position where you can afford to flat-out lose that money (without going bankrupt), then it might work out okay, and you'd certainly get the best interest rate with a home equity loan....but I wouldn't bank on "making a profit" this way....and I would certainly not risk putting myself in a position of losing my home in case of default on the loan.... borrowing a few thousand for a Model "A" is one thing, borrowing five or six figures for something exotic would be risky, in my view.

The first question I would have to ask myself before going ahead with this would be: "Are all my other debts (esp. credit cards!) cleared?"

????

(My wife is a trust officer for a local bank...I'm not even going to ask her opinion on this one! <img src="http://www.aaca.org/ubbthreads/images/graemlins/wink.gif" alt="" /> )

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Good idea Frank, re: not let the wife know! As a matter of fact, if half of our wives knew the mischief we brew on this forum, we'd all lose our internet rights! <img src="http://www.aaca.org/ubbthreads/images/graemlins/grin.gif" alt="" /> And Pat, Let's not bring the ex wife into this. It took me long enough to forget about the damage from that divorce. Wayne

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Guest BruceW

Wayne,

Reading horror stories about ex-wives and such makes me feel lucky.

I have no problem letting Di know of anything I might want to buy. I have no need to keep secrets from her. Di enjoys antique cars as much as I do and we generally do things together... as well as making decisions on cars.

And she is supportive even when she is not there. If I am going to a swap meet she will ask how much money she should take out of the bank for me. I'll tell her the amount I think I might spend.. .. and she will double that amount... just in case I find something else I might want to buy.

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Yeah Bruce, I think we're among the lucky ones. Judy has an identical track record to your Di over these past 44+ years, and I've bought betweem 60 and 70 cars during that time. She even looked the other way when I brought home a 41 Buick 91 that was so horrible one of my old car friends said, "I wouldn't touch that thing with a ten foot pole." We painted it and got it running and when we sold it we lost 50 cents on the whole deal. That brings me to the next point. My Credit Union did, in the 1970s, offer loans for antique cars and like any used car, they held the title. I found a better '41 Buick 90 in Milwaukee, WI and borrowed $4,000 to buy it (also took my first plane ride to see it). That was a LOT of money back in 1973 or 4. I paid it off, restored it, sold it in 1981 for a pretty large profit, and had to pay Capital Gains taxes on it because of where I worked. They frowned on unaccounted for money. My Dad always told me never to borrow, because you have to make $2 for every $1 you borrow to pay it back, but when you are young it is seldom you have those alternatives. I borrowed the $120 from the Credit Union in 1963 to buy my current 1939 Buick Grand National Senior car. I always took the loan for the maximum length of time I could get it, and then made extra payments to pay it off as fast as I could. That gave me breathing room on the monthly payments. I haven't had to borrow now for about twenty years, and I base that on my Dad's teaching, but there was a time, and if you know your situation and your job is stable, whatever you want bad enough to borrow for, is good enough to borrow to get. I also remember what Judy's Father told us, "it takes a lifetime to build a good reputation and only one mistake to ruin it." Just make sure you know what you can do for the period of the loan before you make it, and if you get your old car that way, more power to you.

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<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">buying antiques on credit?????????? On a home equity loan????? Man, u guys GOTTA be joking!!!!</div></div>

If you are one of those few who have the means to just buy what you want, then good on you. However, there are a lot more of us who don't have that luxury. There is nothing wrong with spending some of the equity on something fun and possibly profitable. I get to enjoy my money now. It sure beats a remodeled kitchen.

I took out a 2nd on my home a few years back. Now after 9 Amphicars ranging from paper thin rust guppies to floaters, the loan is PIF, and so are the remaining 4 Amphicars (2 floaters/2 parts) I now have. All paid for via the parts and such I have sold. I just happen to be lucky enough to have made money on every one I sold and paid for my hobby in the meantime.

Carpe Diem!

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Just picking on you Wayne. I only said that because of your reputation for having a light foot <img src="http://www.aaca.org/ubbthreads/images/graemlins/grin.gif" alt="" /> I wouldn't recommend financing a car, but I'm sure if the car was something that I really wanted to own, and could be had for a song, I might consider taking a loan out if I didn't have the cash. Under normal conditions, I wouldn't have financed that new Harley if I didn't think that I could still afford to swing the payment once I came home. As luck turned out, I was able to pay it off before I came home so by the time I cranked it over, it was all mine free and clear. If you have to finance a car, I'd say a home equity loan is the way to go. With the interest rates as low as they are right now, it might be where you can refinance your home at a lower interest rate, borrow the extra money, and still have your mortgage payment the same and/or less than what you're currently paying on your house now.

One of my coworkers just refinanced his house at a lower interest rate, he absorbed the cost of his car loan, dropped off the years left on his house, and still managed to save enough money off of his monthly bills.

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I personally think it's best to save until you can pay cash for any vehicle. As others have said putting your house at risk, should something happen, is not the best idea for a hobby. I guess an exception might be a very much under valued car you could get a "steal" on but you better know old cars and the market well.

I bought a car a few years back from a guy that had paid way too much after falling in love with it. When he went to sell he took a big loss even with me paying a fair market price for the car. On top of that for the four years he owned it he had to pay for all the repairs due to the fact that he wasn't mechanically inclined and really didn't seem to have much interest beyond the aesthetics of the car.

I also wouldn't base any purchase on it being a money maker unless you're a dealer. I'll bet most of the folks in here that have had a car for years spend way more time and money on their car than they will ever recover. If they're lucky they'll break even though <img src="http://www.aaca.org/ubbthreads/images/graemlins/smile.gif" alt="" />

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Good points, JT.

I compare never recouping time and money in old cars with green fees for golf: "you love the hobby, it costs a lot to do it, and, do not look to get your money back for the enjoyment you had".

Regards, Peter J.

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Here are some thoughts from a country banker:

I am not aware of any type of IRA that IRS will allow you to borrow against. However, if you have a 401k or 403b, this is commonly allowed. Be aware though, that if your employment is terminated, you must either repay or pay the IRS penalty.

JJ Best advertizes that they finance antiques, classics, exotics, etc. www.jjbest.com. I don't know anything about them, but perhaps some other forum participants will.

If you have one or more late model cars free and clear, you can borrow against them to finance your antique purchase.

Regarding borrowing money for your hobby, if it's something that gives you pleasure, and that you can reasonably expect to be able to repay, more power to you.

Make up a financial statement listing all your assets and all your debts, and take it with you to your financial institution. This will help them see what you have that could be used for collateral, and they may be able to offer you some options.

Good luck!

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Guest Teamsterdug

Getting back to the original question.....one company that specializes in "big boys toys" financing (not only cars but boats, cycles, just about anything that your wife won't let you spend cash on hand for) is J.J. Best . Good luck. We'll see all Buick lovers in Flint next week at the biggest Buick bash of all time! Bye all!

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On a home equity loan, the interest is only deductible if you itemize. Talk to your tax preparer to see if you would benefit from the mortgage interest deduction. Also, find out what the closing costs would be (appraisal, title insurance, mortgage filing fee, points, etc.). The closing costs may more than negate the savings of the lower interest rate and the tax deduction (if any), especially for a relatively small loan amount.

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Thanks for your input Phil. It is people like yourself with true knowledge of a subject under discussion that can be of real benefit to the people on this forum.

<span style="font-weight: bold">BUT</span> folks, beware of off the cuff advice from people who have a lot of advice to give when they obviously know absolutely nothing about what they are saying. <img src="http://www.aaca.org/ubbthreads/images/graemlins/mad.gif" alt="" /> Unfortunately that has happened a number of times on the forum. <img src="http://www.aaca.org/ubbthreads/images/graemlins/frown.gif" alt="" /> If you know anything about the subject under discussion, then these people stick out like a sore thumb. If you lack any knowledge on the subject, watch out for the advice givers without credentials.

Just my opinion based my years on this forum.

hvs

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JT, You have to buy the right car to get a good payback on your investment. I paid $25,000 for my '65 Corvette Coupe 6 years ago. In that time, I've replaced the battery and the starter, that's it. It's currently appraised at $42,000! Much better investment than my CD's at the bank, plus I get to drive it. <img src="http://www.aaca.org/ubbthreads/images/graemlins/smirk.gif" alt="" /> And, Howard... I'll catch you in a weak moment yet. <img src="http://www.aaca.org/ubbthreads/images/graemlins/grin.gif" alt="" /> Wayne

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In our area (speaking of Virginia)home equity loans have continuously been available with no settlement fees. Years ago I set one up for an emergency, like a septic tank drainfield in a clay soil area that could cost a bunch in my particular area. So, it is there for an emergency with nothing owed. You are exactly correct that you have to be able to do a 1040 and itemize to make any use of the interest. The same is true with doctors bills, taxes, donations, etc. It has been so long now since I could do the long form I didn't think about it and now, remember, with the new tax bill the automatic deduction for a couple filing jointly is going to be $9500 (I think) and you've got to have some bigtime loans and taxes, and/or give away a lot of money to charity to top $9500. Nevertheless, having the ability to simply write a home equity line check works well, especially for a bridge loan or short term situation. The last car I sold was sold to a person using that formula.

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because if you can't make the payments your home is in jeopadary.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Packard V8, Please explain what is wrong with using equity you have in a house to buy an antique that will only gain value over time? The Type 37A Bugatti I passed on for $15,000 20 years ago is now worth $115,000. </div></div>

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Guest DeSoto Frank

I think Teddy hit the nail on the head....

Perhaps we antique car enthusiasts are a few rungs up the evolutionary ladder from others who may be tempted to take cash advances on credit cards for major "impulse purchases", and that sort of thing, but there seems to be an alarming trend in this country of people carrying a lot of unsecured debt in the form of revolving credit cards and so forth, and it seems that a lot of folks don't manage money/debt as carefully as our foregoing generations did....especially those folks who are "children of the Depression" (like my parents!).

I guess like many other things, financing purchases over time is a "tool"...that's how most of us buy our houses, pay for college, etc; and if not abused, it can be a good thing.

As always, everyone has to find out what arrangements are best for their particular situation....

And not spend beyond their means!

Besides, my wife would NEVER even hear of using an HE loan for an antique car purchase....so I guess I'm payin' cash ! <img src="http://www.aaca.org/ubbthreads/images/graemlins/crazy.gif" alt="" />

Frank McMullen

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