Leasing a Ferrari thoughts

Don't. Toys should be paid for not leased or financed. If unable to pay for it then buy a less expensive toy.

 

I was offered a lease with $8,000 down and $2,500 a month on a California Saturday. I personally won't do a lease. Just thought this might give you an approx. idea of what to expect.

 

No lecture here, I'd ignore any elitist comments, you know your finances, we don't. Although I wouldn't personally lease, that option does allow for some buyers to enter the Ferrari world when buying isn't an option, and some use them to eliminate sales taxes, etc..



Jim

 

I have leased (closed end) all my Ferrari's for one reason alone... I use it as a hedge against an accident. NEVER do an open ended lease, which is typical for all the lease deals that are advertised with Ferrari cars/dealers.

I did a 3 year closed end lease because if the vehicle is in any kind of accident, you essentially lose $50K-$60K in additional depreciation alone if you bought it outright, on top of the repair costs. Nobody wants a 2-3 year old Ferrari with a paint job resulting from a collision.

On a closed end 488 GTB lease, NONE of your factory options will be calculated in the residual, Ferrari Financial uses a fixed residual number and a medium/high money factor, which is vastly different if you were to lease a California T.

Your residual value is intentionally a low number, designed to make you be in an equity position from day 1 of your purchase, which is the complete opposite of essentially any other vehicle brand.

Just a few months prior to lease maturity, I purchase the vehicle from Ferrari Financial to take advantage of the equity I have paid to date (remember the artificially low residual), should the vehicle still be accident free. I actually drive my Ferrari in a very busy area, so this method may not be of benefit to you if you don't do the same level of driving.

 

This is state dependent and whether you like to jump in and out of cars.

 

Don't listen to anyone who offers you blanket advice without knowing the details. They have no leg to stand on in terms of if it is a good deal or not.

The answer depends on price, expected depreciation, tax advantage (IE which state you live in as mentioned above),your intended use and option value of being able to "put" the car back to the manufacturer.

Same goes for financing.. To say "never finance" is clearly not the right answer. If rates are low--as they often are when manufacture subsidized--and you have a better use of capital then you could be costing yourself money by paying cash up front. Has nothing to do if you can afford to pay cash up front or not and everything to do with the time value of money.

For a Ferrari, I would be surprised if there are actually highly subsidized manufacturer lease or finance deals. For other manufacturers I have seen such deals quite frequently. IE 0% APR deals..

 

If you have the cash on hand, credit history and income to get financing for a big purchase, (e.g., a house or a Ferrari), it is almost always a good idea. Why? The idle cash you will otherwise use for the purchase will cost you more than the financing. Even the most conservative portofolio of $300,000 should yield an average of 5-8% per year (e.g., dividend heavy stocks). Current financing or leasing should be about 3-3.5%. The difference would be the opportunity loss. A 3% yield compound over the life of the 7 year loan is about $90,000. For a depreciating asset like a car, this could well off set most of it. Ferrari has some unique leasing options. I checked them out when I was about to order my 488. I would not dismiss them as options because they could well be a wiser choice. Ferrari does not report credit history so you are safe from credit rating practices for having a big loan. You of course should not take my advice. Talk to your financial adviser or your accountant. Let your money work for you and not the other way around.

 

I lease all my cars, including every Ferrari I've owned. Several of the benefits are addressed above. A specific example would be my 488 GTB which I'm selling in less than a year of ownership. This will save me $18,000 in sales tax. I also find my cash earns far more that 4% annually. Why tie that cash up in a car. JMO

 

I should have added to my post that several of my friends lease as well, and they see the same benefits mentioned in several of the last 5 posts. Hope I didn't imply leasing is not the way to go, it clearly has it's benefits, and the really smart guys among us use the option regularly.



Jim

 

Haven't seen any mention of this, but, instead, at a better interest rate, FFS has a balloon option, check it out, have the dealer (must be a Ferrari dealer) work up a FFS balloon quote.

The current residual for lease or balloon (with FFS I think they are always the same) for 2017 488 is 159,000 (60 month), will probably go up slightly for 2018 model.

Anyway, with a balloon, the title will be in your name, not FFS, and the interest rate will be better than the "money factor" on a lease...

note on taxes...with a lease or balloon you always have sales tax, it's just that some states require the sales tax up front so the leasing company usually has you pay it directly, otherwise, it is factored into the deal

and, know this, some states/counties/cities/etc have yearly property tax on a lease contract, so, a lease could end up costing you more via personal property tax, so, make sure you check into that first, you may find a lease to have too many hidden and significant costs...

Might be an option...

 

Arnie

Where do you get 4% interest on a Ferrari lease? Most the ones I've ever looked at in the past (premier,etc) all have had rates around 8% plus a one payment penalty for selling the car. I never found these high costs offset the sales tax savings especially given I can write off a portion of my sales tax on my federal return.

 

I've always used Ferrari Financial. I wasn't sure of the exact rate, but it was definitely below 8%. I looked it up and my current rate is 6.5%.

 

This is right. When I went to the Ferrari dealer in SF Bay area and worked up a lease on a 458 the rate was also 6.5% on the lease. This is ridiculously high by leasing standards (Rolls Royce is 3.69% for comparison).

If you're cool with blowing 6.5% of your money just to get a toy then so be it. I can't find an investment instrument that guarantees 6.5% of anything like you're guaranteeing to pay Ferrari Financial every month....

 

I'm paying 1.7% on my hire purchase. I'm in Hong Kong and our currency is prgged to the dollar. I make more depositing cash in my mortgage account than I spend paying the bank in interest.

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They should be very close around 3% to 3.5% currently, about 2% over prime + a slight risk factor. Some of you are getting 6.5% to 8% most likely is due to personal factors. Most other dealers now offer 0% to 3.5% for financing depending on manufacturers' dealer incentives. If you are quoted more than 3.5% you need to ask why and demand full disclosure from the dealer. Dealers do have some leeways. If your credit history is not very good (less than 700), then it will be harder. Conventional loan financing usually is slightly cheaper. The slower than average depreciation of come models such as the 458 and 488 may well be better off financed with Ferrari, or other lenders, than leasing. Try not to let the finance managers intimidate you with jargons like 'money factor', 'capital cost reduction', etc. I think they are invented to mask the real cost of the loan or lease. Money factor, for example, is just another way to describe interest rate that may or may not have combined both the depreciation portion of the lease and the interest cost of the residual. Keep in mind, you can also buy the rate down with a sizable downpayment. e.g., I financed my 458 2 years ago at 2.25% with 40% down for 84 months; 20% down would result in a 3.5%. Buying or financing a Ferrari is pure business, there's nothing emotional about it. Better outcome is almost always a result of preparation, thorough understanding, and objective presentation of your side of the argument during negotiation. I have purchased or leased over 35 cars and I actually kind of enjoy this part of the transaction and I don't even use my HP-12C calculator.

 

Your experience is interesting in Hong Kong. Did you pay over MSRP for your car? Most high end car dealers in Hong Kong have mark ups; and of course, the H.K. government takes a big chunk in import taxes too. What is the import tax now in Hong Kong, 100%? It is 160% in China now, i.e., a new 488 usually costs about US$600,000 there and the used market is significantly higher, starting at $750,000 due to the 3+ year wait.

 

Well, I've leased over 55 new cars and 5 Ferrari's and contrary to other manufactures, there is no negotiating with Ferrari Financial. As far as 6.5%, it is still in line with every other exotic car leasing entity. I've checked them all. The difference is FF offers minimum drive off and strong residuals. The way I see it is my money earns me considerable more than 6.5% and as with my move to the Spider, I save $18k in sales tax. Other than that, it doesn't really matter what everyone chooses to do. Write the check if you prefer. I have many friends that would never consider financing a car. Hats off to them.

 

Bought second hand. Bank hire purchase. Banks in HK are loaded with excess cash dying to lend to those with good credit. Amazing thing is I pay less interest rate vs my mortgage.

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Does anyone know how this works in the UK?

I was always taught to not buy anything I could not buy outright (well except the house) and every deal I saw seemed to end up with me being thousands of pounds worse off. Obviously this assumes no major loss on the car, but I was just interested how it works to your advantage. Is there an idiots guide for UK finance?

 

Just reading the above substantiates that you have never leased a Ferrari through FFS before.

 

All these posts yet NONE of them gave you a direct answer... so here it is:

2017 488 GTB
Residual around $159K (regardless of options, as they don't change the residual, unlike other manufacturers)
Interest rate: 6.5% (MF of around .0027)
Just these numbers alone will give you what's needed to calculate a lease number.

The residual mentioned is for a 3 year/3500 mile/year close end lease.

Yes, this is a nose bleed compared to other manufacturers. But you will always be in an equity position and buy the car prior to lease end to recapture that equity, again, unlike other cars.

 

+1

 

Store location is here in Las Vegas, Towbin Ferrari. I never looked at the car to see the MSRP as I was there to look at 458's.

Towbin Ferrari Maserati - Serving Las Vegas, NV


I have no association with the dealership other than I lookie lou there often.