Thread: Just a thought......

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Ok, we're all Hot Rodders. Most people don't understand the passion and dedication we have for our cars. At the top of the list of the non-understanding folk are bankers! Wish I had a buck for every potential customer over the last 40+ years who would just love to build himself or have built a Hot Rod, then goes to the bank for a loan only to get told that banks don't do Hot Rods!!!

We have our own forums, our own shoes, our own insurance, our own lifetsyle, maybe it's time we had our own credit union!!!! Hot Rod Federal Credit Union!!! Now, I'm no banker and don't remember much from the biznezz classes I had to take in school, but it should work, right??? Kind of like borrowing money to build a house, the lender gives you a bit, then you have to show some progress before he loans you more....

Potential investors and members would be everyone involved with Hot Rods as a hobby, profession, or just an interest. Could it work, would it work???? I don't know, just throwing it out for discussion, I guess.... Maybe someone with a working knowledge of banking might get interested......

Heck, let's have a poll about it too!!!!

Yes I would agree that a system set up by Rodders for Rodders with strict rules could be a help. Like me,I'm stuck at the moment because waiting for surgery on my legs and have time to get out in the garage and do short bursts of work on the car but can't afford to buy the materials to keep the progress going. So if I could go to a Rodders Bank and get a small loan for materials I would be making progress using the car as collateral. You could have 100% finance on a project but say enough to build to a rolling chassis finance and then once that is checked another loan to enable the next stage of construction.

Anything CAN work, the real question is............does it make sense and is it worth it?

I've sat on the board of a credit union and the decision making process is not altogether different than a commercial bank, though more localized. A few less federal restrictions (although my experience is over 20 years ago, so it might be different today). If I were on the board of HRCU a lot of folks wouldn't get loans, or at least my vote. The "failure" rate of completion to a reasonable finished product is pretty high..........a lot of dreamers out there that bite off more than they can chew. If they were using a professional builder it might be more palatable, but then there's the issue of it costing more than it's going to be worth at the end. As we've unfortunately learned in recent times, too many folks don't honor a contract as they once might have. We're in a time of "strategic bankruptcy" where people walk away from the loan security if the outstanding loan amount excedes the market value of the securing "asset". No matter that they have a contractual commitment (now a loose term in practice) to repay somebody elses money regardless of underlying market value. As a credit union member/officer I would have a fiduciary obligation to look out for the other members money (afterall that's whose money we're lending out). As such that's a high burden that demands VERY prudent decision making.

All good points, Bob!!! Being the eternal optimist that I am, I believe most of us are honest, hard workings souls who would enjoy seeing our money help someone else to achieve their goals. I would never suggest that it become a last source for financial degenerates, but rather a worthwhile investment in our hobby! The lending guidlines would have to be perhaps more stringent then other lending institutions... Officers and board members would have to be very knowledgeable on Hot Rods and banking.

I guess my main point is that I could go into my local dealer tomorrow morning and finance a brand new Mustang with very little (if anything) down....but to borrow $10K to put into my '57 I'd have to pledge at least twice that value as collataral..... Bankers just don't understand us, that's all.....

What Bob said. I know every car I've built cost more than I got when I sold it.

In one of my former lives I was a Credit Manager, both retail and industrial. When you are making the decision as to whether you are going to loan someone your money you have to assume that they may not pay you back and you will have to use whatever collateral they have put up to recoup some or all of your money. It is easier to get a brand new car financed than one that is several years old because the lender knows he has a better chance of getting top dollar out of a new one as opposed to an older car. I understand now that it is impossible almost to get a loan for a car older than 7 years.

Don

i dont think most people would want to borrow 60 thousand bucks to build a 40 thousand buck car .. i like the thought ..

I think Uncle Bob put my thoughts into words very nicely. I couldn't guess the percentage of "failed" for some reason, projects, but there sure are lots at the bigger swap meets - some of which are pretty good raw material, others........

Peoples dreams are often, no, usually lots bigger then their wallets as well as their skill sets

I agree, I cannot really add much to Uncle Bob's eloquent thoughts other than in my experience a specialized credit union is formed to serve a localized group, like educators in a metro, people who work at a specific business, and similar groups where a credit union is incorporated (under the laws of one state). This Hot Rodder's "group" is widespread, not even limited by the political boundaries of a specific country. Aside from the potential of projects going astray, I don't think that the multi-state approach works with a credit union. You'd really need bunches of independent shops, serving areas with enough clients to first save enough money to have assets to loan and then to loan it prudently.

biggest problem is the repo aspect of it.
a car halfway done is worth next to nothing.

Dave I like your idea, it just seems we all spend more than our projects will sell for. The margin is just to tight in most cases, though there are a few folks out there making a living at it!
Still it would be cool to be a member of a hot rod credit union. My local credit union sucks!

I would never suggest that someone could borrow 100% of the build cost, only the Big 3 are dumb enough to finance something 100%!!!! The criteria would have to be tough, complete with a professional appraisal of the car in it's present condition. I was surprised that most everyone seems to think that all builders are so stupid they invest twice what the car could ever sell for, thought that was only a line we all used at "For Sale" time!!!

A credit union is also a decent place to save money, probably not the big return that the high rollers get but a nice safe conservative return for me! Think it would be kewl to see my savings being used to help a fellow QUALIFIED individual to finance some goodies for his own ride.

Heck, not all Hot Rodders are financial dead beats, are they??? Just having a source where I could borrow some $$$$$ from an institution that actually understands and appreciates Hot Rods would be great!!!!

WOW ... great idea ... when do the doors open?

REGS