I want it NOW ! ! !

Quote from dealgate : Penalties are 10% of the gross amount of the early withdrawal. If I get a 5 year loan on $40k at 8% we are talking around $8600 in interest. So almost a wash getting the loan vs the 10% penalty of the $70k gross.

Are you really seeing 8% auto loan rates right now? If you've done enough to get $500k in your retirement accounts, you should be fiscally wise enough to have decent credit, which means the loans should be much lower.

Take a loan, pay it off early if the rates are higher than what your money earns.

Quote from dealgate : This argument is a non-sequitur. It does not apply since the same could be said about any auto purchase if you were to "invest" rather than spend that money.

The difference is that this is already invested so it is already working. I would surmise that the average person does not invest the money that they would have otherwise spent on a car.

Quote from MSUSteve280 : Are you really seeing 8% auto loan rates right now? If you've done enough to get $500k in your retirement accounts, you should be fiscally wise enough to have decent credit, which means the loans should be much lower. Take a loan, pay it off early if the rates are higher than what your money earns.

Used car loans for classic cars are funny. I looked into them before. Since you are relying on the "collector" value for the collateral, they banks jack you up. And realistically, I'd probably put $10k in cash and the rest from one of my IRAs. I could just use my HELOC, but again, I really just don't want the payment. I have a long way to retirement and also have around $500k in equity in my property. So I don't think I will be too hurt with a little mid-life crisis withdrawal.

But I also see this as a quasi-investment. If I need to or decide to, I can get almost certainly every cent of what I put into the car back out of it and realistically could double my money. This is why I would not even consider any modern car - their value goes down until they are worthless. Someone suggested modifying a Corvette. I think they totally missed the point in what I want and am trying to do. I have a modern "muscle" car in my Daytona Charger already. I will never make any money at all on that. And I am cool with that.

if you want a classic car go all the way and get a 280zx.

Quote from dealgate : Used car loans for classic cars are funny. I looked into them before. Since you are relying on the "collector" value for the collateral, they banks jack you up. And realistically, I'd probably put $10k in cash and the rest from one of my IRAs. I could just use my HELOC, but again, I really just don't want the payment. I have a long way to retirement and also have around $500k in equity in my property. So I don't think I will be too hurt with a little mid-life crisis withdrawal. But I also see this as a quasi-investment. If I need to or decide to, I can get almost certainly every cent of what I put into the car back out of it and realistically could double my money. This is why I would not even consider any modern car - their value goes down until they are worthless. Someone suggested modifying a Corvette. I think they totally missed the point in what I want and am trying to do. I have a modern "muscle" car in my Daytona Charger already. I will never make any money at all on that. And I am cool with that.

If you have 500k in home equity and 500k in 401k and you're 42 you have to make pretty good money. Why not save at least say half in a year and use it as down payment. Then pay off the loan in a year (or however long it takes you depending on income) You will still be able to mid life crisis away in a year or two. Impulse buys don't usually turn out to well. Especially when its coming out of something that gains compounding interest.

Oh you can't forget about the cost of all those speeding tickets and the 4 mpg x 2000 miles you go

Quote from happyhunting : If you have 500k in home equity and 500k in 401k and you're 42 you have to make pretty good money. Why not save at least say half in a year and use it as down payment. Then pay off the loan in a year (or however long it takes you depending on income) You will still be able to mid life crisis away in a year or two. Impulse buys don't usually turn out to well. Especially when its coming out of something that gains compounding interest. Oh you can't forget about the cost of all those speeding tickets and the 4 mpg x 2000 miles you go

Not a lot of free money anymore. My wife quit to be a stay-at-home mom and that cut our income like 40%. Once she goes back we will be on easy street again but I don't want to wait that long.

Quote from dealgate : Not a lot of free money anymore. My wife quit to be a stay-at-home mom and that cut our income like 40%. Once she goes back we will be on easy street again but I don't want to wait that long.

Well it sounds more like you're going to just make the decision logical or not. Good luck with the new car that by the time you retire will have cost you a substantially in interest

Quote from happyhunting : Well it sounds more like you're going to just make the decision logical or not. Good luck with the new car that by the time you retire will have cost you a substantially in interest

No I haven't made up my mind yet. But logically I think it does make sense. I get what I want - right now. I get an alternative investment (one reason we are doing so well now is I have made quite a few alternative investments that have paid off). I get no increased monthly outlay (I am getting rid of another car for the classic car).

This car will replace my next new car, which would have been due in the next couple of years anyway and would have cost more than I will be spending on the classic.

But actually I forgot that I have a bunch of coins. I am going to see about liquidating them. With they money from those I may not need to crack the IRA at all. They were a horrible investment anyway so I am happy to see them go for a better one.

Quote from figarotigger : All of you are ignoring that he will also have to pay taxes on that $40k as income in the year that he withdraws the money in ADDITION to the 10% penalty. Additional Tax bracket $$'s plus 10% penalty is far more than the interest rate on a car loan.

10% penalty plus the income taxes due on it.

If the OP is stuck on the idea of taking money out of the retirement account would it make more sense to do it in the form of a loan from it? I don't remember if is was mentioned as being a 401k or what it is but that would at least avoid having to pay the income tax on the $40k and the penalty. I don't really know how those loans work and I definitely haven't ever thought to recommend one as being a good idea before but if the money is going to come out of the account anyway it just might be a good alternative to paying the penalty and taxes. Hopefully somebody who knows something about borrowing from retirement accounts could say whether it would be better or not.

Quote from Iaaaiws : If the OP is stuck on the idea of taking money out of the retirement account would it make more sense to do it in the form of a loan from it? I don't remember if is was mentioned as being a 401k or what it is but that would at least avoid having to pay the income tax on the $40k and the penalty. I don't really know how those loans work and I definitely haven't ever thought to recommend one as being a good idea before but if the money is going to come out of the account anyway it just might be a good alternative to paying the penalty and taxes. Hopefully somebody who knows something about borrowing from retirement accounts could say whether it would be better or not.

You can borrow from a 401k, not an IRA. I could transfer money from an IRA into my 401k and then borrow it - you can only borrow 50% of the balance of the IRA and I don't think I have enough in my current 401k to cover it. But again, I don't want a loan. This would be a loan even though it is to myself.

I'm going to see what I can get for these damn coins. I already called my dealer/agent and he said send them to him and he'll make an offer. I don't think that is going to be more than maybe $15k though. There isn't a lot left.