$$$$ women or 360/430 F car

My personal view is that until you can pay cash for a Ferrari, you have no business buying one.

Ray

 

I think thats ridiculous. If you can afford it, then do it. You only live once and the experience is unparalleled.

 

funny.get the ferrari & you'll have a blast plus you'll be able to get girls for free.take care.430 drives & looks much better

 

Ray,

"you should not buy a ferrari unless you can pay cash", I notice you post this on almost every single thread that discusses ferrari purchases..

It is starting to come off as more gloating than actually trying to give meaningful advice..

What do you say to the people that easily have the cash to purchase the car but choose to finance?

The way I see it is that if you are in the market for a depreciated 360 (140k lets say for a spider) you put 40k down and finance 100k of it.. why is that such a mistake? you can put that 100k into a real estate/business venture that will make you another 50k or more within a year.. And you still have a car that has likely only lost 10k worth of value.. so you've gained..

I am just confused why you stick with this ideal so strongly you post it in ever single "should I buy this" thread? I know you were very fortunate young in life and were making 400k a month.. but you must understand most ferrari owners make 10% of that and still can afford a 150k 360.. Again it just comes across as painfully arrogant..

 

Personally I would spend it on women. Cars don't keep you warm at night. Ray is probably right, but everyone has a different level of debt, AKA risk, they are comfortable with. And Ray, just so you know, I paid cash for mine as well.

 

Forget about these "$$$ women" and just buy the car.. or if not the car then spend your extra money on something decent! Just my .2 cents...

 

No, I'm not trying to gloat or be arrogant.

My point is that if you can only afford an exotic car by taking a loan out from a bank (at whatever percent, let's say around 7 percent a year), then most likely you are not in the financial position to be buying the car in the first place - unless, of course, you are like most of the people in the US who just mindlessly go into debt in order to live well beyond their means.

Anytime a thread like this comes up, there are always those who say stuff like "life is short, go ahead, just buy it, you only live once", blah, blah, blah. And that's fine. However, they seem to nearly always have 5 posts to their name and are not even subscribed and/or they have silly names like "ferrariRoyalty". My guess is that, if the truth be known, many of these same people do not own a home that is even close to paid for, nor do they have much savings in the bank, and probably, they have some significant amount of credit card debt which they don't mind paying 22% a year on.

Maybe I'm wrong. However, the point is that a Ferrari (unless you are buying a classic or were lucky enough to buy an F40 when they were trading hands at $250K) is generally a declining asset. That, in and of itself, is a poor use of money. However, if you then chase that with an interest rate generally associated with an auto loan, then it's really a bad use of money in my view (especially if you don't have it).

Sure, if you are making $40K a month or something, then maybe buying a Ferrari on time isn't that big of a stretch. However, if you are making that much, why not just wait a few months or so until you can really afford it without having to use someone else's money?

So that brings me back to my general advice of "if you can't pay cash, you probably have no business buying an exotic car". My personal feeling is that if you have $150K of cash laying around burning a hole in your pocket, then losing a few thousand a year on your Ferrari is probably no big deal. However, if you don't and the only way you can buy a 360 is to go out and borrow someone else's money, then you are probably not only making a poor decision financially, but it's probably just one more in a long line of poor financial decisions if the truth be known.

If you don't have the cash on hand to buy the car, there is probably a reason for that. And taking out a high interest auto loan to buy an exotic car probably isn't helping to solve the reason.

Anyway, you can do whatever you want with your money - it doesn't bother me. I'm simply giving my views on the subject. If you don't agree with 'em and/or they rub you the wrong way for some reason, then perhaps taking a nice long drive in the bank's Ferrari will make you feel better

As far as people who have the cash on hand, but use the bank's money instead, I don't see any major problem with that. The one caveat that I would add, of course, is that I hope you are making a higher return on that money as compared to what you are paying the bank for the auto loan.

Ray

 

It's true (about the women)... and also about everyone having a different level of debt. Ultimately, the decision is up to each person. I would take what everyone here says (including me), with a grain of salt pretty much

Do what works best for your own finances, networth, age, place in life, etc.

I do agree everyone should have a Ferrari at least once or twice in their life. Even if it's a bit of a stretch, it's still worth it. Just make sure it doesn't land you in the poor house is all.

Ray

 

+1

 

I'll agree with RayJohns. It's not just the purchase price. With a ferrari, $5000-$10,000+ maintenance bills are always a possibility. If you are just making the payments, then what will happen when you get one of those bills? How are you going to pay it off + your monthly payment? Credit card?

There's always the option of buying a cheaper ferrari. When I bought my car 5 years ago, I bought a nice 308 GT4 very cheap, and paid cash. My first service cost me $7000. No problem, paid it. No payments to keep up, and lots of fun.

It's very easy to say that you can take a loan and invest the money. But your loan is going to cost you at least 6%. You'll have to make quite a bit of money on your investment, risk free to be able to make that worthwhile.

Dom

 

In general, this is probably good advice. However, every once in a Blue Moon, this could cost a person who wants to buy a Ferrari more. Imagine if a person had financed the purchase of a Dino 246 GTS or 365 GTB/4 Daytona about 4 years ago. The rapid appreciation of those cars would have made it look like a wise move. Both cars have more than doubled in value in those years. Remember when nice Daytona coupes were $125k? It wasn't that long ago. Same car now is $300k plus. Hindsight is always 20/20, YMMV. So, financing a near-fully-depreciated Ferrari makes more sense to me than financing one that is 2 - 8 years old (IMHO, the years of the highest rate of depreciation typically).

No one knows the next Ferrari model that will start appreciating quickly. Some say the 365BB is next. Others say the 328 GTS cars are going to start going up at a faster pace (although I don't believe the 328 cars can escalate to too high of a price given the high number of them that were made). The 512 TR is also at an attractive price point. Personally, I really like the 550 prices which are now in the $85k - $100k range but that is a much longer-term strategy, i.e., it will probably be another 10 years or more before 550 prices will start to climb.

I agree that on-going maintenance will be somewhat expensive, but that will be the same cost whether the person pays cash or finances. Given where the national economy is going these days, this is probably not a good time to stick your neck out financially. At some point, perhaps a year or two down the road, inflation is going to kick in, and you'll see all the Ferrari prices jump some.

So, for a subset of the people out there looking to buy an older Ferrari, financing the car's purchase might work for them (assuming a low fixed interest rate and they being at the stage of life with high or rising income levels). After saying all that, I'm in your camp and prefer to save up and pay cash for them.

 

That's very true. I'm still kicking myself for not buying an F40 when I had my chance. In that case, the reason I did not pull the trigger was because I just couldn't justify cutting loose with $350K or more for a car. However, had I known the price would sky rocket in the last 5 or so years, I would have not had much problem getting a loan to buy one

Ray

 

That's a very good point: factoring in the risk as part of the equation. The bank is making 6% effectively risk free (since you are paying the insurance on the car they own). So they can make 6%, all year long, with no risk of losing a dime. However, if you take that same money and invest it, you are incurring risk to your capital in order to produce even that same return.

Ray

 

If I knew what was going to be hot, I could make several fortunes in just one week. This is a dumb argument in favor of financing.

I believe it is a very rare buyer that can pay cash yet doesn't. I know some people lease them through a business and write off all the payments, that can work out.

I'm still looking for that risk free 7% return on a passive investment. If anyone knows one, please let us all in on it.

Dave

 

The problem w/ this reasoning is that.. if you are making let say 360k a year.. if your other expenses aren't too elaborate than a 150k used 360 that has taken it's depreciation hit is a decent or even better than decent deal.. you can put 50k down finance 100k.. if you feel like paying it off sooner sure.. regardless 100k is about 2k a month in financing over 60 months.. which shouldn't make much of a dent if you are making 36k a month..

So.. you have the option to comfortably own and operate (maintain) a ferrari at 360k a year... or you can wait until you are 50 years old have millions saved then do it.. But it's a bit less fun..

sure if you are 31 making 400k a month then paying for everything like that in cash is a no brainer.. but really how many people pull that off at 31? there are thousands among thousands of ferrari owners.. surely most of them don't make 400k a month do they?

I have a feeling that a good amount of 300k+ people (and some under 200k) are owners who can afford to handle the car without much of a problem.

 

Going from a $1,000 to $3,000 a month is a big jump for most people. It depends on your "risk tolerance". To many of us life is a "calculated risk", i.e. take limited chances and keep some for a rainy day. For others, of the school of "who cares, you only live once", i.e. put it all on the line (I see this in Vegas too frequently), if you are wrong, you are on welfare. I suggest you be patient, amass some money, and then pull the trigger. This results from two observations. Life is a long haul, having everything too early spoils the fun down the road, and we are experiencing economic upheaval which will bring down the price of cars and likely increase costs of other goods and services. At the end of the day, save enough so you don't have to ask the question. Best

 

If 3k is your spending allowance, I wouldn't advise getting an Fcar. You should be prepared to undergow a substiantial repair, and it can easily exceed that in one shot. Despite what people have said on here, I think debt can be a good thing, as sometimes money in the bank makes you lazy.

If you really want an Fcar just set your sights on it, and find a project you could invest in and offset the debt cost and deperciation cost with something to atleast break even. I for one don't belive in paying cash for these cars unless you are truly rich, 30-40+Million range. Cash put into real estate, expanding your portfolio or paying off contracts is a much better use of cash when done correctly.

Best of luck.

 

Very well said!!! I agree 100%

 

I agree with Ray.

 

I just want to add that I personally have outright purchased exotic cars.. however I also have partially financed them..

So I have experience with both..

again this also comes down to how you use your money..

Let's say you are a doctor or a private business owner, and you income is completely coming from one business.. It doesn't require additional subtiantial investments after the initial investment..

However let's say you have a few business or are making money a few different ways.. then 100k extra cash is 100k that can be used in 2 or 3 seperate projects..

an example..

lets say you buy a 150kferrari, you finance 100k of it and plop 50k cash.. you take that 100k you were going to plop into the ferrari and you start 3 residential construction projects that when complete could generate 100k each.. In a situation such as this the money that would have went into your car has turned into profit.

Again.. if you are 100% committed in one business that doesn't require hard cash.. like a doctor, lawyer, etc. etc. and you rely on a steady income of 300-500k or something.. then I can understand outright purchasing of a car..

Again.. personally it does feel good to just pay for a car and not have to worry about monthly payments.. However if you are making enough to stay in the black all the time then you never really notice the monthly payments either..

 

I am actually enjoying my little lesson in the economics of purchasing a Ferrari.

 

I'm with with RayJohn as far as people who have the cash on hand, but use the bank's money instead, I don't see any major problem with that.

However...I do think there could be some people in unique situations. I'm not in this boat but let me provide an example.

Income $100K a year
Has 75K in the bank

I think right there in itself...people would say...you can't afford or shouldn't be owning a $150K Ferrari. However...see below:

Purchased a home at $350K back in 1998 let's say which is now worth $1 milllion.

The person put 20% down on the 350K purchase. That would be a $280K loan. Let's say he has that mortage at 5.75%. The monthly mortgage payment would only be $1,500 a month.

At 100K a year income...take home pay would be around at least 5K a month I believe. (100K x 67% take home after tax divide by 12 months).

Even after you factor in utilities, food, insurance, gas, etc....there is still plenty left over.

So person takes out an equity line of credit of $150K at let's say 6.5% fixed. Should be easy...look at how much equity is in the house.

Payment wouldn't be that much at all...probably $1,200 a month. Plus...the interest is tax deductible....it was of course for the house...right? ha ha

Even if things get tight or is a bit of a stretch...he can still sell the car. Sure he might lose some money. Let's say it was 10K or even 15K. Well...so what. Some people spend more money than that on a vacation trip alone in one summer.

Now...just because of the above...I'm not recommending people go start financing exotics. A lot has to be considered and thought out.

 

u get girls 3 times a month for $1000/night?

id say go for the girls.

 

I've owned my F-car for a long time. I'd have to say that proper maintenance is a fairly big portion of the total ownership and total satisfaction. My understanding is that 360 is a lot more demanding maintenance-wise to the 430.