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post #1 of 36 (permalink) Old 06-07-2019, 04:27 PM Thread Starter
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Lightbulb Financing Thread....

So, I've done some searching, and most threads were 10 years old...

I figure, we should start a financing discussion thread to get more folks onboard (including myself)

It's odd that FF doesn't have a Financing link on their homepage, but I found it with a simple search https://www.factoryfive.com/order-a-kit/financing/

Rocket Loans by Quicken Loans Features:
  • Loan approval amounts are between $2,000 - $35,000 (Minimums vary for some states, see below)
  • Loan terms can be either 36 or 60 months
  • Depending on the credit, APR will be between 5.98% - 28.99%
  • The customer receives their funding within 24 hours
  • There is no pre-payment penalty
  • Rocket Loans will approve loans with a credit score as low as 650
  • Not available in these states: Nevada, Iowa, West Virginia, North Carolina

Minimums are different in these states: Ohio-$5001; New Hampshire-$10,001; Massachusetts -$6,001; Georgia-$3,001; New Mexico-$2,501.

What other options have you builders used?

I know, there are some of you who lump-payment their cars (lucky guys)

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post #2 of 36 (permalink) Old 06-07-2019, 04:37 PM
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There is a link on the Home page right below the link for the DVD and Brochure.

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post #3 of 36 (permalink) Old 06-07-2019, 05:03 PM Thread Starter
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Originally Posted by Orion22 View Post
There is a link on the Home page right below the link for the DVD and Brochure.
LOL dammit - I'm blind!

anyhoo, surely there are other options - I wouldn't think a standard car loan would be possible...

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post #4 of 36 (permalink) Old 06-07-2019, 05:12 PM
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Holy cow, the high end of those interest rates! When I researched it, I found that many, many went the lump-sum route, and that's what I ended up doing after exploring things a bit. It took years of pinching and saving, to the sacrifice of some other things, but in the end, I'm glad I went that route. I created a separate account and direct-deposited a percentage of my paycheck into it every month. I didn't touch that account except for things related to the build, and I put in extra money whenever I could. In the end, I was able to write a check for the kit, and then I started saving for the motor. Once I had enough for the motor/transmission, I was able to purchase it, and I started saving for body work and paint. I've had enough to do that for a bit now and am just trying to get this thing completed into go-kart so I can send it to Jeff K. for his magic touch. All of this has happened with the full agreement of my wife. Happy wife, happy life.

As for other options, personal lines of credit with fixed interest can be used, though they have size limits if they are not secured. I would stay away from any sort of home equity situation, personally, though I have heard of a few others who have gone that route. I just can't imagine putting any sort of risk on my home equity. Credit cards are a possibility, but the interest rates would suck unless you can get some sort of special.

Best of luck to you!

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post #5 of 36 (permalink) Old 06-07-2019, 06:15 PM
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Not to be a wet blanket, but financing something that is essentially a toy, is not a good financial move.
Save your pennies, skip a couple coffees, beers, and dinners out, and buy when you can actually afford it. The good thing is that you don't have to buy it all at once. You can basically build the entire car without an engine and transmission, or wheels and tires. Paint and bodywork, a major expense, can be put off indefinitely and you can still drive the car.

28.99% - WOW!

Let's say you borrow $40,000. That is a low-ish budget for a pretty good car.
You end up paying $76,166. You are paying for two cars, but you only get one.
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post #6 of 36 (permalink) Old 06-07-2019, 06:45 PM
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It's a toy.

I strongly suggest you save up and pay cash. I wouldn't recommend financing it- or anything else for that matter (except a home).

So that means you can't order it today...but I've never heard of savers remorse.

If you need help figuring out how to do this, I recommend following the seven baby steps advocated by Dave Ramsey. It's free and it works!

https://www.daveramsey.com/

HTH,
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post #7 of 36 (permalink) Old 06-07-2019, 07:24 PM
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Borrowed against 401k, done it on all three builds so far. Paid them all off early. Couple of times the interest I was paying myself back was more than it was making in the markets. So it was kinda like saving but with more instant gratification. Waiting till you can pay cash is smart in some ways but you're just putting off living your life till later.
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post #8 of 36 (permalink) Old 06-07-2019, 08:37 PM Thread Starter
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Originally Posted by Joe Campbell View Post
Borrowed against 401k, done it on all three builds so far. Paid them all off early. Couple of times the interest I was paying myself back was more than it was making in the markets. So it was kinda like saving but with more instant gratification. Waiting till you can pay cash is smart in some ways but you're just putting off living your life till later.
that's an interesting model for sure!

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post #9 of 36 (permalink) Old 06-07-2019, 08:41 PM Thread Starter
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Financing Thread....

Quote:
Originally Posted by LuvAZ View Post
It's a toy.



I strongly suggest you save up and pay cash. I wouldn't recommend financing it- or anything else for that matter (except a home).



So that means you can't order it today...but I've never heard of savers remorse.



If you need help figuring out how to do this, I recommend following the seven baby steps advocated by Dave Ramsey. It's free and it works!



https://www.daveramsey.com/



HTH,

Will


thx - i'm way past the 7 baby steps, just was curious as to people's motives, and approach... I can't imagine being a guy that finances a kit, and doesn't finish it - yet pays on it monthly...

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post #10 of 36 (permalink) Old 06-07-2019, 08:46 PM
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I did a home equity line of credit. Now that income taxes are different that may not be such a good idea from the pure financial point of view. Took me 5 yrs to pay it off, but, hey I have an FFR that I could not have had otherwise.

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post #11 of 36 (permalink) Old 06-07-2019, 09:07 PM
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I went the buy what you can when you can route.

In the mid 2000's I asked the financing question and for the most part got the "its a toy - don't finance" advice. I do not recall factory Five having financing back then either. I am averse to paying much in interest for anything so I went the pay as you go route.

My story:
In 2008 I bought the kit with the options I wanted. A few months later I bought a running 1991 Mustang donor that had a wore out 2nd gear. I thought I had what I needed to build my dream car. After disassembling the donor I quickly realized I did not want the bulk of the parts off of that Mustang on my dream car. (Note: If you go the donor route get a low mileage donor in good condition.) The donor I purchased trying to get a car on the road sooner rather than later was a mistake. I got bogged down with reassembling the engine and wiring and let the kit set for years while life and family got in the way (I don't regret letting life and family get in the way at all), all the while paying insurance for a heap of parts in my garage. In 2016, timing and finances were up to the task and my wife and I decided to have someone finish the car, minus body work and paint. Right now I am in my late 40s and I have a had the kit for 11 years, only 3 of which I have been able to drive it, and it is still sans body work and paint. I can say I never financed a dime for my Cobra though. The pay as you go route worked for me and I am still not done yet.

For me, I'd finance a finished car or pay as you go without financing.
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post #12 of 36 (permalink) Old 06-08-2019, 02:34 AM
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I subscribe to the "don't finance a toy" school of thought (heck, at this point in my life I don't finance anything) and paid cash.

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post #13 of 36 (permalink) Old 06-08-2019, 03:55 PM
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Never ever paid cash for a car except for the COBRA.
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post #14 of 36 (permalink) Old 06-08-2019, 07:10 PM
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I paid cash but it is spread out over years. Buy the kit and build it for 2-3 years the damage is spread out!!

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post #15 of 36 (permalink) Old 06-08-2019, 07:37 PM
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My wife had some stock options at work that had split several times and she was ahead quite a bit so she sold some to pay cash for my first MKII. It was totaled in an accident so I bought a MKIV with the proceeds plus kept the engine, transmission, rear end, and a lot of the smaller items. Almost finished and Iím still 12K to the positive from the insurance payment! Pretty much just have bodywork and paint left.

Iím in the pay cash for a toy group, but I donít advocate getting into a car wreck to come up with the funds.

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post #16 of 36 (permalink) Old 06-09-2019, 12:05 AM
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Paying cash for this or that is fine. I am envious of those who could do that. I almost never did until about 8-10 yrs ago when my wife started earning what was/is big $s for us. And even now her $ go mostly for house/home stuff. But I am not stupid either. I use credit smartly. I don't over extend myself. I spent about $4k on an engine upgrade to a 408. We moved in the middle (a $200,000+ bump in house value because of her being able to) which put the 408 on hold for a year. I paid off about $3k on that card while on hold, and then the rest was easy. then suddenly FFR brought out the 2015 IRS. Called them and asked questions and immediately put the $2500 on a card. Cash flowed the other grand or so while paying off the card. Bought nothing for the FFR until that big charge was paid. My other hobby is guns. I have a general use card, an FFR card, and a gun card. I watch what the balances are. I buy something and wait to pay off that card before I buy something else. Sometimes the balance on one card will halt buying on the other two cards. I see nothing wrong w/ using credit as long as it is used smartly.
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post #17 of 36 (permalink) Old 06-10-2019, 03:58 PM
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In am in the pay cash for toys camp also. Even if you have to build the car in stages. I mean getting the kit built and then get the engine/trans. After all, they will be cheaper in the future. Plus the more time you have to source the drive train, the better the chance you will get a good deal. You do not want to pay more for rushing. The biggest thing is to stay focused on the end. Do not let feature creep double your budget. (Good luck with that one. I still have not mastered it yet). As for using credit cards, that is fine as long as you pay them off at the end of the month. You do not want to be paying interest on all of your purchases when you make them.

And remember to get presents for your wife and not your car. Spending $30 on flowers has a much higher ROI than something shinny for the engine bay.
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post #18 of 36 (permalink) Old 06-11-2019, 09:21 PM
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Originally Posted by Avalanche325 View Post
Not to be a wet blanket, but financing something that is essentially a toy, is not a good financial move.
Save your pennies, skip a couple coffees, beers, and dinners out, and buy when you can actually afford it. The good thing is that you don't have to buy it all at once. You can basically build the entire car without an engine and transmission, or wheels and tires. Paint and bodywork, a major expense, can be put off indefinitely and you can still drive the car.
The problem with this line of reasoning is then nobody (read very few) would be able to enjoy their dreams. You're correct in the grand scheme of things, you're financing a toy. People do it all day every day...buying a Corvette, Harley, RV, Cobra etc. that's what credit is for.

On the other hand, taking out a loan with a 20+% finance rate is a terrible decision, but most shouldn't have to go that route.

As far as other finance routes there's a company called Lightstream online I have used twice now. The process couldn't be any easier and they have very good rates. I highly recommend them as a company.
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post #19 of 36 (permalink) Old 06-11-2019, 09:22 PM
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Originally Posted by Joe Campbell View Post
Borrowed against 401k, done it on all three builds so far. Paid them all off early. Couple of times the interest I was paying myself back was more than it was making in the markets. So it was kinda like saving but with more instant gratification. Waiting till you can pay cash is smart in some ways but you're just putting off living your life till later.
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post #20 of 36 (permalink) Old 06-12-2019, 03:13 AM
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I was too young to want to touch my retirement funds so I saved until I had enough for the Basic Kit (~$14,000). Then I cash-flowed the build as funds allowed. If you don't let everyone on this forum talk you into spending way to much, you can throw a few hundred a month at the build and be done in a year or two. I enjoyed shopping around for killer deals and I think I built mine for a very modest budget. I think the car is just so much more enjoyable to drive knowing I have no payments.
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post #21 of 36 (permalink) Old 06-12-2019, 02:36 PM
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Like many, I saved up for the initial donor kit. After that, I paid for parts as I went. For cost reasons, I went the donor route. I was familiar with the mustang components, their interchangeability, and their shortcomings and failure points having put a quarter million miles on fox and SN95 mustangs over the previous 15 years.

I knew I wanted a coyote, so I didn't get an actual donor car (plus the problems of storage and transport of a dead car). Many of my donor parts were sourced from the local pick n pull junk yards and I refurbished them with new bearings, seals, a coat of paint, ect. For a while, it felt like I was making an extra monthly car payment to the tune of $500+ as I bought parts as required. Every part, I tried to get the best deal I could to shave dollars off the cost. I ended up getting the coyote crate engine 10% off using one of summits black friday sales. I waited for sales, negotiated, found coupons ect to cut the cost and still get what I wanted.

As always, set a realistic budget. I identified the major cost hurdles (initial kit, engine, paint, ect). Then, each year I added up the cost of the parts which I would need that year so I could budget it in. I spent 4 years building to get a registered car, and painted it 2 years later. Again, if you save up for the initial kit, then maintain that savings rate for the duration of the build, it'll be like paying on a loan, except you avoid the risk and cost of a loan.

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post #22 of 36 (permalink) Old 06-12-2019, 05:44 PM
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I did it!

We took a home equity revolving line of credit. Without it I would probably never have been able to get mine. Like mentioned before, we are not promised tomorrow and when I finally have to give up my keys, I want to say, "I did it!".
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post #23 of 36 (permalink) Old 06-12-2019, 08:49 PM
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Our line of thought is....IF you can't pay cash for it (whatever IT IS) save until you can.
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post #24 of 36 (permalink) Old 06-12-2019, 08:54 PM
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Quote:
Originally Posted by JKolbfleisch View Post
I was too young to want to touch my retirement funds so I saved until I had enough for the Basic Kit (~$14,000). Then I cash-flowed the build as funds allowed. If you don't let everyone on this forum talk you into spending way to much, you can throw a few hundred a month at the build and be done in a year or two. I enjoyed shopping around for killer deals and I think I built mine for a very modest budget. I think the car is just so much more enjoyable to drive knowing I have no payments.
I guess this is just my viewpoint...

First you have to have $14,000 laying around that you have absolutely no use for. Most people aren't fortunate enough to be in that position. Most people balancing a family and their own dreams aren't. Let's say you have the $14,000. My question is, in your scenario, what's "a few hundred a month"? $300? More? At $300 you've saved $3,600 in that first year. That's certainly not enough to complete a build in "a year or two"...you're only at $17,600! Two years at the same money you're at $21,200...perhaps you can be finished but that's the absolute most basic of builds with you doing everything. The end of year 3 at the same money you're at $24,800...a build can be done at that price, nothing fancy. This puts your time frame not at a year or two, but at 2 or 3 years with 3 years being the most realistic number. Again, that's at "a few hundred dollars" being $300...your time frame would accelerate with more money obviously.

I bring this up because you could go the above route...or enjoy your life.

I guess the biggest exception I take with your post is the portion about..."I think the car is just so much more enjoyable to drive knowing I have no payments". Maybe I'm just a simple mid-west guy with a different mindset, but I can't wrap my head around that logic. I traded two cars that I owned in order to get my first Cobra 7 years ago when I was 33 and had to finance the rest. I loved the ever living hell out of that car!!! I drove that car any and every chance I got. I went to every car show with it. I took people for a ride at gas stations when they stop and asked questions. I took neighbors for rides that I hadn't met before. I had random kids in the neighborhood come over to help me work on the car. Most importantly, I drove my daughter to her HS graduation in the car. I drove my wife's best friend to her wedding in the car and you would have thought she was the Queen of England how she was being treated as we drove down the street and the pictures that were being taken at every light.

I traded that car when my son came along for a '65 Fastback. I built and awesome GT 350 replica that I traded for a Viper and some cash which I traded 2 months later for the Cobra I have now. I don't owe anything on my current Cobra.

The point...looking back now never, ever, never would the thought have crossed my mind that "I'm having the time of my life, but this would just be so much better if I didn't owe anything on the car". I can't even fathom that thought process, there was nothing better! I loved every last second with that car. I in no way had less enjoyment because I owed money on something, what I had/have, is memories I wouldn't have had because I didn't want a loan. I'll remember driving my daughter to her graduation until the day I die. I'll remember driving Shawne to her wedding until the day I die. Hell, I'll never forget the car being dropped off the trailer at my house and my buddy and I tearing around the neighborhood in the middle of a Central Illinois December freezing to death with the biggest smiles in the world on our faces!

I guess what I'm saying is, yes, you can slowly do something over a number of years until you have all the money you need hoping that life doesn't interfere in any way OR you can enjoy your life. I've done it one way and know I'll never regret that decision.

**full disclosure...I didn't take out a 20%+ loan, if that's your option, it's a bad one, don't do it!
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post #25 of 36 (permalink) Old 06-13-2019, 03:05 AM
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Originally Posted by donkeykong View Post
The problem with this line of reasoning is then nobody (read very few) would be able to enjoy their dreams. You're correct in the grand scheme of things, you're financing a toy. People do it all day every day...buying a Corvette, Harley, RV, Cobra etc. that's what credit is for.
Just about anyone middle class and above that is living within their means (not that many people actually are) can save enough for a Cobra build in a few years. No, you can't have it now, and you can't have it and everything else that comes along.

People do finance toys every day. True. Most of those people are in debt and a lot are a couple paychecks away from financial ruin. But they have their toys, their having "fun", and look like big shots. I bought a house at the beach at an absolute steal from someone that lived it up, right until they got foreclosed on. They had pictures of their travels, NASCAR races, deep sea fishing, football games, concerts, etc next to the pool table and big screen TV all over their man cave walls.....well, my man cave walls.

"That's what credit is for." No, what credit is for, is for people with money to be able to make even more money from people that don't have money. Credit is a money making business, not a community service. You should read about what is classed as "good debt" vs what is "bad debt". Cars, even daily drivers, are bad debt.

Live your dream! I know several people that lived their dreams of Harleys, Corvettes, RVs, Vipers, and big vacations that they couldn't afford. Now, being able to retire is nothing but a dream, and they are having regrets. I'm retiring 10 years early, with my toy that I waited several years for. Don't confuse having fun with enjoying life. The older you get the more it shifts to the second one.
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post #26 of 36 (permalink) Old 06-13-2019, 12:43 PM
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Originally Posted by Avalanche325 View Post
Just about anyone middle class and above that is living within their means (not that many people actually are) can save enough for a Cobra build in a few years. No, you can't have it now, and you can't have it and everything else that comes along.

People do finance toys every day. True. Most of those people are in debt and a lot are a couple paychecks away from financial ruin. But they have their toys, their having "fun", and look like big shots. I bought a house at the beach at an absolute steal from someone that lived it up, right until they got foreclosed on. They had pictures of their travels, NASCAR races, deep sea fishing, football games, concerts, etc next to the pool table and big screen TV all over their man cave walls.....well, my man cave walls.

"That's what credit is for." No, what credit is for, is for people with money to be able to make even more money from people that don't have money. Credit is a money making business, not a community service. You should read about what is classed as "good debt" vs what is "bad debt". Cars, even daily drivers, are bad debt.

Live your dream! I know several people that lived their dreams of Harleys, Corvettes, RVs, Vipers, and big vacations that they couldn't afford. Now, being able to retire is nothing but a dream, and they are having regrets. I'm retiring 10 years early, with my toy that I waited several years for. Don't confuse having fun with enjoying life. The older you get the more it shifts to the second one.
I couldn't have said it better. I worked hard and saved my whole life, did without all the big vacations and fancy "ego" stuff. I have always used credit as a tool to make more money. I now have more saved than I ever thought possible when I was in my youth, and do as I like.
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post #27 of 36 (permalink) Old 06-13-2019, 01:07 PM
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... I now have more saved than I ever thought possible when I was in my youth, and do as I like.
And as we've discussed Rich, there is a term for that kind of money

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post #28 of 36 (permalink) Old 06-13-2019, 02:07 PM
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Delayed gratification

Lots of great replies here. Everyone has a different tolerance/pain point for debt. I've been saving for this build both directly and indirectly for years.

Directly by stashing money away specifically for the FFR. I still used a HELOC to actually pay FFR and I'm paying that down as the CDs I stashed the build money in mature. The small amount of interest I'll pay is worth it to me to maintain a given amount of liquidity. Job security is not what it used to be and things can change rapidly and unpredictably.

I indirectly financed my build by driving a series of ho-hum cars for most of my life. Currently, a 2013 Honda Accord that I picked up used. No European sports sedans, no American muscle cars, no lifestyle SUVs or pickups. I've coveted all of those, but I took the cheap option and reminded myself that I was saving for something better.

Each time I walk into the garage and see the frame sitting there in it's early stages I'm amused at the audacity of the project, both in terms of the build itself and the money being invested (though for me there is infinite ROI in spending time with my sons on this project and teaching them everything I know). When I start to question that investment I remind myself that I've already paid for it half a dozen times over by driving a base Passat for 13 years instead of an Audi S4, by opting for the sunroof and a Jetta Wagon instead of a droptop Mustang GT, and by constantly opting for half of the cylinders I really wanted.

There's a balance for everyone that lets them sleep at night and one person's concern is another's terror. We all work to find that balance of what we need and what we want. I'm lucky enough to have both.

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post #29 of 36 (permalink) Old 06-13-2019, 04:24 PM
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A few more thoughts.

1. These builds usually end up taking a lot more time and money than you planned on. If you have never built a car before, it is easy to think that the kit is only "$20k" and another $10k for drive train because I saw a post on the forum that it is possible. So $30k to build a kit. Then $60k later, and the car is still not on the road. Feature creep is a huge deal with these builds.

2. We really do not know how many kits sold vs driven there are. In the past twenty years of going to kit car shows and asking around, I have a gut feeling it is much less than 50%. Of the cars that do get on the road (notice how I will not say finished?) my gut feeling again, is that 50% get sold because the dream of a Cobra did not match the reality of a short wheel base, high horsepower car that takes a lot more to drive than a modern car. This is why we see so many Cobras for sale with less than 5,000 miles on them.

3. Go for it. There is nothing financially responsible about owning a Cobra in the first place. That is what Corollas are for. Just know that if you do go in debt for a kit car, the project really has no value till the car is done.
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post #30 of 36 (permalink) Old 06-13-2019, 07:16 PM
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Just about anyone middle class and above that is living within their means (not that many people actually are) can save enough for a Cobra build in a few years.
I feel you're way out of touch with what middle-class is. before you state that you're middle class...I don't know any middle class families that have a beach house in Florida or that are retiring 10 years early.
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