After years of working on my car and dealing with setbacks(financial and time) I decided that I am getting a loan to finish my build or at least get it closer to being complete. I'm at a point where I can afford it, so it seems logical.
How many of you fellow members have taken out loans for projects? I would like to here your input
Most people are going to say its a bad idea! I've done it before mostly for key items though not a whole build. I just work at paying it off much faster then the full term to help not pay as much interest. I have an account with Navy Federal and they pay 250 dollars to refinance an auto loan. So I use a local bank or lendor and then before even making a payment I switch it to Navy Federal and always get a better rate and they pay me to take the note.
For instance I needed 3 grand so I called my local bank got a loan on a vehicle I owned and in no time at all I had the money in my account with an interest rate that was not great. So then I refinanced it with Navy federal they pay me 250 bucks and give me a good rate on a used car 2.59 so its like $2.50 day but I pay it off in 3 months and the interest was equal to the 250 bucks I recieved so basically its a wash for me. You must be careful though because if you are barrowing alot it won't happen like that or if you don't pay it off early.
Only way i would do it is if you thought it would take you 10k to finish your car. You have the 10k in the bank but dont want to take that lump some out. Borrow the money only if the interest rate is low and at most your loan only costing you under 1k over the mature date. remember at anytime you can pay it off right away without strapping you for cash.
I always say pay cash for toys. You could consider taking out a loan against your savings if you use a credit union. Mine offers that as an option and the rates are usually lower than a private loan. Our Credit Union also gives you some life insurance on the loan too.
I have done it, a home equility loan. It wasn't a good idea especially with cost over runs, and now the housing market. Now I have a "car payment" for 10 more years, unless I pay it off early, which I am working on.
However, I would not have had the money to save to get it done. I have had an absolute BLAST with this car over the last four years, a few ASCS events, a few autocrosses, and just driving it, sometimes making the car payment woth it.
If you are going to do it, just make sure you can afford it.
It can be done but for most people it's not a good idea...
If you have the cash in some form of investment that is making 8%, do you pull that out to pay for the car, or do you take a loan that costs 4% interest?
With interest rates so low, sometimes it can be better to take a loan, rather than use your own $$ that is making more in its current spot than it will cost you for the loan.... And even better if you pay it off quicker than the terms....
But the bottom line is that most people aren't that disciplined to do it the "right way"... So in general the best answer is ... Don't do it...
Brian Hobaugh SCCA National Tour June 2014
First Hemi 'Cuda Convertible Ever Built
Short clips: Goodguys Pleasanton autocross and pit videos
Loans for your projects???
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