persons financial situation to be able to comfortably afford a F-Car ex:(360)

Somewhat age old topic with no real answer. It all boils down to your comfort level and tolerance for risk, and your feelings about your financial future.

I am fairly conservative, and make it a practice to only buy sports cars if I pay for them in cash. No sense paying interest on a depreciating asset. I keep them as cheap as possible.

I don't think there is a magical net worth that qualifies you for a Ferrari. I do think that if you have to worry about the finances of the car, that you will not enjoy it as much.

 

It depends what is important in your life. I personally live alone in a nice big house, I use maybe 15% of my house. I'm starting to think that living in an efficiency with a 6 car garage is not a bad idea.

 

I Am 31 and not married, I have a home that is rented out in the city and I am building a home next to it, I plan to sell both (investment properties) but since I am 31 and single I still prefer to live in a 1,000 sqft apartment.. I mean what else do I need? a 10,000 SQ Ft mansion? how pathetic would I look living alone in something like that at my current situation..

I would feel like a toolkit living in a big house with a lawn in the suburbs being a single guy.. It doesn't suit me at all in my situation right now.. but I love cars and I love tracking my cars.. I have the M3 and now added the ferrari that are my passion and hobbies.. I have investments and work towards increasing their value every day.

but for MY life and MY situation the ferrari fits in nicely.. If my investments/businesses were to go to hell in a year or two (or god forbid sooner) I will sell the car.. but that could happen to anyone, at any time.. in the meantime I do the best I can and reward myself in whatever way I see fit..

just about 4 years ago I bought my first lotus elise, I was very nervous about the purchase since the car cost as much as my yearly income.. but as my income grew the decision became easier.. in short I do not regret taking a risk to enjoy myself back then.. and things grow and grow (god willing).. For me buying the ferrari is just another way to kick myself in the pants to keep trying to excel..

I don't know how many of you are true car enthusiasts.. or just well off people with a need to burn some money out on a car.. but to me looking at an exotic car.. sitting in an exotic car.. and driving an exotic car are very very meaningful things.. I love everything about cars, and in regards to almost everything else in life I am pretty indifferent and responsible.. but when it comes to an exotic car.. there is no rationality.. no higher brain function.. just the sound of the engine and the feeling of turning the ignition on for the first time..

Again.. for me this means something, to others.. to people who see an exotic as a fun toy.. this rationale would not apply..

I guess what I am saying is that there are few things in life that really excite me anymore, but since I was a little boy.. the enthusiam and excitement for exotics cars has not changed ONE BIT.. I consider owning one of these cars a dream come true.. and I am blessed to be able to pull it off (currently) in my financial position..

 

definitely not.

the problem is you are still asking in terms of annual income. you might as well ask, what if you REALLY want one?

 

The Ferrari typically is an extra car - not your daily driver.
And it needs a garage where it is safe (don't let the kids, or neighbor kids, lean their bikes on it).

Your on-going maintenance costs will vary greatly from year to year.
Most Ferraris get driven less than 5k miles per year, so for some years, the costs will be very low (under $1000 for the entire year - just the cost of an oil change or two plus maybe a brake fluid flush).
Other years, you'll need a brake job, new tires, major engine service, etc. These years could be $5k - $10k per year.
And, you need to be prepared for a very bad year - perhaps something major in the drivetrain goes bad. That might be a $30k - $40k year.

So, the safest answer is to buy the Ferrari with cash and have enough money reserves for that really bad year up front.
On the other hand, lots of people finance the purchase and never experience one of those really bad years.

 

I don't agree with the "if you have to ask, you can't afford it" line. I think that answer comes from people who can't afford it.

Now I may say that if a car forum is the most sound financial advice you have available to you, then you can't afford it.

Suzi Orman doesn't believe what she said. She may believe that people that are irrisponsible with their money should only pay cash for their cars. but Even if you aren't paying interest by paying cash, there is always opportunity cost of the money. If you can be making 7 percent in a compounding interest investment, why wouldn't it make sense to pay 7% on a cimple interest loan? you come out ahead...

Get a financial planner involved. Create a plan. and take steps to get there. My wife hates that our planner is a car nut. But he has built a ferrari into the plan, and we've hit the markers in order to go shopping.

matt

 

Don't forget about the income or capital gains tax on that investment though. If your ROI is only equal to your APR you won't be coming out ahead.

 

nope, you've just lost money (say 35%) to taxes, plus you've overpaid for the car. also, making 7% is not easy ... it will carry risk. you make it sound simple but it isn't.

 

come on. you guys know its not that simple. depending on the investment, the tax implications can be differed. And remember there is a significant difference between a 7% simple interest loan vs a compound interest on. I was using 7% as an example number. not the hard and true forecast return and cost of money. I know a 7% return isn't gauranteed, but what % are you using to forecast your investment portfolio? If its less than 7% you are super conservative or you need a new planner. Let's not forget that lease options depending on your state can differ sales tax on the vehicle, which is a huge advantage depending on how long you will keep the car.

I'm not saying that 100% of the time you should finance vs pay cash, but it does make sense sometimes.

 

one of my main businesses (biggest moneymaker) is electronics brokering/exporting.. I use lines of credit + me and my partners cash on hand weekly to buy and sell goods.. I need as much cash as I can keep.. which is why I always keep my most expensive car about 80% financed.. and when rates are currently at 4% (some credit unions) there is little reason NOT to do it.

this of course is my personal situation and would not apply reasonably for other people.

 

good lord. what credit union is offering 4% right now?

 

If you are talking about buying another Elise ($45K) or perhaps and Exige ($58K) or even the new Corvette ($102K) I can see the possibility of being able to cover the nut with a $100K of income, but when you're talking about a 2008 F430 (and I'm not even talking about a Spider) at 150% more than the Corvette, its all a pipe dream from there.

 

Amen!! I could not agree more, you saved me a bunch of writing with numerous good points. The original posted noted a 360 for example NOT a 430 spider. You can pick up a 360 for $100K or less. It all comes down to priorities and how important having an Fcar is. I paid cash for mine and owning and Fcar has been a life long dream for me.

 

the topic poster mentioned buying a ferrari 360 modena at 100-120k.. so I am going from that standpoint to help him out.. on his income claim of 100k..

 

I wonder how many exotic owners actually pay cash for a car? Surely, a there is a car dealer on here lurking...

I bet the % is really low. I have plenty of liquid assets and I never pay cash for my cars.

 

I sincerely doubt that. I've never done anything other than cash. I'd be shocked if you were right.

Anyone else?

 

If it helps i had a few convos with my credit unions that have told me they get requests for loans well over 100k for a car, they set these loans up all the time..

 

It's all just math. Plug it into Excel and see if it's comfortable.

BTW, if you can justify the car as a valid business expense, lease it and write-off the lease payments. You'll likely be ahead of the cash buyers.

 

+1

Always paid cash for toys.

 

With the way the market is falling out of these cars, any one with a brain would never buy one...

Don't believe me, ask anyone that is trying to sell a 360 or 430... It is not what you pay for it up front, it is what it is worth when your done with it.


Count on losing about 20% per year and 10% per 10K miles....

F Cars being a smart business decision has gone by the way side. Maybe in the old days. They make way to many, they have become a high end Honda in my book.

That being said. I will always have at least one. I love them. Just not a smart Financial move no matter how you slice it.

 

Why you think that?

 

+1......the last check you write should be to your mortuary and it should bounce!!

 

Finally someone who thinks the right way.

 

Yeah...sounded good to me too...

 

Buy a used porsche instead. Lot's of fun, more reliable and much cheaper to own. When you make it, buy the Ferrari.