Getting a loan, would you?

Major Tom · 08-05-2018, 10:12 PM

Let's say you are looking at a pristine highly collectable rare luger with a healthy price tag. You don't have the funds to buy it out right. But you think it may increase in value in coming years. Would you get a loan to buy it?

HerrKaiser · 08-05-2018, 10:20 PM

I would say no. I try to make it a point that I don’t spend money which I don’t have for things. (other than school). That said, if you believe this to instead be a safe investment that will pay off handsomely, then it would make more sense. I’d still lean towards no.

Edward Tinker · 08-05-2018, 10:22 PM

depends on if I really wanted it

borrowing money is never good if its for possible resale later, the market could get flooded (which happened for a bit with Shattucks inventory and collection, Joops collection, Sturgeus Collection, and many more, some we never even knew existed...

hayhugh · 08-06-2018, 07:07 AM

I nearly maxed out one of my credit cards when I purchased a Baby Luger and a Baby Nambu at the same time. Opened up a new credit card and paid off the purchase with a "no interest" loan on the new card. Just an option not a recommendation.

George Anderson · 08-06-2018, 07:36 AM

Why not? Folks go in debt all the time to buy a new automobile which begins to depreciate on day one.

Vlim · 08-06-2018, 07:42 AM

It depends on the item. With some its nearly impossible to go wrong, even with a stressed market.

I've been financing the classic Mercedes hobby like that for many years. Didn't get rich but did not do bad either.

As long as it is an investment and not for 'consumption', and you keep an eye on your limits, you should do ok.

That being said, I now have a conflict with my bank because they decided to terminate my credit without a valid (to me) reason. I have banked with them for 40 years and the last year it's been nothing but problems, idiotic decisions and zero customer care. They used to be a cooperation of local banks that specialized in small businesses. But they merged into one large bank, so locals have nothing to say anymore.

DavidJayUden · 08-06-2018, 08:19 AM

Absolutely not. I live debt-free and if I don't have the money I don't buy. And yes, some opportunities are missed, but I just sleep better at night that way.
dju

4 Scale · 08-06-2018, 08:46 AM

Strictly as an investment decision, no. Lugers IMO appreciate at the rate of inflation plus a percent or two, and borrowing costs are above that.

The problem with this 'analysis' is that purchasing a Luger is or should be done for non-investment reasons. People buy stuff they don't really need but want, like say new cars, all the time using debt. So it really depends on how much you want it and your ability to repay.

DavidJayUden · 08-06-2018, 09:27 AM

And once the economy turns south (ala 2008), or you lose your job, or your health (or your wife's) takes a hit? That rare Luger might as well be an anchor around your neck as you struggle with high interest credit cards.

https://www.nytimes.com/2018/08/05/b...americans.html

dju

Norme · 08-06-2018, 09:42 AM

I follow Shakespeare’s advice, “Neither a borrower nor a lender be”.
Norm

mrerick · 08-06-2018, 10:24 AM

I would never take out a loan to buy a Luger.

Might as well leverage your debt and start buying derivative investments or start working the stock market on a margain.

Nothing assures that demand in the future will increase the value and price of Lugers.

One of the most successful gun makers in the USA operates with zero corporate debt, preferring to make capital investment from retained earnings. Ruger. It's been a decent stock to own even while other companies have gotten in trouble with financing schemes and the resulting ownership changes.

They built their new Ruger factory in Mayoden, NC with about $8 million in retained earnings.

sheepherder · 08-06-2018, 10:32 AM

Quote:

Originally Posted by Major Tom

Let's say you are looking at a pristine highly collectable rare luger with a healthy price tag. You don't have the funds to buy it out right. But you think it may increase in value in coming years. Would you get a loan to buy it?

I would never buy anything in the belief that it would increase in value. I would only buy it if I liked and wanted it. I would not take out a loan if I had other loans, like a car loan or a mortgage.

Right now, I have only a car loan. I have enough savings to pay it off right now, but choose not to. I also have enough savings to buy anything I like outright, so a loan is not required.

Finding something I like is getting harder, not because of a shortage of cash, but because I have had everything I ever wanted. Sometimes more than one.

hayhugh · 08-06-2018, 12:01 PM

At this stage of the game I only buy things I want - Anything I need I already have! Picked the Baby Luger and Baby Nambu because I wanted them and they don't come up every day! Nave no loans outstanding and being able to pay them off interest free just added to the pleasure...

m1903a3 · 08-06-2018, 12:56 PM

I would and I did. I wanted to buy a very expensive Navy which I would likely never have another chance to own. I had no mortgage, car loans or credit card debt. I didn't want to take an IRA distribution because it would have been taxable income and it was also appreciating where it was. Financially, a low interest rate loan was by far the most logical choice. Don't regret it for a second. Now that I'm over 70 my mandatory distributions just go to pay the loan faster.

wlyon · 08-06-2018, 12:57 PM

Getting a loan to buy any collectible is a risky adventure. Seems like many times todays collectible is tomorrows junk. All collectibles are a "whim" market and can and will change rapidly.

Vlim · 08-06-2018, 01:32 PM

My father is from a family of 11 children. He is the only one who never loaned or took a mortgage. It shows. The other 10 now have their own properties and most succeeded in upscaling their housing, enough to help their offspring finance their own homes.

I got the reward of a lifetime of property rental: nothing.

Mister Sunshine · 08-06-2018, 01:53 PM

I remember many years ago when a guy went out on a financial limb and bought the only surviving Luger in 45ACP made for the Army trials when the Army was looking for a semi auto pistol. As I recall he paid about a half million for it. It was a sure bet. A few years later he put it up for auction and got about 345k. He lost big time. Don't borrow money for anything you don't absolutely have to have.

Vlim · 08-06-2018, 01:59 PM

The opposite also happened.

DonVoigt · 08-06-2018, 03:30 PM

No.
Collectibles are not the same as an investment; and borrowing money is a slippery slope.

Another thing to keep in mind is that one normally buys "retail" and has to sell "wholesale"- which means any "profit" is a long time coming.

Vlim · 08-06-2018, 03:48 PM

I'm Dutch. I never pay retail prices anyway

Investors have actually moved into the collectables market lately because it is relatively sound, stable and low risk.

Two sides on every coin.

08-05-2018, 10:12 PM	#1
Major Tom User Join Date: Jan 2017 Location: S.E. Iowa Posts: 484 Thanks: 533 Thanked 227 Times in 124 Posts	Getting a loan, would you? Let's say you are looking at a pristine highly collectable rare luger with a healthy price tag. You don't have the funds to buy it out right. But you think it may increase in value in coming years. Would you get a loan to buy it? __________________ I Build Custom Pistol Boxes

08-05-2018, 10:20 PM	#2
HerrKaiser User Join Date: Feb 2018 Location: South Carolina Posts: 839 Thanks: 779 Thanked 851 Times in 407 Posts	I would say no. I try to make it a point that I don’t spend money which I don’t have for things. (other than school). That said, if you believe this to instead be a safe investment that will pay off handsomely, then it would make more sense. I’d still lean towards no. __________________ -QM Looking for Mauser S/42 toggle train #22

08-06-2018, 10:24 AM	#11
mrerick Super Moderator - Patron LugerForum Life Patron Join Date: Dec 2009 Location: Eastern North Carolina, USA Posts: 3,907 Thanks: 1,374 Thanked 3,108 Times in 1,509 Posts	I would never take out a loan to buy a Luger. Might as well leverage your debt and start buying derivative investments or start working the stock market on a margain. Nothing assures that demand in the future will increase the value and price of Lugers. One of the most successful gun makers in the USA operates with zero corporate debt, preferring to make capital investment from retained earnings. Ruger. It's been a decent stock to own even while other companies have gotten in trouble with financing schemes and the resulting ownership changes. They built their new Ruger factory in Mayoden, NC with about $8 million in retained earnings. __________________ Igitur si vis pacem, para bellum - - Therefore if you want peace, prepare for war.

08-06-2018, 12:56 PM	#14
m1903a3 User Join Date: Aug 2008 Location: Virginia Posts: 198 Thanks: 26 Thanked 315 Times in 112 Posts	I would and I did. I wanted to buy a very expensive Navy which I would likely never have another chance to own. I had no mortgage, car loans or credit card debt. I didn't want to take an IRA distribution because it would have been taxable income and it was also appreciating where it was. Financially, a low interest rate loan was by far the most logical choice. Don't regret it for a second. Now that I'm over 70 my mandatory distributions just go to pay the loan faster. __________________ - Mike Life member: NRA, OVMS, VGCA Member: NAPCA, N-SSA(Veteran) Si vis pacem, para bellum

08-06-2018, 12:57 PM	#15
wlyon Lifer 2X Lifetime Forum Patron Join Date: May 2005 Location: Somewhere in Montana Posts: 2,628 Thanks: 3,168 Thanked 2,547 Times in 951 Posts	Getting a loan to buy any collectible is a risky adventure. Seems like many times todays collectible is tomorrows junk. All collectibles are a "whim" market and can and will change rapidly. __________________ Bill Lyon

08-05-2018, 10:22 PM	#3
Edward Tinker Super Moderator Eternal Lifer LugerForum Patron Join Date: Jun 2002 Location: North of Spokane, WA Posts: 15,926 Thanks: 2,014 Thanked 4,523 Times in 2,089 Posts	depends on if I really wanted it borrowing money is never good if its for possible resale later, the market could get flooded (which happened for a bit with Shattucks inventory and collection, Joops collection, Sturgeus Collection, and many more, some we never even knew existed...

08-06-2018, 07:07 AM	#4
hayhugh User Join Date: Oct 2013 Location: Florida/Penna Posts: 891 Thanks: 856 Thanked 511 Times in 274 Posts	I nearly maxed out one of my credit cards when I purchased a Baby Luger and a Baby Nambu at the same time. Opened up a new credit card and paid off the purchase with a "no interest" loan on the new card. Just an option not a recommendation.

08-06-2018, 07:36 AM	#5
George Anderson Lifer Lifetime Forum Patron Join Date: Jul 2002 Location: VA Posts: 3,592 Thanks: 1,773 Thanked 2,528 Times in 787 Posts	Why not? Folks go in debt all the time to buy a new automobile which begins to depreciate on day one.

08-06-2018, 07:42 AM	#6
Vlim Moderator Lifetime LugerForum Patron Join Date: Oct 2002 Location: Europe Posts: 5,053 Thanks: 1,036 Thanked 3,987 Times in 1,205 Posts	It depends on the item. With some its nearly impossible to go wrong, even with a stressed market. I've been financing the classic Mercedes hobby like that for many years. Didn't get rich but did not do bad either. As long as it is an investment and not for 'consumption', and you keep an eye on your limits, you should do ok. That being said, I now have a conflict with my bank because they decided to terminate my credit without a valid (to me) reason. I have banked with them for 40 years and the last year it's been nothing but problems, idiotic decisions and zero customer care. They used to be a cooperation of local banks that specialized in small businesses. But they merged into one large bank, so locals have nothing to say anymore.

08-06-2018, 08:19 AM	#7
DavidJayUden Patron LugerForum Patron Join Date: Nov 2008 Posts: 4,047 Thanks: 578 Thanked 1,414 Times in 887 Posts	Absolutely not. I live debt-free and if I don't have the money I don't buy. And yes, some opportunities are missed, but I just sleep better at night that way. dju

08-06-2018, 08:46 AM	#8
4 Scale User Join Date: Nov 2014 Posts: 544 Thanks: 194 Thanked 489 Times in 251 Posts	Strictly as an investment decision, no. Lugers IMO appreciate at the rate of inflation plus a percent or two, and borrowing costs are above that. The problem with this 'analysis' is that purchasing a Luger is or should be done for non-investment reasons. People buy stuff they don't really need but want, like say new cars, all the time using debt. So it really depends on how much you want it and your ability to repay.

08-06-2018, 09:27 AM	#9
DavidJayUden Patron LugerForum Patron Join Date: Nov 2008 Posts: 4,047 Thanks: 578 Thanked 1,414 Times in 887 Posts	And once the economy turns south (ala 2008), or you lose your job, or your health (or your wife's) takes a hit? That rare Luger might as well be an anchor around your neck as you struggle with high interest credit cards. https://www.nytimes.com/2018/08/05/b...americans.html dju

08-06-2018, 09:42 AM	#10
Norme Always A Lifetime Forum Patron Join Date: Jul 2009 Location: Colorado Posts: 2,417 Thanks: 225 Thanked 2,603 Times in 933 Posts	I follow Shakespeare’s advice, “Neither a borrower nor a lender be”. Norm

08-06-2018, 12:01 PM	#13
hayhugh User Join Date: Oct 2013 Location: Florida/Penna Posts: 891 Thanks: 856 Thanked 511 Times in 274 Posts	At this stage of the game I only buy things I want - Anything I need I already have! Picked the Baby Luger and Baby Nambu because I wanted them and they don't come up every day! Nave no loans outstanding and being able to pay them off interest free just added to the pleasure...

08-06-2018, 01:32 PM	#16
Vlim Moderator Lifetime LugerForum Patron Join Date: Oct 2002 Location: Europe Posts: 5,053 Thanks: 1,036 Thanked 3,987 Times in 1,205 Posts	My father is from a family of 11 children. He is the only one who never loaned or took a mortgage. It shows. The other 10 now have their own properties and most succeeded in upscaling their housing, enough to help their offspring finance their own homes. I got the reward of a lifetime of property rental: nothing.

08-06-2018, 01:53 PM	#17
Mister Sunshine User Join Date: Sep 2016 Location: Cherry Valley, Ca. Posts: 94 Thanks: 0 Thanked 29 Times in 20 Posts	I remember many years ago when a guy went out on a financial limb and bought the only surviving Luger in 45ACP made for the Army trials when the Army was looking for a semi auto pistol. As I recall he paid about a half million for it. It was a sure bet. A few years later he put it up for auction and got about 345k. He lost big time. Don't borrow money for anything you don't absolutely have to have.

08-06-2018, 01:59 PM	#18
Vlim Moderator Lifetime LugerForum Patron Join Date: Oct 2002 Location: Europe Posts: 5,053 Thanks: 1,036 Thanked 3,987 Times in 1,205 Posts	The opposite also happened.

08-06-2018, 03:30 PM	#19
DonVoigt User Join Date: Apr 2015 Location: near Charlotte NC Posts: 4,681 Thanks: 1,441 Thanked 4,350 Times in 2,040 Posts	No. Collectibles are not the same as an investment; and borrowing money is a slippery slope. Another thing to keep in mind is that one normally buys "retail" and has to sell "wholesale"- which means any "profit" is a long time coming. __________________ 03man(Don Voigt); Luger student and collector. Looking for DWM side plate: 69 ; Dreyse 1907 pistol K.S. Gendarmerie

08-06-2018, 03:48 PM	#20
Vlim Moderator Lifetime LugerForum Patron Join Date: Oct 2002 Location: Europe Posts: 5,053 Thanks: 1,036 Thanked 3,987 Times in 1,205 Posts	I'm Dutch. I never pay retail prices anyway Investors have actually moved into the collectables market lately because it is relatively sound, stable and low risk. Two sides on every coin.