Who has done a financial no-no in order to buy a classic?

[bull]

I mean cashing out a 401k, a cash-out refinance or maybe selling an heirloom to buy a Charger, Challenger, Cuda, etc.? I'm mostly interested in those who cashed out their 401k and how much they paid in penalties. Was it worth it?

[Blown70]

I mean cashing out a 401k, a cash-out refinancing, selling an heirloom, to buy a Charger, Challenger, Cuda, etc.? I'm mostly interested in those who cashed out their 401k and how much they paid in penalties. Was it worth it?

You mean when I am going to take all the cash I have in the bank to buy the two challengers?   Well its not doing me any good in the bank.

401K, shit I am self employed.  I have have what I have.

Tom

[Old Moparz]

I took some money from a joint savings account to buy the '70 Road Runner last summer, but it was discussed with my wife before I did it. She's fine with it, & knows that all the old cars are investments themselves. I wouldn't do it if it was going to deplete the savings, that would be stupid. As for cashing in a 401, I wouldn't do that either. Even if the value of the car exceeded the interest & value in the 401. I don't think I'd want to take the chance that the car market falls out, or something happens financially & I have to sell the car quickly & lose money. I think the penalties are somewhere around 30% too.

[Johnny SixPack]

We took out a 5-year loan from our finacial planning institution (Edward Jones) to pay for the "70 and "69.

Yeah, it hurts to lose $1000.00 a month to them, but it's money well spent I believe.

As I look at it, I easily get that much enjoyment out of them each month, and as a plus, I'm too broke to afford to do anything but put gas in 'em for the most part.

Sure cut down on the drinking.

And in 5 years once they are paid off (well, at least the initial cost of purchasing them), I believe they will easily be worth 15% more than I originally paid for them.

Not that that is a real driving factor, as I don't see myself as being able to part with either of 'em.

[Silver R/T]

I paid cash for mine

[694spdRT]

Fortunately, my classics are all paid for and I never needed to borrow any money on them because I have had them so long. I do have one loan on the '05 Cummins but, I at least I owe much less than it is worth.

I don't think that a classic car really would be a bad investment. The problem is that I would have to buy something I don't like or want. I could see having problems parting with anything nice as I have turned down several offers to buy the '69 in the first month I had it done.  

I had a chance to look at a 10,000 mile Plum Crazy '70 Challenger Hemi 4 speed on Friday and the guy was asking $350,000 for it. To be honest he really is not out of line looking at the current market. The problem with that investment is I don't have the $350K to buy it in the first place.  

[derailed]

I borrowed 10000 from my home equity but was able to pay it all off the following year with my tax return

[bull]

I borrowed 10000 from my home equity but was able to pay it all off the following year with my tax return

Dang. That's a big azz tax return.

[hemihead]

I think some people that are borrowing against their Houses , future, etc, may be very sorry someday as most cars are not really good investment property.

[PocketThunder]

I borrowed 10000 from my home equity but was able to pay it all off the following year with my tax return

Dang. That's a big azz tax return.

No kididing, he's paying in way too much if his return is that large in one year.

[triple_green]

You mean like borrowing $40K from a Home Equity Line of credit and then having the shipping company let the car roll off the back of the carrier and having the rear end smashed in? And then having the carrier/insurance co. still not pay for the damage yet after 2 1/2 months?

Nothing here 

3X

[bull]

You mean like borrowing $40K from a Home Equity Line of credit and then having the shipping company let the car roll off the back of the carrier and having the rear end smashed in? And then having the carrier/insurance co. still not pay for the damage yet after 2 1/2 months?

Nothing here 

3X

Yea, something like that. No resolution yet? Might be time to call in the big guns.

[derailed]

I borrowed 10000 from my home equity but was able to pay it all off the following year with my tax return

Dang. That's a big azz tax return.

No kididing, he's paying in way too much if his return is that large in one year.

Id rather have them take out a little more each week and get a big return than have a surpise at the end of the year.

[andy74]

i usually end up getting about 5 grand at tax time also,although i set my tax deductions high to cover the fact that my chrysler bonus cash is untaxed.a friend who worked with me didnt adjust his with holdings and had almost 20 grand in chrysler bonus money(2 years ago)and with no kids,wife etc,he had to pay almost 5 grand in taxes!

so,i use the chrysler money when i can for charger stuff,and half my return goes in the charger/project car fund,and the rest gets used for normal day to day bills etc.i also contribute 10%to my 401k,7 from me and 3 from my employer,which i am allowed to borrow against if need be-i did when i initally bought the charger,and then paid my self back with intrest because it was cheaper than a credit card that i used at the time.

i would do it again if i had to,because i cant drive my 401k,and smoke the tires !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Orange_Crush]

If you think about it, the act of buying one of these cars is a financial no-no...unless the car you buy is already restored, chances are pretty good you're gonna spend more on the resto than the car is actually worth.

Having said that, if you are gona borrow the money to buy one of these things, I would say that a home equity loan or line of credit would be the way to go...at least if you do that there is a tax break on the interest you pay.

I actually do something that everyone advises against with my taxes.  I have more money withheld every month which I wind up getting back at the end of the year.  I know that what I'm basically doing is providing the government with an interest-free loan, but it saves me from actually having to write a check to uncle sam every year AND I usually get 2 or 3 grand back which is basically "mad money."

[NHCharger]

Bull ,haven't you heard the expression "creative financing". Several years ago a moparts member bought a mid 60's C-barge. He financed the deal. He later had money problems and posted about his money woes and possibly losing the car. moparts members sent him money to help him out. Less than a year later he bought a second car, 73 Charger U code I believe. After showing off his new Charger next to his other car he couldn't understand why some members were upset that he made no effort to repay the people who helped him out instead of buying another car.

[Orange_Crush]

Bull ,haven't you heard the expression "creative financing". Several years ago a moparts member bought a mid 60's C-barge. He financed the deal. He later had money problems and posted about his money woes and possibly losing the car. moparts members sent him money to help him out. Less than a year later he bought a second car, 73 Charger U code I believe. After showing off his new Charger next to his other car he couldn't understand why some members were upset that he made no effort to repay the people who helped him out instead of buying another car.

Do Tell...who was that?

[Mike DC]

Actually, I think people have a distorted view of what's going up and what isn't.  The expensive cars selling for hundreds of thousands of dollars are the ones that are artificially inflated.  It's the regular street cars that are have been going up slowly & steadily for a couple of decades.  (And even now at the height of Barrett-Jackson fever, you can STILL buy them for no higher than the price of building them.)

You can buy one $220,000 Hemi Challenger and the market might go bust next year.  But if you bought ten regular Challengers for $22,000 each, then I'll bet you won't lose a dime.

.

[Orange_Crush]

Actually, I think people have a distorted view of what's going up and what isn't.  The expensive cars selling for hundreds of thousands of dollars are the ones that are artificially inflated.  It's the regular street cars that are have been going up slowly & steadily for a couple of decades.  (And even now at the height of Barrett-Jackson fever, you can STILL buy them for no higher than the price of building them.)

You can buy one $220,000 Hemi Challenger and the market might go bust next year.  But if you bought ten regular Challengers for $22,000 each, then I'll bet you won't lose a dime.

.

Precisely.  Ask anyone who bought a Ferrari on speculation in the early nineties.  Guys bought Ferrari Daytonas for 1.5 or 2 million dollars and, when the market went bust, they couldn't sell them for 300 thousand.

Something is gonna trigger a mass selloff of these cars, doesn't matter what it is, sometimes its nothing.  When that happens, prices are gonna go through the floor.

[Charger_Fan]

Normally I would absolutely not do something like that to get a car...I've learned my lesson on that crap, although in smaller doses.
However...back when I had that shot at that Daytona way back when, I would have DEFINITELY jumped in & done something like that. I only needed around 30K to get it...that would have been absolutely the best savings account I could have ever had!
The hard part would have been to sell it, so I could actually reap those profits.

Id rather have them take out a little more each week and get a big return than have a surpise at the end of the year.

Same here!
I had to pay 2 years in a row, when one of my kids reached 18 years old (one kid per year) & couldn't claim them the same way on taxes.
The first year I had to pay a ton, so I adjusted my take outs...but missed it by a little & still had to pay a few hundred bucks the next year. I'm still paying on that 1st one, BTW.

Bull ,haven't you heard the expression "creative financing". Several years ago a moparts member bought a mid 60's C-barge. He financed the deal. He later had money problems and posted about his money woes and possibly losing the car. moparts members sent him money to help him out. Less than a year later he bought a second car, 73 Charger U code I believe. After showing off his new Charger next to his other car he couldn't understand why some members were upset that he made no effort to repay the people who helped him out instead of buying another car.

That's pretty lame, for sure.
There's a divorced woman at my work. One of her kids ended up in the hospital for a while & she told another co-worker that the bills were piling up. Feeling pity, the co-worker went around to every employee & asked if they'd like to donate a little to help out. Most everyone donated something.

About a month later, she comes in with a nice new expensive watch & makes sure lots of people see it...she can't understand why people are pissed & now treat her differently. She didn't say thanks to anybody other than the first co-worker who felt pity for her in the first place.
I don't know how the kid is doing, don't care either.

Sorry for the hijack, Bull.

[NHCharger]

OC, I'll PM you. Don't want to go spreading dirt, even though it's true.

[chrisII]

just today i filled out paperwork to borow another 3g on my home equity loc. i found a duster that i feel i would be foolish not to buy, and the charger neaded a litle brother (ok i just wanted something shiny and cool to drive while the charger gets done right). i feel that the car is currently worth about $1000 more than the selling price so paying prime interest on it doesnt bother me much, especialy when its tax deductable. is this a good investment? we will see i guess, but i know ill enjoy the car. ive worked since i was 15 to be able to finaly afford a kool , shiny driver and i intend to enjoy it. loosing my mom and an uncle both to natural causes and in there early 50s last year taught me to live for today, never know if we have a future to save for.

[472 R/T SE]

He changed his username, it's HemiDreams.    He owns a Corvette now.

When I got hurt I cashed out the 401k initially cause I didn't know I would go from the hospital to the office at work, ended up using the money to buy a Super Bee.   At the time I really didn't care about taxes, living for today.  I paid 5k initially in penalties and then the government reamed me out at the end of the year.  Very bad choice but I don't give a sh#t, whaddya' do.  Since then, I've "flipped" (as some of you like to say) a few cars to move up the ladder from that Super Bee, and have done good I think.  I consider my little Chally my 401k now.

Before I was hurt we used a home equity loan for the car stuff per accountant for a write off.

[BigBlockSam]

i tried to cash out my 401k to buy a superbird but after all the penalties and taxes , i didn't have enough left to buy the superbird. so i left it alone. i bought all my chargers cash. i was lucky i bought them berfore they got super expensive. Rene

[Old Moparz]

I thought I'd bring this topic back from the dead since anyone answering Bull's original question now might do it differently. The reason I went looking for this thread, was I got a statement at work the other day showing the vested amount I have in two 401K plans. We have profit sharing here & my employer contributes to the plans. Kind of made me feel sick, but it would have been worse if it came right out of my own pocket.

Without actually posting the amount that disappeared on me, if I took the money out myself, I probably could have bought a brand new Challenger SRT8 & still had enough money to go get a crate Hemi for one of my old clunkers.   

[PocketThunder]

I thought I'd bring this topic back from the dead since anyone answering Bull's original question now might do it differently. The reason I went looking for this thread, was I got a statement at work the other day showing the vested amount I have in two 401K plans. We have profit sharing here & my employer contributes to the plans. Kind of made me feel sick, but it would have been worse if it came right out of my own pocket.

Without actually posting the amount that disappeared on me, if I took the money out myself, I probably could have bought a brand new Challenger SRT8 & still had enough money to go get a crate Hemi for one of my old clunkers.   

Yep, took about 40% hit myself, but i've got another 40 years to work before i can retire so i should be able to absorb it.  I should have cashed it out at the peak of 2006 and payed the 30% fee's.  I'd still have more than i do now.  But that stock will be worth something again some day... right?..??   

In thread topic relation.  When i was young, dumb, and full of bubblegum i used my credit card to buy parts for my ongoing 55 Chebby project.  When i got it done i had a nice car but i just didnt feel good about it because i still owed $5000 to the credit card on it.  I finally paid that off and then i felt like it was really my car. 

Now its cash and carry, if i dont have the cash to buy the parts then i have to wait, just like the old old days.

[Charger_Fan]

Now its cash and carry, if i dont have the cash to buy the parts then i have to wait, just like the old old days.

Same here. That's why my Charger isn't done.

[Old Moparz]

Now its cash and carry, if i dont have the cash to buy the parts then i have to wait, just like the old old days.

Same here. That's why my Charger isn't done.

Wouldn't it be nice if your cash was so heavy you couldn't carry it?   

I decided after charging some parts like PT did 25 years ago, that I wouldn't do that ever again. Mine was only about $1000, but it still bugged me.

[69charger2002]

If you think about it, the act of buying one of these cars is a financial no-no...unless the car you buy is already restored, chances are pretty good you're gonna spend more on the resto than the car is actually worth.

Having said that, if you are gona borrow the money to buy one of these things, I would say that a home equity loan or line of credit would be the way to go...at least if you do that there is a tax break on the interest you pay.

I actually do something that everyone advises against with my taxes.  I have more money withheld every month which I wind up getting back at the end of the year.  I know that what I'm basically doing is providing the government with an interest-free loan, but it saves me from actually having to write a check to uncle sam every year AND I usually get 2 or 3 grand back which is basically "mad money."

i do the exact same thing. i get 7-8k back each year and i use that as mad money to buy something good. this year it was a pontiac ram air trans am.. yes yes i know.. try finding a good looking 98-02 dodge car like the trans am with 325 hp dead stock. ok case closed.. and no a SRT-4 pile-o-crap neon does NOT count
trav

[bigcountry]

I bought my Charger and Road Runner with cash in '07 and '08 respectively.  I have been saving up to do the restos.  I lost enough last year on my 401k to do a rotisserie resto on both cars. I was always hesitant on the 401 contributions and just upped my contribution to the max a few months before it all went to pot.  Hopefull It'll recover soon. Whatdda you do?

[richard pettys 73]

I dont have alot of money but to buy my first charger (i just bought it last week) i used some money from an accident that i was in instead of paying off all my doctor bills . however i did call the doctors and they said they would settle for three grand less....so i dont guess i did to bad . Now i am hoping to pick up another charger if everything goes right just got to finish up some minor details i hope.

[BigBlockSam]

howdy

Yep ,a lot of things have changed since last time i posted in this thread .  i rolled my 401k into an IRA . i was forced to retire from my job of 28 yrs . for medical reasons .

then hotrod  told me he was willing to sell me his b5 blue superbee  that I've was asking him to sell me for several yrs . i discussed it with my wife . she told me , take the money from the IRA , i got me a great wife . everybody else told me not to mess with my retirement money . we did it anyway . since I'm disabled there's no penalty . it's just treated as income .

THANK GOD I DID IT!  That money would have been gone by now . i lost about 50% in my IRA  but i got me my #3 car in the top 5 cars i  want to own .

i still can't seem to get enough money to get the #1 car  i want to own. a superbird . maybe someday . Rene

[jaak]

Now its cash and carry, if i dont have the cash to buy the parts then i have to wait, just like the old old days.

Same here. That's why my Charger isn't done.

x3..... what these guys said.

Jason

[bull]

They always tell you not to mess with your 401k accounts but then you look like a fool now if you didn't mess with it. I thought long and hard about cleaning mine out a few years ago (about the time I started this thread) to finish the Charger once and for all but finally decided to "do the right thing" and leave it in. Now it's worth about half what it was when I was going to liquidate it and my Charger's still not done .

[BlueSS454]

I have always paid cash for any of the cars I have....none of which have netted me over $500.  Of course, all the cars I buy are rusty junk.  I save $$ to blow on the parts during restoration...labor is free for me since I can do it all myself.  Bottom line for me is, if I don't have cash on hand, it can wait.

[TheGhost]

I took out a high interest loan to buy the Barracuda.

When I sold the Barracuda, I still didn't have enough money to pay off the loan completely.

[1969chargerrtse]

I have no idea what money I have lost in my 401 and I don't want to know.  There's nothing I can do about it.  For those that took money out before the crash, that's like buying a Hemi car back in the day and still having it.  Who knew?  I was shocked to get about 9,500 back this year.  Last year it was 7,000.00.  I spent about 3,000.00 on the Charger on parts ( lets not go there ) and the rest for bills.  Were doing well in my company with elevators, but sometimes I worry, you never know what can happen an then it's bye bye Charger as the family and keeping the home comes first.  I just want to get to the point where I can say it was fun while I had it.  It's all back together, if I can get a whole spring and summer out of it, I'm cool.  I bought my car with some 2nd mortage money and have no regrets.

[68charger383]

I lucked out, the boss has been tinkering with setting us up with a 401K for the past four years, but never got around to it.

I bought my charger last year with a classic car loan from my credit union at 5.75% interest. So I pay something like $45.00 month to interest for the car loan.

I don't know if they still do classic car loans, but at that rate, I'll do it again for another car. I'll have to check the next time I go in to pay my loan payment. 

[89MOPAR]

   Well, depending on where you work, you may not incur any penalty.   I borrowed money about 3-4 years ago from our version of a 401K  [ thrift savings plan for gov't workers ].
So i paid myself back at about a 4% interest rate.  Since i kept my job, there were No penalties.  But if i had gotten fired or quit, yes probably 35%.
    Point being depending on how your plan is structured, if you keep your job until the loan is payed off, there might not be any penalty.

I'd also suggest getting a home equity loan vs a "line of credit" . I haven't seen one line of credit without a variable interest rate.  Right now funding rates are at an extreme low, so if you got an "equity line of credit" , you can only expect for your loan payment to go up,up,up.   With the "loan" your interest rate is fixed.  What you pay now is what you'll pay in a few years.

Wife and i called my retirement plan loan the " former car sin loan " .  Since i had sold or traded the cars it had funded before the loan was payed off.
  Payed back about $3700 last year on normal payments.  Plus about another $6000 i paid extra towards it , from tax return / overtime/ budgeting/ etc.
Well my retirment plan account lost at least double that amount last year !!  So it all sort-of went down the drain....
    But at least it's paid off now !!      However the wife will not agree to borrow money again      I believe once you are married, the spouse has to sign the loan papers also.

[SFRT]

I saved up and paid cash.

[Mike DC]

I'm smart about not getting into any debt to purchase vehicles, but I'm dumb about how much I'll eventually spend on them after the initial purchase.

[mauve66]

only if her name is on it, if its from work the only way her name is on it is as benificary, soooo if you piss her off she COULD get the car AND whats left in the account

[Mefirst]

Took a loan for 2/3 of price when I bought my Charger. Later I bought an apartment, the apartment value today is allot higher than what I payed for it, so if I sold my apartment Id get enough cash to pay off al loans, have enough over to pay 10% cash for a new apartment loan. So in that regard my Charger is payed for.

Today I save money from my salary to pay for parts needed, I wont take any more loans for it. If I would sell the Charger, it would bring in about double of what I originally payed for it...

/Tom