Financing

Doubtful any bank would want to hold a note on a 328. Take a home equity and pay for it that way?

 

You have unwittingly opened a big can of worms here..........

Dave

 

Find another credit union. I financed mine with zero down for 60 months @ 5.25.

 

JJ Best in New England
800-872-1965
they will go up to 10 years if you want.

 

Financing a toy is never smart...

 

Financing because you don't have the money may not be smart, but financing at a good rate so you don't tie up your cash can be very smart.

 

+1

 

That would be true if you could get a guaranteed return higher than the loan interest rate AND what your bought with the loan money would appreciate and cost you nothing to own...once you find that let me know and I'll buy two...

 

If you choose to buy a toy, it can/will depreciate independently of the means you use to purchase it, so the coupling of the two conditions makes no sense; except if you're still assuming that the buyer financed it because they couldn't buy it outright.

 

The depreciation is added interest to the loan that you pay... so if you finance you pay the loan interest plus the depreciation(interest) whereas if you pay cash you just pay the depreciation...

 

I understand that, but you're ignoring the stipulation that the return on the money in hand exceeds the interest on the loan. Again, depreciation, actual or book, is independent of the cost of money.

 

The motto of the richest people in the world is...

Always use other peoples money......as long as it does not cost you anything.

May be long term or short term.....but if you don't have the money to pay it off in a reasonable amount of time it is not to your benefit.

Me............I purchased my Ferrari in cash, I would never finance something like that, it does not make me any money.

All my trucks for my company are financed, because they are money makers, they take in much more money then it costs to own them, so in a sense I am using other peoples money.

 

When I bought my 328 I financed half of it through Capital One (http://www.capitalone.com/autoloans/index.php?linkid=WWW_1106_AUTO_09_HOME_H1_02_G_AC1) because although I had the money saved I had to wait a short time to get it (CD had to mature) so I needed a "bridge" between the car that was for sale now and the money that was available in two months.

Capital One had better rates than the dealer could get, application was online and easy, and I had the check from them in 2 days. They don't care what kind of car you are buying, they base your eligibility off your credit worthiness.

However I would not buy an expensive, money-sucking toy like a Ferrari if I had to finance it for 5 years in order to afford the purchase price. Of course if you have the money invested at a guaranteed higher return and would have to use that to buy the car that is a different story. But I suspect that since you need 60 month instead of 36 month terms you don't have the money on hand.

 

That's what I do...my law firm leases my M5 that I use as my daily driver and I pay cash for my toys...Ferrari, chopper, ect...

 

I understand that...but, it is difficult to get a "guaranteed" return on your money higher than a consumer loan on a Ferrari for 60 months once you take into consideration the taxes and cost to hold that investment...sure, I am making 40%+ on some of my stock investments, but that is not guaranteed whereas the loan interest rate you must pay is! The risk just makes no sense for a toy such as a Ferrari...at least IMHO...

 

I'm with Franklin on this one. If you can't afford to pay cash for a toy you can not afford it.

 

Lol. Finally, we get to sink our teeth into a new topic.

Yup. And in the case of a Ferrari, the question is what you're going to do when the car needs a $1200 driving light replaced, or a $2000 clutch job, or a $400 coolant tank, or a $4000 major service, or -- well, you get the idea.

I think you should buy the Ferrari that you can write a check for, comfortably.

+1

 

You are better off taking the money you would pay for the loan each month and set up some nice investments, and in 5 years you can buy it with cash.

Also think about the constant fiddling on the car that every Ferrari owner does, and if you dont do the work yourself, the repairs will cost a fortune....sounds kind of sad to finance alot of money for something you use maybe once a week, or less!

But if your a balls to the walls guy.......................go for it!

ps........part of the fun is the waiting and anticipation of the day that you finally get your dream car.

 

cash has an opportunity cost

 

So you're back to quibbling about whether you can get a higher return or not. That's your line of thinking, but I think that's up to each person to decide for themselves.

First, auto loans actually aren't that expensive and it's not that hard to get 7-8% returns consistently (say a typical low beta portfolio like 60% S&P, 30% bonds, 10% cash/money market). So with a modest 7-8% return (you don't need 40% returns to justify a choice to finance, that's setting the bar way too high) it still makes sense. Second, even if it's negative, it could still be worthwhile to some. I was offered a 6.5% rate recently when I picked up my latest car and with CD rates as high as 5.4%, you're only talking a little over 1% negative on a guaranteed rate if I took them up on it. Paying $1500-1600 per year net on a $150K car might be worth it considering that the car could easily depreciate $15-20K per year. In many cases, the uncertainty in depreciation could be greater than the net cost of the loan. Since the owner of a toy is signing up to the cost of ownership, a few bucks either way isn't going to impact the financial spreadsheet much and they have the money in hand for other opportunities.

FWIW, I tend to agree that most people shouldn't finance a toy like a Ferrari. They either fool themselves that they have the money to pay for the car, fool themselves that they have the money to maintain the car, fool themselves that they're ready to take the hit on selling the car or fool themselves that they get a return that's much higher than their loan costs. But a stock one-liner like "never finance a toy" is too simplistic to address the underlying tradeoffs.

 

I'm at a point where I paid cash for my last two Ferraris. I've worked my way up to that status over a period of years. The fact you say you need five year financing bothers me. I'm not sure you can afford it. I have a couple of old rules which helped me.

Never borrow more than you can cover.
Never bet your family's future.
Never bet the roof over your head.
If you can't go first class, get a plan to do just that. Work the plan.
If you blow the toy, don't take everybody down with you.

If you're not comfortable with those, DON'T DO IT! At 37, you can plan and wait. Car loans are expensive money.

I don't want to write a phone book. What is your total credit picture? If you have any sort of credit card debt. ANY! Forget it. If you have to write it all down and determine if you can make the payments against your necessary life requirements, you are waiting for Katrina.

Believe me. I want you to have your car. I only want to see you keep it.
Very best.

 

Yes this is an often repeated topic, because there is no one definitive answer. Just opinions from people in different situations, and we have no clue about the situation of the original poster. Who says his car will depreciate? There's plenty of Ferrari's that are at or near full depreciation.

Simply put, it would be nice to pay cash for everything. But if you happen have no other debt, why not finance it so you can enjoy it now instead of waiting 3-5 yrs? I did home equity to purchase, and now the balance is low enough where I just transferred it to a credit card with 0% for the next 14 months. Now that's what I call a bargain! And in 14 months, I'll transfer it to another 0% card, or back to the line of credit if needed.

 

Ahhhhh ................Grasshopper.............the old credit card bouncing technique, very well done! I love that one.

 

Yes, I think I agree with you there. I financed my Audi because VW Credit gave me 2.9%, but I paid cash for my 308 because I didn't think I'd find a loan that would do better than the 5% I'm getting in my money market, and I wasn't willing to gamble the money would make more in a higher risk investment. But, some people might be willing to take that risk.

The basic point I was trying to make before was that financing because you can't afford the car is probably not a good idea. But if you're financing because you think you can do better with the money held elsewhere, well, that's entirely possible and might be a smart move, but it'd have to be decided on a case by case basis.