Getting a loan, would you?

[JTD]

They make money every day. I have no issue borrowing when something nice shows up, gun, or anything else.

[4 Scale]

Originally Posted by m1903a3

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.

I think Mike's experience is instructive. His story is IMO another way of saying "it depends" to answer the question of is debt OK or not for a purchase. His story is an example of where debt might make sense - as a way to keep the total cost of ownership down.

The key question is, do the benefits (appreciation and the satisfaction of ownership) exceed the borrowing costs? In the example quoted, it appears they did and borrowing was a rational choice.

[DavidJayUden]

"The key question is, do the benefits (appreciation and the satisfaction of ownership) exceed the borrowing costs?"

I respectfully disagree. I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

[m1903a3]

Originally Posted by DavidJayUden

"The key question is, do the benefits (appreciation and the satisfaction of ownership) exceed the borrowing costs?"

I respectfully disagree. I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

Where do you get the idea that dangerous territory plays a part?

I'm retired. I was debt free, having no loans of any kind nor any carryover credit card debt from month to month. To me it was a pretty simple math question. A cash withdrawal from an IRA would have been additional income taxed at the highest rate I pay both the feds and the state. In addition, since a withdrawal is treated as ordinary income, it would have put both me and my wife into a higher rate for our monthly Medicare payments. Having a low interest rate loan is far cheaper.

I could pay off the loan tomorrow, but it's cheaper to keep it.

As for investment value, I didn't buy it as an investment. i bought it because I wanted it and can afford it.

[4 Scale]

Originally Posted by DavidJayUden

I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

While I agree that it is foolish to get into "dangerous" debt, on anything, it's hard to imagine that on even a really nice Luger. If debt for a Luger is "dangerous" for a given collector, that person should not buy at that level via either cash or debt.

I just refinanced my house and used a small portion of the proceeds to fund a 1940 Mauser P 08 collectible. I have no debt other than the mortgage. Debt is cheap right now and as my overall debt is low even with the mortgage, the risk is low in using debt to fund investments. If I had liquidated an investment to buy the Luger, I would have to pay taxes and lost investment earnings on the money. I.e., a similar analysis to Mike's. Each must look at their own situation to decide if debt makes sense. In Mike's case and mine it makes perfect sense.

[DavidJayUden]

"Where do you get the idea that dangerous territory plays a part?"

I get that idea from previous posts that mention credit cards, taking out loans, and "sure thing".

I've said my piece on the issue, but it is interesting to see such a wide tolerance of risk in the "Luger funds" department.

dju

[DonVoigt]

I think the most "dangerous" part is "thinking" one may be buying an "invest-able" luger and it turns out it is not! The buyer may not know of his mistake for years.

One must surely be an expert before borrowing $$ to buy anything, house, car, luger, etc.
JMHO.

[Vlim]

Knowlegde is power. Always has been.

[4 Scale]

Originally Posted by DonVoigt

I think the most "dangerous" part is "thinking" one may be buying an "invest-able" luger and it turns out it is not!

I think this is spot on. From what I've seen, Lugers appreciate faster than inflation but only by a little bit. And if they behave like other specialty collectibles (art, antiques etc.) the price can drop a lot during recessions. So buying a Luger mainly for price appreciation doesn't make sense to me.

I also hear from time to time "buy the best you can afford" because those go up in value faster. I do not see why this would be true so absent data I would have to say I'm skeptical if buying the best is good investment advice. Rather, I think the best advice is to not over pay.

[George Anderson]

When I last lived in North Carolina I ran into a collector in Hickory who wanted to sell his entire collection of about thirty Lugers. The collection included a near mint K-date, a couple of complete rig artilleries and Navies, and on and on. He would only sell the whole works; no cherry pickin'. He wanted sixty thousand dollars. I could have sold some equities and bought, but I went to my bank and got a seventy-five thousand unsecured line of credit. I bought the collection and more than doubled my money.

[Rick W.]

no

[rhuff]

I would be most uncomfortable in taking out a loan to purchase a Luger....in fact, I would not do it!! Perhaps, I just don't want it bad enough. That said, I have never purchased a car on time, but have never owned a new car either. We all have to do what is comfortable with our way of thinking. If a real necessity comes up, and I need money.....then, no question about taking out a loan if there is no other way around it.

[Mister Sunshine]

An older man told me something I will never forget. He had been in the gun collecting business since the 1920s. He said guns go in cycles, one day a gun is hot and a few years later something else is. Now forty years have gone by and I have seen it play out exactly the same way. Remember when pre 64 model 70s were the hot item. Just a few years ago when black powder cartridge shooting was going strong the demand was so great that an entire industry was created just to supply the rifles. Most of those rifle companies have folded. As men grew older, died or moved on to another shooting sport the single shot rifles they bought became difficult to sell and you sure wont get you original in vestment back. I have seen it many times on the ASSRA web site.

[4 Scale]

I generally respect experience but I have to wonder if Lugers are a world to themselves. They were prized by the soldiers of Germany's adversaries as trophies in two world wars. This is well documented. The history, appearance, operation is unique and iconic. The precision of the mechanism is impressive compared to even modern pistols, and astounding when you consider the date of manufacture. The likelihood that a pistol that functions/appears similar will be produced in such numbers in the future is low. As a relatively new Luger owner who uses a public range, I am always impressed that this is the single firearm that makes young and old shooters alike step back and say "whoa! Is that what I think it is?" IMO I have never heard of a firearm with such a fan club. Also the data that I have seen re: price over time (almost entirely from comments by other collectors on the forums) indicate steady appreciation in excess of inflation since introduction around 1900. Given this data I personally believe they will remain collectible for the foreseeable future.

[DonVoigt]

Collectible - yes.
Will the price go up and down- for sure.
There is no guarantee in any given period that luger values will be up from when you bought one; over 100 years yes, they will be "up".