To own or not to own? (F360)

If your finances are as you say,... you'll be able to pay cash for a car in 1 year. Wait 1 year. Pay cash.

 

To be honest. If I personally was in the situation that you describe, I wouldn't do it yet. That's not to say that you can't, but I would be more concerned about investing more money instead of blowing it on a car. You are a young guy making a very respectable salary. Since you are young, these are the most important years for you to invest. Look up charts with compounding interest. You will see that a modest amount of money invested early on can really turn into a huge amount of money later on! Cars depreciate like crazy, and cost a lot of money to insure, maintain and repair. You may purchase a 360 that seems healthy, and runs great, then out of nowhere you can wind up with a $10,000 repair bill. I would first make sure that my future, and my family's was really set up, then buy the car with "throw away" money so it doesn't cause more grief than enjoyment.
I know I may get a lot of abuse for this post from my Fchat buddies here, but it's just my personal opinion that you asked for. It doesn't mean that you can't or shouldn't buy it at this time. It's easy for all of us to sit here and say "awesome car, go buy it. You won't regret it one bit", but YOU are the only one that will know if you are comfortable with the purchase.
All that said, I did have a question for myself once I finally purchased it. "Why did I wait so long?!!" So that's proof that being conservative isn't always the best choice to make. We do have to live after all, don't we?
All that said, welcome to Fchat, and good luck with whatever you decide. The 360 makes a perfect starter Ferrari. That's what I bought to get my feet wet, and I absolutely love it! It's a whole different animal than the Vettes or Vipers (even though those are faster). It just feels and sounds great.

 

$140k annual income, no expenses other than mortgage and utilities, and other cars to drive, plus DIY'er?

go for it.

I'd try to put half down, and finance the rest at a decent rate (less than 3%) hopefully.

 

I'd wait, but to each his own. I could never justify a 3rd toy car that I was going to drive 2500 miles that cost 1/2 my household salary. Remember after taxes that 140K is like $100K, so a $70K car is 70% of your annual cash.

At 25 and newly married you are going to have a lot of opportunities in the near future that may require some cash. Having a nice savings could enable you to fill some needs (think kids, buying house, expanding a business, pursuing a new venture or career, buying new furniture, an investment opportunity, etc).

The econ is probably going to blow up sometime in the next 4 years-- having a nice savings will enable you to either weather the storm or take advantage of some great opportunities.

 

All good angles on advice here.... Another option would be to start with a car half that price, a well bought Z06, say a 2009, is mostly depreciated, with minimal loss per year left.
You would still have a note for $500 a month/5 years. How about drive that for 2-3 years, save towards the exotic, invest some, and see how you sit in a few years.
You could buy a toy and pay cash now with that $20k, no payment for a decent C5Z06, S2000, a BMW, etc.

 

I would not recommend it.

$140k is not enough to support the family and the Fcar - unless you are paying cash for the car and even then it would be close.

You'll need to take vacations and buy other stuff, the Fcar financed will take away a big chunk of after tax money. As posted above anything goes wrong on the car and you'll be over $10k in a heart beat. You won't be buying a trouble free car at $70-$80k, you'll need to be in the $90k range, maybe high $80s (IMHO).

What isn't apparent is how few places you will feel comfortable in taking the car - the movies are out, work or clients are usually out, most dinner spots and public parking garages are out, leaving it out on the street somewhere overnight is out, and even valet parking is questionable.

Monthly Cost of car:

$65k loan, 5% for 5 years = $1,256
Insurance = $150 (easy to call and get a quote)
Maintenance = $200 (or $2 for every mile you drive, anyone feel free to correct me)

If you hold the car for the 5 years, factor in another $10k (clutch, brakes, or whatever so another $166 a month.)

Sales tax in CA at $80k amort over 5 years = $133 a month.

$1,900 a month for a depreciating asset you won't be driving much. Something to think about.

 

Excellent analysis. Makes me want to get rid of my 360.....kidding of course!

 

Agree with this part.

Plus, the last thing a 25 year old needs is a loan on a depreciating third car that's only getting 2500 miles of annual use.

The first time the car needs a $4000 part replaced, the best laid budget plans will go out the window.

 

I was thinking that, or if he wants something exotic maybe a Lotus Elise/Exige. I suspect values will hold steady, given the small number of them in the US, and with the car no longer permitted to be imported here.

 

I wouldn't get any toys like this until your assets (not salary) were making enough to cover all expenses (purchase and upkeep). It's a pretty thing, but all you're doing is ramping up the speed on the treadmill at this point.

 

I also recommend waiting. You're young, might have kids, then what? A combined $140k per annum with that expense picture and the additional expenses of kids will mean you'll have to sell assets.

Personally, I wouldn't want to sell a car I could possibly come to love, so I'd be in for some hurt.

You're young enough - just wait for a bit. Trust me, since I have two young children, they take a big chunk of disposable income (in a GOOD WAY!!!) and you're going to enjoy spending it more that way than you would with a Ferrari.

Just my $0.02. Be advised, I am a poster boy for "instant gratification" in that I don't like to wait for anything - I want it now now now. But, in this instance, my honest advice, like many of my colleagues here, is to WAIT.

Good luck!

 

My take as the cheap b@$tard of this and the 360 forum... so here is my thinking on the matter..

First of all, only you can know your situation and what that will be is up to you.. you can't predict the future, yaddity yaddity..

1) How much you make: 140k between the both of you.. 80k + 60k isn't a bad household income in terms of the US... but for the northeast, taxes and living expenses really isn't as much as say 140k in a lower cost state. You know your monthly expenses and how this relates. Kids will eat up a ton of this cash.. my bro and wife make this much in NY metro area with 2 girls and he's always claiming to be impoverished..

2) How secure is your job? If there is a downturn, will you be downsized and will that knock the income down by half. Will you be able to afford your mortgage with only one of you working? I personally had no problems financing because as a doc.. anywhere on earth I go I have a job.

3) Yes this is financial BS.. I had had emergency fund set up before I bought my car. I presume its in place with you (if not get this set up before you get the FCar)

4) Not a bad approach to buying a 360. If you can fix this car yourself.. it will reduce the cost of the car tremendously. I'm about to do an annual fluid change and its cost me about 350 bucks or so. Key is I do it myself in my garage.

Get an independent mechanic who can help you when you need to do work on the car when you're unable. A 360 is more reliable than my POS Boxster. 360's are some dainty flower that will break if you blow on it. A manual 360 will be reliable. The hard part will be finding one for a reasonable sum.

On $10,000 bills. The largest expense I've had with my high mileage car was $1100 at one time. Overall I'm about $5000 in of so after 3 years of ownership. The key is I don't take it to a dealership if possible. Yes it can be done if you're handy. $10000 is for dealership repairs that aren't spaced out or rare failures. This is of course IMNSHO..

You're young. Weigh what your options how comfortable you are with the costs per month. Be able if you had to sell it (and you WONT want to) to loose 10-20% of your purchase price. And for a loan checkout PenFed it's cheap enough currently to use OPM..

Choose wisely kimosabe...

 

If you have to ask then your not ready...

 

Exotic cars = exotic problems

I would recommend a stepping stone car....a Porsche 996 Turbo. This is what I have now, and can be bought for $25k-$27k. For example, mine sits at 530 hp, coilovers, new brakes, upgraded clutch....You want to go to 600 hp? Easy and cheap. And the car is reliable and classy. And you can take it anywhere and put kids in the back.

 

They are down that much? Great car!
I was surprised when this 03 only pulled 30 at Mecum Saturday
2003 Porsche 911 Turbo 3.6L, 6-Speed for sale by Mecum Auction
Image Unavailable, Please Login

 

Wow, what you would say to my situation, 5th car, not 3rd. My 360 cost more than 100% of my gross annual salary, yup, it cost most then I make in a year (oh, and its paid for)

I cut out all the math because I won't argue with it, I think the total/month you mention is way off but I put down more than half on my car and my loan was only 6 months to give me time to sell a car to pay the other half, so I can't argue with your math because I realistically had no loan. I budget $500/month for my car and I will need a clutch in 2 years when I also need belts. However, I will argue about "not being able to leave out in the street" I do, next week it will be at a LAX parking lot for the week, second time this year, its just a car folks. Yes, there are areas in Los Angeles and even Santa Barbara where I would not feel comfortable leaving the car on the street overnight but for the most part, if I feel safe parking my wife's Hyundai there, I feel safe parking my 360. I do worry about parrallel parking, because I am afraid of people using the "bump" method of parking so I avoid that but I avoid that with ALL my cars. I do admit parking is a concern sometimes when I go out of town, 3 weeks ago in Vegas I was sure I was going to come back to my 360 full of door dings because the hotel parking lot was so tight but car is fine, no dings. Not bad for a 99, no visible door dings/chips on the sides, too many rock chips in the nose though

And in my opinion saying if you make $140k/year you can't afford a 360, is completely ridiculous, I make less than HALF that and I own a 360.

Now I will agree that the original poster is still young and perhaps that money would be better invested for retirement/emergencies/college for the kids/etc. IT may be too early for a Ferrari but my motto has always been the same as my fathers, you have to plan and save for your retirement but also remember that a drunk driver may kill you tomorrow so enjoy life while you can. Its no use being able to afford a Ferrari in your 90's but you also don't want to be broke when you are 66 (social security age). Sounds to me like the poster can afford a 360 easily based on what he said, wether he should buy it is another story that only he can answer.

 

Agree, that is a lot of car for the money.... Bottom of depreciation scale and the OP can pay cash in a few months with some saving up.....
As someone else pointed out, Ferrari is lesslikely to be used, shopping, dinners, out of sight ventures, this is a great entry car. Makes me want to look at one to replace the Viper....

 

I almost bought a 308 in the early 90s but didn't because people told me that it was an extravagance and I should save money instead. I was already maxing out my 401k and IRAs. So, I took their advice and put off buying a Ferrari for over 15 years. During that time I bought several new Mercedes, Porsches, Audis, etc... instead. If I had bought the 308 in the first place I would have been much better of financially. Now that I have my Ferrari I feel no need to buy expensive daily drivers. I say go for it as long as you are maxing out all you retirement options.

Oh, and on paying cash. If you can get a 1.74% loan from PenFed then don't pay cash.

 

The math posted prior by Innovative was not exact, but it gives the OP an idea of costs.
Mike posted $500 a month for PM/ repairs, $400 a month by others so say, $450.
OP could get a loan from Pen Fed, for 1.79% and save some coin there.

So loan could be down to say $1050 a month if he only borrowed $60K, so he needs to find a car for $70k, plus tax and license, and a couple of thou for anything like tires or so the car may need. Then insurance, at his age it may cost $150, it all depends on many factors, including credit score...we don' t know this. So say $100 for insurance.

This is a minimum of $1600 a month, or about $2400 a month in pretax earnings at a est.
35% total tax rate.

$2400 X 12: $ 28,000 + per year in pretax expenditures .

Could the OP swing it , he could. Should he ? That is for him to evaluate all angles.....

At the end of five years, he will pay off a car that will depreciate some, but realistically will still be worth say $45k, giving $5k a year in value loss.
Year six he goes to paying $550 a month in upkeep and insurance..... Not bad.

After retirement donations my wife and I only make a little more than the OP.
Our house payment is a little more and we support a boat in a slip that costs a small fortune per month, and save $1000 a month for emergencies. Now I paid cash for the 360, so big difference there, but we still carry a note on a car and boat that is almost as much as his possible payment.
Mike is doing it on far less.....so it can be done.

In the end I still think taking a step at a time is the wise move....buy a car cash now, enjoy it and save/ evaluate trading up in a few years. Nothing wrong with that Turbo, and get the F car later. Save the amount you would spend on that payment each month, for 3 years, and with the equity in the P car you are close to a cash buy for that 360 .....

 

Not really. Mines been more reliable than my 986.

Yawn... another modded 996 variant. There's five every week at my local C+C. Nothing special.

It'll technically be faster as many cars are, but it's not a Ferrari 360. And I suspect that's the crux of the question he posed.

 

This.

 

Honestly, if rarity is what you seek, buying one of the 18,000 360s doesn't cut it either...

There were 8,000 996 Turbos produced

 

If you're buying a Ferrari for "pride of ownership" or other related feelings only you can decide what that's worth to you. If you want to experience the fun of driving a Ferrari, maybe rental is something to consider.

Here's a place I found on the web (I know nothing about them, have no interest in them - financial or otherwise) that rents Ferraris and other higher end exotics. Maybe a good way to get behind the wheel of a Ferrari while leaving your financial status unchanged.

Exotic Car Rentals of New Jersey - Corvette, Viper, Maserati, Lamborghini, Smartcar, Escalade, Hummer, Porsche, and Mercedes

 

... that look exactly like any of the 250,000 other 911's on the road (or any C4S). Again, NOT a 360 by any means. That would also explain why every time I take the 360 out people are taking a picture with a camera phone... so common.