Financing / Paying for Factory 5 Kit

[THUNDERSTRUCK]

Just a question of curiosity.

How is everybody paying for their kits?
Cash, Financing or other.

If financing any suggestions or recommendations

[Frenchie]

I saved up and will be paying cash in August.

[otto halstead]

My wife paid cash for my first MKII, I used some of the insurance proceeds when it was totaled to pay for my MKIV.

[rthomas98]

I financed through my credit union. They gave me the same percentage rate as buying a new car but it was technically a personal loan. I actually just paid it off this year.

[F500guy]

Along that line, what did the accept for transaction, was it a wire transfer?

[rthomas98]

Along that line, what did the accept for transaction, was it a wire transfer?

Are asking about what factory five accepted? It was credit card for the down payment and then I sent in a check for the rest.

[edwardb]

Factory Five provides payment method options when it's time for the full final payment. I've always mailed a bank check. But I know they also do wire transfer. The initial deposit via a credit card is the quickest/easiest.

As for financing, expect most will recommend paying cash. Including me. Don't flame me, but if you can't muster the cash, maybe not time yet. Keep in mind that you don't have to spend the whole budget at once. Since most builds are over a 1-2 year period (obviously some shorter, some longer) and all the parts aren't needed up front, you can pay as you go. Which helps. Some will also drive in gel coat for a period (year or two, whatever) for shakedown but also to save up for the paint job.

[Dgc333]

I paid with a personal check.

[GoDadGo]

I borrowed half the funds needed from my 401-K.
The other half came out of my personal checking account. (Not Our Family's Operating Funds!)
The interest I paid, was paid back to my retirement account.

[Sarcasticshrub]

CC for the down...

I sold another car project for the kit + shipping costs and a few more items after delivery.

I'm looking at a 3-year build so making purchases as I go is my plan. Sales and even more detailed planning are in the works (as if the last year of waiting for completion wasn't enough time :p.

[CDXXVII]

I saved 10K and financed 20K.

From there I just took my time and built it over the next 5 years. Gave me the time to pay off the initial 20K and save for everything else I needed to complete the build. It also gave me the time to not cut corners and do everything right the first time. Too many build are put together in a hurry and the attention to detail is just not there.

I hear a lot of comments about how you should not buy if you cant afford it out right. I don't agree. Be responsible and if this is your dream don't wait until you are too old to enjoy it. I officially finished mine on my 55th birthday. If I had waited until I had all the stars lined up and the cash up front I probably would have never done it.

https://thefactoryfiveforum.com/attachment.php?attachmentid=180275&d=1530502919

[RoadRacer]

I saved 10K and financed 20K.

From there I just took my time and built it over the next 5 years. Gave me the time to pay off the initial 20K and save for everything else I needed to complete the build. It also gave me the time to not cut corners and do everything right the first time. Too many build are put together in a hurry and the attention to detail is just not there.

I hear a lot of comments about how you should not buy if you cant afford it out right. I don't agree. Be responsible and if this is your dream don't wait until you are too old to enjoy it. I officially finished mine on my 55th birthday. If I had waited until I had all the stars lined up and the cash up front I probably would have never done it.

https://thefactoryfiveforum.com/attachment.php?attachmentid=180275&d=1530502919

Similar here. I was lucky that the hot rod comes in two stages. For both $10k payments I used a 0% cc offer and spread the payments over the next year. I was always doing it on the cheap, with a secondhand motor, junkyard rear and no paint. It took three years but I now drive the wheels off this thing. No way I wasn’t going to do this.. I finished mine at 56 years old and life’s too damn short to wait!

[Jeff Kleiner]

Ca$h.

Jeff

[JeffP]

I borrowed half the funds needed from my 401-K.
The other half came out of my personal checking account. (Not Our Family's Operating Funds!)
The interest I paid, was paid back to my retirement account.

Probably not the most popular method, but I did the same thing. I took the loan at the end of 2021 with the market was still at a pretty good peak and then it crashed through 2022. It actually worked out really well that I pulled that cash out when I did and paying myself back the interest is now buying all that stock back on the cheap.

[csmith]

Like others in this thread: CC for the down payment (for convenience); and personal checks for both the kit and drivetrain. I waited till I had the cash on hand for the build and a 15% buffer for tools and whatnot before ordering. Took ~7 years of additional savings, but I understand not all jobs pay well enough to do that. So using your better judgment for what you want for you and your family is probably the right path.

[ggunter]

I was fortunate enough to have cash (thanks to my dad leaving me a few bucks when he passed). However, a home equity loan works well too, and you can deduct the interest.

[edwardb]

...However, a home equity loan works well too, and you can deduct the interest.

Home equity interest is only deductible if (1) you itemize, and since the standard deduction has been raised quite a bit, fewer people qualify, and (2) the funds are used to buy or build a home or improve your existing home. The latter is based on IRS guidelines starting in 2018. A home equity loan is a source of funds for multiple purposes. But tax deduction of the interest isn't there any more for these builds.

[ggunter]

I haven't had a house payment for almost 20 years, so I guess I'm out of touch on that one. I did buy a boat that way a bunch of years ago.

[Papa]

I'm in the cash category. For me, anything that isn't an absolute necessity should be a cash purchase.

[lewma]

I'm lucky enough to be in a position where I used cash, which is the only way this could have worked. No way would my other ( better ) half have given the green light if it was to be financed.

[Chadillac]

I didn't have enough cash for everything at first, so I bought the base kit and have purchased parts along the way as funds allowed. The upside is no loans, but the downside is you'll be paying more shipping costs. Just another option...

[F500guy]

Now that I am retired, I am still looking at options. Bulk of my wealth is in retirement accounts, so that is an automatic 25% tax hit on any money I pull out so that gets ugly fast when looking to do large purchases. So I have great credit and lots of options for 7% or less interest loans so I am probably looking at a combination of sources.

[Scott L]

Cash - Keep in mind that the kit cost is less than half of the total cost for most builders...

[drewr]

Whatever you choose, you want to factor in some flexibility. You may change your mind about options/parts as you go; some things may not work as you thought; you might make mistakes. You might fall in love with a $20K paint job. The process is good, but it will likely throw you a curveball or two along the way. So I'd think you wouldn't want to be in too much debt and find yourself stuck at some point. If you get a loan, make sure you can carry it comfortably. Unlike a new car, it is harder to turn around and sell a pile of parts if you get in over your head.

I took advantage of the COVID used car bump and sold another car to pay cash for my Coupe.

[jts359]

I bought a completed car , But I sold an Avanti and a TR7 Plus money I made from doing a Studebaker truck restoration , Ed

[Lickity-Split]

I'm not normally a fan of financing toys, boats, snow mobiles, etc. because they are depreciating assets. The more you borrow, the more money you lose.
However, in most cases I'll bet your finished FFR project will be worth at least your investment, and will probably increase in value in the future.
So, in this case your monthly loan payment wouldn't really be any different functionally than a 401K contribution, or other such investment.
The only problem with this approach is that any investment will only pay off when you sell it, and I don't see the investment in my Cobra paying off for quite a while ;)

[Ducky2009]

Ca$h is King

[Jacob McCrea]

Cash - Keep in mind that the kit cost is less than half of the total cost for most builders...

That's an important point for anyone using credit to buy the kit. I used credit for either the downpayment or the final payment - I forget which. But did so sensibly and paid it off quickly, with little finance charges.

Even with the kit paid off, the build process reminded me of the aircraft owners' saying: acquiring the machine is the cheap part, it's everything else that's expensive. It was clear that I would be in a money pit if I were (1) paying more than nominal interest on the kit, and (2) also having to put parts on a credit card, pulling money from a 401K, etc. There were times when my build sat for months as I saved up money to acquire the next component. I was fortunate to have the storage space - and patience - to do so.

[Mikey/PR]

Sold my 2 projects in order to pay for mine. A 1968 Mustang and a 2012 Mustang GT. Wire transfer at the end.

[ydousurf]

I'm in the 401K group. If you have one, use it! We can discuss this until our eyes bleed green (dollars) that is! Yes. Yes, you will lose money buy taking it out, if the market is strong or not so much. But you do pay yourself the interest back in the form of 4-8% or so. However, depending on your 401; and the dollar amounts and guidelines on how much you can lend yourself, etc... I know my bank, even with my really good credit was not going to fork over 50grand with no collateral down? I took my buxs, smiled, and then the market began the chaotic roller coaster ride. I'm still smiling! :) So in the end, think of your build as an investment. To put in perspective, if you can achieve 10% or higher (double digit growth) on your 401's, then your doing as well as a brokerage firm! I do my own investments and have achieved a high of 31% return and in double digits every year. That is, minus the 2007-08 and even 21-22 and even 23 years of crazy! In those cases, never panic. JUST LET IT RIDE!

Anyway, always remember folks... YOU CAN'T TAKE IT WITH YOU!!! Chase your dreams, at all costs! :D

Doug

[Badfish]

If you live in CT, make sure you also plan appropriately for annual property tax, mine skyrocketed to $1500. Seems to vary significantly by town, but something to keep in mind prior to purchasing.

[DanQ]

I am working my way up the ladder. I bought a 1953 Ford F100 back in 2015, restored it, sold it, took that money and bought a Jeep CJ7 in 2019, restored it, sold it, which covered my complete kit (33 Hot Rod) arriving in June. Any additional costs will be paid along the way. Sure is easier when there are no more house payments and kids are both through college.

[MSumners]

If you live in CT, make sure you also plan appropriately for annual property tax, mine skyrocketed to $1500. Seems to vary significantly by town, but something to keep in mind prior to purchasing.


On a car?

[Badfish]

Yep, on 1 car, my 2003 FFR kit car.


On a car?

[FredG]

Cash ... it's a toy.
That said, life is short, if you can manage financing (without putting your family through pain) it will cost you more but you will be in heaven.

[phils88gt]

I said the below on the "other forum" but I think it's relevant.


You are not guaranteed tomorrow.

Is this really that important a thing you need to do? If it is then do it. I wish I started years ago and I would have been making memories with my dad back then. When the time came that it was now or never I did borrow the money to start. I had the cash to buy outright but in today's times keeping my cash liquid was worth the interest cost to me. I own my home which is less than spectacular, drive old cars I fix, and these are all choices I've been making for my whole adult life. It however never left me piles of cash. I always found something to use it for. Be that responsible things like real estate or stocks, or lesser things like eating out and traveling. Even those trips to dinner and travel were not lost; some of the best memories of my life are there. I have no fond memories of buying etfs. ( I'm not saying investing is pointless )

I actually find the insinuation that not having 14k cash for a toy is irresponsible to be comical. Anyone that has ever paid a payment on a boat, new car, or even a second home ( that isn't a rental ) is taking unnecessary risk. There are a lot more people paying a mortgage than those who dont. Ironically I don't have a mortgage and I try to live debt free. What I am advocating is If this is really a dream and not a toy you will be tired of in a week then take the leap and get going. Your dreams get no closer without action, and the lofts up high are never met if you always look up.

Of course only you can decide if you can afford to do this, but you also can mitigate your cost on your own resourcefulness. The other thing about this is you can stop if you have to. It would suck to make payments on a car you don't drI've but hey plenty of guys make payments to women they are not married to anymore. Saying they should have stayed home instead of meeting her is a padantic argument.

So, I'm advocating that the cost of borrowing can be far less the the cost of not following your dreams. A life without purpose is no life at all. If this is going to be a super cool toy you will work on for 4 hours and give up. Try to buy one complete.

[rthomas98]

I said the below on the "other forum" but I think it's relevant.


You are not guaranteed tomorrow.

Is this really that important a thing you need to do? If it is then do it. I wish I started years ago and I would have been making memories with my dad back then. When the time came that it was now or never I did borrow the money to start. I had the cash to buy outright but in today's times keeping my cash liquid was worth the interest cost to me. I own my home which is less than spectacular, drive old cars I fix, and these are all choices I've been making for my whole adult life. It however never left me piles of cash. I always found something to use it for. Be that responsible things like real estate or stocks, or lesser things like eating out and traveling. Even those trips to dinner and travel were not lost; some of the best memories of my life are there. I have no fond memories of buying etfs. ( I'm not saying investing is pointless )

I actually find the insinuation that not having 14k cash for a toy is irresponsible to be comical. Anyone that has ever paid a payment on a boat, new car, or even a second home ( that isn't a rental ) is taking unnecessary risk. There are a lot more people paying a mortgage than those who dont. Ironically I don't have a mortgage and I try to live debt free. What I am advocating is If this is really a dream and not a toy you will be tired of in a week then take the leap and get going. Your dreams get no closer without action, and the lofts up high are never met if you always look up.

Of course only you can decide if you can afford to do this, but you also can mitigate your cost on your own resourcefulness. The other thing about this is you can stop if you have to. It would suck to make payments on a car you don't drI've but hey plenty of guys make payments to women they are not married to anymore. Saying they should have stayed home instead of meeting her is a padantic argument.

So, I'm advocating that the cost of borrowing can be far less the the cost of not following your dreams. A life without purpose is no life at all. If this is going to be a super cool toy you will work on for 4 hours and give up. Try to buy one complete.


I agree fully. The reason I ended up financing my project is I have a medical condition that as I get older I will be less likely able to work on a car like this. I didn't want to be in a position of having the cash for the car and not be able to have the fun of building it. So I will take the debt over the regret any day of the week. Plus my loan gets paid off this year anyways so no regret and no debt real soon.

[2FAST4U]

All my builds have been cash

[red.barchetta]

My build is being done with cash.

Being a Canadian build, the kit alone right from the get go is 40% more, then add the missing components removed to make the kit Canadian import compliant, adds up in a hurry. So the added interest costs of financing did not make sense for me.

You have to really really want to build a FFR car right now up here with the current exchange rate…

[RBachman]

I used my own money, but only because I did not want to think about payments every month.

[Kbl7td]

Was going to use cash after selling my SLC, but using card now with 18 month 0% financing. My opinion is always leverage a bank and spare cash for other appreciating assets.

[AC Bill]

One of the issues I see in building a car today is the new mind set that newer builders have gotten, in that you must use new parts for it. This can cost you thousands and thousands of dollars more, than if you went the donor build route.
For years and years, hundreds of fellows built their dream car on a shoestring budget, using donor parts, exactly as Factory Five intended builders to do. Those cars are still being proudly driven around 35 years later. You could still do it today if you don't get caught up in all the free advice, on how to spend your money, and you won't require such a large $$ amount all at once. You buy things as you can afford them.
Maybe start your dream by buying a donor that you don't need to finance. You can learn a lot about building a car when you have to strip one down yourself. Cleaning up and painting parts isn't expensive, and can be fun to do while your waiting for the next step in ordering the base kit.

[UpNorth]

Ca$h is King

Spot on!