Finance vs Cash
10-09-2002, 06:17 PM
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Finance vs Cash
So I'm looking at buying a Porsche (If I don't somebody is going to have to put me in the mad house) need to build some credit. So I'm just curious as to how hard it is to get a loan for an older Porsche in good shape. Do you guys generally buy the cars cash or take a loan??
I'm only 21 and don't have a house to take the equity off of... I'm going to put down at least 1-2 thousand dollars. Depends on what I find. I seem to be especially partial to the older cars, 70-72 911T for their simplicity, I have a second vehicle so daily driving shouldn't be a primary concern. I have never bought a car before, I paid cash for my truck. So I'm curious if a bank would even loan money for a car like this??? I'm not looking for junk, or concours, just something fun, clean, and running good.
I'm only 21 and don't have a house to take the equity off of... I'm going to put down at least 1-2 thousand dollars. Depends on what I find. I seem to be especially partial to the older cars, 70-72 911T for their simplicity, I have a second vehicle so daily driving shouldn't be a primary concern. I have never bought a car before, I paid cash for my truck. So I'm curious if a bank would even loan money for a car like this??? I'm not looking for junk, or concours, just something fun, clean, and running good.
10-09-2002, 07:23 PM
#2
Hate to say it, but probably not...
Given your age and relative inexperience with credit, it would be a stretch to assume it'll go. Usually, banks feel better when the vehicle in question is newer (IE 7 years) and the event of repo, they can sell the car without too much drama.
As far as I know, it's difficult to find a commercial lender that'll give money for an older (Pre 87) car, including a Porsche.. Banks just don't see them as a justifiable risk. If it is done, it's usually lended to someone with years of repayment history and an established record. Plus, the terms of the loan are short compared to new cars, and the rates suck.
My purchase didn't involve any loans. Another thing worth considering, is that the banks usually max out at book value for a newer car, older vehicles usually require a certain amount down, and with that in mind, they would've given me $11k for my car, MAXIMUM, which of course is less than I paid. Even if lending was possible, it would've only been for a portion, since what the banks say and what the sellers say doesn't exactly line up.
Save your A$$ off and sooner or later you'll be able to buy it straight out.
Just my $.02.
rjp
Given your age and relative inexperience with credit, it would be a stretch to assume it'll go. Usually, banks feel better when the vehicle in question is newer (IE 7 years) and the event of repo, they can sell the car without too much drama.
As far as I know, it's difficult to find a commercial lender that'll give money for an older (Pre 87) car, including a Porsche.. Banks just don't see them as a justifiable risk. If it is done, it's usually lended to someone with years of repayment history and an established record. Plus, the terms of the loan are short compared to new cars, and the rates suck.
My purchase didn't involve any loans. Another thing worth considering, is that the banks usually max out at book value for a newer car, older vehicles usually require a certain amount down, and with that in mind, they would've given me $11k for my car, MAXIMUM, which of course is less than I paid. Even if lending was possible, it would've only been for a portion, since what the banks say and what the sellers say doesn't exactly line up.
Save your A$$ off and sooner or later you'll be able to buy it straight out.
Just my $.02.
rjp
10-09-2002, 09:43 PM
#3
[quote]Originally posted by Flat Six Addict:
<strong>So I'm looking at buying a Porsche (If I don't somebody is going to have to put me in the mad house) need to build some credit. So I'm just curious as to how hard it is to get a loan for an older Porsche in good shape. Do you guys generally buy the cars cash or take a loan??
I'm only 21 and don't have a house to take the equity off of... I'm going to put down at least 1-2 thousand dollars. Depends on what I find. I seem to be especially partial to the older cars, 70-72 911T for their simplicity, I have a second vehicle so daily driving shouldn't be a primary concern. I have never bought a car before, I paid cash for my truck. So I'm curious if a bank would even loan money for a car like this??? I'm not looking for junk, or concours, just something fun, clean, and running good.</strong><hr></blockquote>
Get a 914. They are less expensive and more fun to drive. They handle better too.
<strong>So I'm looking at buying a Porsche (If I don't somebody is going to have to put me in the mad house) need to build some credit. So I'm just curious as to how hard it is to get a loan for an older Porsche in good shape. Do you guys generally buy the cars cash or take a loan??
I'm only 21 and don't have a house to take the equity off of... I'm going to put down at least 1-2 thousand dollars. Depends on what I find. I seem to be especially partial to the older cars, 70-72 911T for their simplicity, I have a second vehicle so daily driving shouldn't be a primary concern. I have never bought a car before, I paid cash for my truck. So I'm curious if a bank would even loan money for a car like this??? I'm not looking for junk, or concours, just something fun, clean, and running good.</strong><hr></blockquote>
Get a 914. They are less expensive and more fun to drive. They handle better too.
10-10-2002, 01:03 AM
#4
Flat 6:
Here are some of my thoughts (this is free advice and you always get what you pay for)...
Let's say you found a decent car for $10k. Put down $2000. That leaves $8000 to finance (plus sales tax). IF you found a lending institution to loan you some money you may pay a high rate of interest on such an old car. Due to your lack of credit, your potential interest rate can go even higher.
Here's an example. Let's assume 11% interest. $8000 @ 11% for 3 years is $262 per month. If a 15% rate is used, it'll be $277 per month. On top of this monthly payment, you'll have to spend an average of $100 per month for repairs and maintenance. Older cars can be reliable, but age really takes it's toll after awhile and repairs can get expensive. Now you're talking almost $400 per month (maybe more if the car breaks a lot) on a 30 year old Porsche for at least 3 years. It would be a great driving experience, but not a great financial experience for a toy.
For those prices, you can lease or make payments on a pretty nice new car and not have to spend a nickle on maintenance. It's not much fun to be forking over $1500 for the clutch job you just had to have done while still sending off your monthly check for almost $300 to the bank.
Again, just my $.02...
Jay
90 964
Here are some of my thoughts (this is free advice and you always get what you pay for)...
Let's say you found a decent car for $10k. Put down $2000. That leaves $8000 to finance (plus sales tax). IF you found a lending institution to loan you some money you may pay a high rate of interest on such an old car. Due to your lack of credit, your potential interest rate can go even higher.
Here's an example. Let's assume 11% interest. $8000 @ 11% for 3 years is $262 per month. If a 15% rate is used, it'll be $277 per month. On top of this monthly payment, you'll have to spend an average of $100 per month for repairs and maintenance. Older cars can be reliable, but age really takes it's toll after awhile and repairs can get expensive. Now you're talking almost $400 per month (maybe more if the car breaks a lot) on a 30 year old Porsche for at least 3 years. It would be a great driving experience, but not a great financial experience for a toy.
For those prices, you can lease or make payments on a pretty nice new car and not have to spend a nickle on maintenance. It's not much fun to be forking over $1500 for the clutch job you just had to have done while still sending off your monthly check for almost $300 to the bank.
Again, just my $.02...
Jay
90 964
10-10-2002, 01:43 AM
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<a href="http://www.peoplefirst.com" target="_blank">www.peoplefirst.com</a> is great for financing older cars, as they don't go by blue book value. BUT, if your credit history is limited, they might not finance you, as their lending is based solely on your history rather than collateral or car value.
10-10-2002, 02:24 AM
#6
Interest payment alone is enough justification to save. Leveraging a car can be downright dangerous if you're tight on budget. If you have reliable transportation and have your other expenses in check and you're earning, just wait a while. You'll be WAY ahead in the long run.
rjp
rjp
10-10-2002, 10:43 AM
#7
Flat:
Save and pay cash! It's the only way. Like others have stated, maint and repairs will come into play and they are not cheap. Also insurance is another consideration. At your age with a P-car, it might be expensive. It would really suck to be making payments (loan and insurance) on your car while it is under repair somewhere for a couple of months due to the cost of the repair - i.e., tranny rebuild: $3K, new shocks: $500, Clutch: $1.2k, performace tires: $600 - $800, and the list goes on........as will your monthly payment.
Save son save and pay cash. Then use your cash flow later for repairs & maint. It took me three years to save $20K for my '86 911, however that gave me a lot of time to look at many, many different 911s. When I was ready to buy, I new exactly what to look for and what I wanted and when I fould it, I slapped down the cash.
Good luck and be careful!
Regards,
Jim
'86 911
Save and pay cash! It's the only way. Like others have stated, maint and repairs will come into play and they are not cheap. Also insurance is another consideration. At your age with a P-car, it might be expensive. It would really suck to be making payments (loan and insurance) on your car while it is under repair somewhere for a couple of months due to the cost of the repair - i.e., tranny rebuild: $3K, new shocks: $500, Clutch: $1.2k, performace tires: $600 - $800, and the list goes on........as will your monthly payment.
Save son save and pay cash. Then use your cash flow later for repairs & maint. It took me three years to save $20K for my '86 911, however that gave me a lot of time to look at many, many different 911s. When I was ready to buy, I new exactly what to look for and what I wanted and when I fould it, I slapped down the cash.
Good luck and be careful!
Regards,
Jim
'86 911
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10-10-2002, 11:21 AM
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Cash is king. At your age, unless you are buying a home, you should not be buying anything on credit.
The interest you would pay on a personal loan, assuming you qualify, is just obscene. Mortgage rates are below 6% but an unsecured loan will easily be three times that amount. That's a huge amount of your disposable income that is essentially wasted on servicing your debt.
So here's what you do. Like chuck951 said, get a 914. They are a blast. However, maintenance on a 914 will not be any cheaper than a p-car ten times it's price. But if you are not making payments on it, you can be setting aside a little bit every month for those expenses.
Then get a house or a condo. Put aside a little bit every month for that. At least as much as you spend on your p-car. If you get a fixed rate mortgage, your monthly cost will be set for 30 years. Even if you do not build any equity, I doubt you could rent a place that would never have a rent increase. Then, when you've built some equity, you can borrow against that at a greatly reduced interest rate to buy the SC of your dreams. But who knows, by then you may be completely smitten with the 914...
Stay out of debt. Build equity.
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
The interest you would pay on a personal loan, assuming you qualify, is just obscene. Mortgage rates are below 6% but an unsecured loan will easily be three times that amount. That's a huge amount of your disposable income that is essentially wasted on servicing your debt.
So here's what you do. Like chuck951 said, get a 914. They are a blast. However, maintenance on a 914 will not be any cheaper than a p-car ten times it's price. But if you are not making payments on it, you can be setting aside a little bit every month for those expenses.
Then get a house or a condo. Put aside a little bit every month for that. At least as much as you spend on your p-car. If you get a fixed rate mortgage, your monthly cost will be set for 30 years. Even if you do not build any equity, I doubt you could rent a place that would never have a rent increase. Then, when you've built some equity, you can borrow against that at a greatly reduced interest rate to buy the SC of your dreams. But who knows, by then you may be completely smitten with the 914...
Stay out of debt. Build equity.
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
10-10-2002, 11:23 AM
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Thanks for all the advice...
I really have thought a lot about getting a nice 914 that needs some tlc and making some upgrades to the chassis. However.
I am in a position that the only bills I have are cell, rent, insurance, and cable!! I have the ability to put away $500 a month, and if I work a second job, anywhere between $750-1000. Depending on how much of a social life I want to have. At this point I want a Porsche so bad I'm almost willing to work 24/7!!!
I also have not been able to get a credit card to build credit because I don't have a history with anyone yet. So I probly wouldn't be able to get any loans with an interest rate under 11%. However I was told that after six months of paying on that loan, you could refinance, but I assume that is based on the terms of your loan. My truck is valued at about $3,500 (not bad for 27 years!) I figured since I own it outright (my name on the title) I could use it as collateral. But then again that Porscheitis talking again and not my financial intelligence.
I guess I'll keep on reading about your cars and keep saving!!! I wonder how much I'm getting back for tax returns... <img src="graemlins/xyxwave.gif" border="0" alt="[bigbye]" />
I really have thought a lot about getting a nice 914 that needs some tlc and making some upgrades to the chassis. However.
I am in a position that the only bills I have are cell, rent, insurance, and cable!! I have the ability to put away $500 a month, and if I work a second job, anywhere between $750-1000. Depending on how much of a social life I want to have. At this point I want a Porsche so bad I'm almost willing to work 24/7!!!
I also have not been able to get a credit card to build credit because I don't have a history with anyone yet. So I probly wouldn't be able to get any loans with an interest rate under 11%. However I was told that after six months of paying on that loan, you could refinance, but I assume that is based on the terms of your loan. My truck is valued at about $3,500 (not bad for 27 years!) I figured since I own it outright (my name on the title) I could use it as collateral. But then again that Porscheitis talking again and not my financial intelligence.
I guess I'll keep on reading about your cars and keep saving!!! I wonder how much I'm getting back for tax returns... <img src="graemlins/xyxwave.gif" border="0" alt="[bigbye]" />
10-10-2002, 12:17 PM
#10
Credit card companies want consumers to think getting a card is a privelege. Screw that. Getting into debt and owing interest is not a privelege. A credit card you will soon see is about as hard to get as a library card. Like everyone says, don't get into the habit of financing anything that doesn't appreciate in value. You'll be sorry if you do. At $500.00 saved a month, you'll be driving soon. It'll take you close to that long just to find one that's nice. (At least that's what I experienced.) Plus, you'll never have to watch your paychecks afterwards. A little pain now, but worthwhile later.
Nothing feels worse than working for the bank....
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
Nothing feels worse than working for the bank....
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
10-10-2002, 04:20 PM
#11
[quote]Originally posted by RANDY P:
<strong>Credit card companies...</strong><hr></blockquote>
Actually I like credit cards, banks and other financial institutions. The key is GOOD credit. If you have good credit then you can take advantage of great offers. Most everything I buy that is $500+ is via store credit cards, but only if they give me a deal. Jewelry, electronics, home appliances, and virtually all other big purchases offer some sort of no interest/no payment deals for 6-12 months. It's free money. The trick is that you need to pay it all back and never be late. And don't get in too much debt. Good credit also allows one to qualify for good car loans. 0% for 60 months on a new car is a good deal. Too bad Porsche doesn't offer that kind of financing.
The other deal that credit cards offer is through those purchase checks. I can get a fixed "loan" through a credit card for less than a used car loan, 6% for the life of the balance. Again the trick is to pay these things off quick to minimize interest payments.
I guess my advice (aside from buying a 914) would be to consider your cash flow and the amount of risk you want to take. Looking back on the dollars I've spent on P-cars I'd have to say it's been money well spent. These cars are fun to drive and tinker with. Plus you meet all kinds of porsche fanatics. You only live once you know.
Enjoy now, pay later. Isn't that the American way?
<strong>Credit card companies...</strong><hr></blockquote>
Actually I like credit cards, banks and other financial institutions. The key is GOOD credit. If you have good credit then you can take advantage of great offers. Most everything I buy that is $500+ is via store credit cards, but only if they give me a deal. Jewelry, electronics, home appliances, and virtually all other big purchases offer some sort of no interest/no payment deals for 6-12 months. It's free money. The trick is that you need to pay it all back and never be late. And don't get in too much debt. Good credit also allows one to qualify for good car loans. 0% for 60 months on a new car is a good deal. Too bad Porsche doesn't offer that kind of financing.
The other deal that credit cards offer is through those purchase checks. I can get a fixed "loan" through a credit card for less than a used car loan, 6% for the life of the balance. Again the trick is to pay these things off quick to minimize interest payments.
I guess my advice (aside from buying a 914) would be to consider your cash flow and the amount of risk you want to take. Looking back on the dollars I've spent on P-cars I'd have to say it's been money well spent. These cars are fun to drive and tinker with. Plus you meet all kinds of porsche fanatics. You only live once you know.
Enjoy now, pay later. Isn't that the American way?
10-10-2002, 04:37 PM
#12
A 914 sounds like better suited to your situation. They're fun,handle even better than a stock 911 and have lots of upgrade opportunities.
911 parts are more $$ and a nice one for $10K that won't need a few grand thrown at it fairly quickly are hard to come by.
From a financial standpoint, buying on credit is OK as long as you have good equity in what you are buying, but you're throwing a lot of money away in interest.
If you think your credit will be a problem....find a co-signer....and be sure to follow through on payments
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
911 parts are more $$ and a nice one for $10K that won't need a few grand thrown at it fairly quickly are hard to come by.
From a financial standpoint, buying on credit is OK as long as you have good equity in what you are buying, but you're throwing a lot of money away in interest.
If you think your credit will be a problem....find a co-signer....and be sure to follow through on payments
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
10-10-2002, 07:15 PM
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You will find that many banks will not grant a used vehicle loan for anything older than 1995.
So - a loan may not even be possible unless it's a) specialized or b) a personal loan. Both of these types of loans will kill you in interest and are therefore NOT worth it. <img src="graemlins/c.gif" border="0" alt="[ouch]" />
Since your credit is not yet established you will need either a co-signer for a loan or cash. So,
In your case I'd say you should pay cash. Either wait and save it up OR (if possible) borrow it from a family member! You can either do it as a bridge loan (you pay them back in full when you get all the cash to do so), or make payments to them monthly like a regular loan. The best part here is "NO Interest". The "Bank of Mom" rocks for this when you're still young enough to use it!
BTW: if you want to begin establishing your credit, a great way to start is by getting a Dept. store card (i.e. Sears). They love to give these things to ppl. with little or no credit and especially push them around holidays! Anyway, get one and buy some cheap stoofs.. alla socks or shoes or a tie - whatever - as long as it's something cheap you can pay off as soon as the bill comes. Make that first payment in full and BOOM - yer on yer way to the world of wonderful plastic money! Soon everyone will want your name on their card! Watch out! LOL
Good luck!
-Vex
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
So - a loan may not even be possible unless it's a) specialized or b) a personal loan. Both of these types of loans will kill you in interest and are therefore NOT worth it. <img src="graemlins/c.gif" border="0" alt="[ouch]" />
Since your credit is not yet established you will need either a co-signer for a loan or cash. So,
In your case I'd say you should pay cash. Either wait and save it up OR (if possible) borrow it from a family member! You can either do it as a bridge loan (you pay them back in full when you get all the cash to do so), or make payments to them monthly like a regular loan. The best part here is "NO Interest". The "Bank of Mom" rocks for this when you're still young enough to use it!
BTW: if you want to begin establishing your credit, a great way to start is by getting a Dept. store card (i.e. Sears). They love to give these things to ppl. with little or no credit and especially push them around holidays! Anyway, get one and buy some cheap stoofs.. alla socks or shoes or a tie - whatever - as long as it's something cheap you can pay off as soon as the bill comes. Make that first payment in full and BOOM - yer on yer way to the world of wonderful plastic money! Soon everyone will want your name on their card! Watch out! LOL
Good luck!
-Vex
<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />
10-10-2002, 07:37 PM
#14
[quote]Originally posted by chuck951:
<strong>
. Good credit also allows one to qualify for good car loans. 0% for 60 months on a new car is a good deal. Too bad Porsche doesn't offer that kind of financing.
You only live once you know.
Enjoy now, pay later. Isn't that the American way? </strong><hr></blockquote>
Has anyone ever seen what they are charging for the rigs now on this special "0%" interest deal? Shopped a Dodge Durango, before the 0% it was down to $28k - after the 0% deal was launched price went to $35K -
Now answer me this? Is it REALLY 0% interest? Personally I'd rather pay the rate and get the lower principle. If I win the lottery or come up with a rich dead uncle I can pay off early and escape the extra interest. Can't do that if they inflated the principle.
There is no such thing as FREE FINANCING. The payment remains after the newness wears off. Banks do not work for free, nevermind what the ad says.
rjp
<strong>
. Good credit also allows one to qualify for good car loans. 0% for 60 months on a new car is a good deal. Too bad Porsche doesn't offer that kind of financing.
You only live once you know.
Enjoy now, pay later. Isn't that the American way?
</strong><hr></blockquote>Has anyone ever seen what they are charging for the rigs now on this special "0%" interest deal? Shopped a Dodge Durango, before the 0% it was down to $28k - after the 0% deal was launched price went to $35K -
Now answer me this? Is it REALLY 0% interest? Personally I'd rather pay the rate and get the lower principle. If I win the lottery or come up with a rich dead uncle I can pay off early and escape the extra interest. Can't do that if they inflated the principle.
There is no such thing as FREE FINANCING. The payment remains after the newness wears off. Banks do not work for free, nevermind what the ad says.
rjp
10-10-2002, 07:45 PM
#15
People First is offering 5.75%APR, regardless of model year, for purchases from a dealer, or 6.25 from a private party. They will cover 100% of the amount, which means you could use your cash for the inevitable odds and ends that need fixing.
Not to preach, but I agree with the earlier comment that a house should probably be your first priority if you are borrowing money for anything. But 5.75% is damn good for a used car. Almost like "free" cash, considering the dismal returns over the past couple of years on everything except real estate.
Not to preach, but I agree with the earlier comment that a house should probably be your first priority if you are borrowing money for anything. But 5.75% is damn good for a used car. Almost like "free" cash, considering the dismal returns over the past couple of years on everything except real estate.