Ferrari financing? or what to do

Brief intro, I am a younger guy (under 30) who always buys things cash have ZERO debt etc... I dont have really any credit history besides an amex and some items for 6 years ago that were bad (defaulted student loans, all paid in full tho)

anyways Im thinking about getting a 458 12/13 for next few months till by turbo S build is here in Dec... I have money to pay it cash etc. what im wondering is to help build credit etc, should i put like 200k down and finace the rest on 36 months to start some sort of history with cars? also will i get approved? I have plenty of income etc... but score/history are not built

thoughts of what to do?


* I also posted this on 6speed

 

a person who has the funds to spend $200.000 + cash on cars and has no credit and comes on a forum to ask financial advise i would call well you know the old saying a fool and his money is soon parted. you should find a good financial adviser and get some real advice.
just my 2 cents

 

Yes, but assuming that this is a legitimate question, I would advise is to paying cash for the Ferrari.

 

It's easy to finance a Ferrari Financial if you're going to put that much down. Probably 4.99% APR. If you shop around, you may get it for a bit less.

Financing isn't necessarily a bad option if you want to save cash, a rainy day, or use it for investing in something else. But, it cost you also.

Remember that you're still going to have to pay for insurance, and registration which aren't cheap.

Bottom line: If you don't mind paying 5% interest on 100 grand, then it's one possibility.

Whether you should or shouldn't is not our call. Do with your money and your life as you see fit.

 

My issue is if I keep paying cash I will never build a solid history... I reckon most
f car owners pay cash anyways tho... I'm just trying to look ahead

 

Why would it not be legitimate ? Does it sound that rediculous?

 

There's lots of ways to build credit history aside from buying an F car. Buying an F car to build credit is probably the worst reason to buy one.

 

Well, we've had our share of 12 year olds who like to post stuff like this here all the time, especially new comers like yourself.

"How can I buy a Ferrari?" is a pretty common post from these types.

 

Point taken.

I'm not buying a 458 to build credit, I want a 458 regardless of credit builder or not i was thinking secondarily to use this as a move to build some hefty credit history, I'm not suggesting to put $50k down with 144 month payments ... I'm saying 200k+ down and a 36month term on balance so I can show something, prob won't have car over 6 months anyways so it will be paid off shortly.

Also I appreciate your replies, just seeking perspective here

 

Talk to the salesmen at the dealership. They will fill you in about Ferrari Financial. The good thing about them is that they are used to loaning money on these cars so it's easy. A lot of banks or whatever won't give you the time of day on a car of this price and a loan this high.

 

Much appreciated

 

Do you have credit cards?

Pay them off on time.

Pay your bills on time.

Don't take credit you won't use.

In this case, financing a car for a few months will actually have the opposite results you wish. I've been told by someone who runs a credit agency that someone who takes out a loan for a major purchase, such as a house or car, and then pays it off in under 12 months is considered as someone who isn't responsible with credit, since they likely had the cash all along- as you say you have. Anyway, thats what I'm told.

If you can afford to pay cash, do it.

 

Somebody paying off quickly isn't responsible with credit because they had the money already? That has to be most daft thing I have ever heard.

I think the more likely story is that people paying it off quickly are just not very interesting because a lot less money is made from them. Simple fact is that that industry just LOVES people going into debt they can't quite afford to pay off. Of course, they will never admit to that.


Onno

 

I wish SRTMike was still around as he was an expert on credit.

From what i remember car loans arent that important to your score. its more about having the *right amount* of revolving credit being used on a consistent basis.

 

The goal of credit scoring isn't entirely about how much income/resources you have, but also about how well you manage your obligations and fulfill them relative to your financial capabilities.

How Does Paying Off a Loan Affect Your Credit Score? - Yahoo! Finance

If I Pay Off Loan, Hows My Credit Score? | Bankrate.com

Paying off a loan early probably won't hurt and likely might help; but it won't help as much as making payments regularly from the beginning to the end of the loan contract.

It's easy to make payments well within your means, the question for a lender is do you have good judgement about what your means really are and will you fulfill them when they are at your limits? Higher scores are more about assessing your willingness to make the payment when it is hard, not just when it is easy.

 

I respect your question, but it seems you only want to finance for 36 mts, keep the 458 for about 4 months until the the TTS is delivery this Dec? By Dec, you will flip the 458 for the TTS and pay off the loan by Jan 2014? From a financial point, that is a unlikely challenge to build up your credit score. I view all very high cars to be toys, and make no sense, other than personal enjoyment.

I view finiancially you can be at risk of only for 4 months, who knows, you can lose your job, get sick, the economy could tank, 458 prices go down and you are stuck with high monthly payments and a 458 that has depreciated and difficult to sell. Plus keeping it only 4 months you do not have time to ride out the storm. Not to mention all the upfront costs to buy the car, for example state taxes, insurance, etc. Clearly, a 458 is not an investment. Even myself who own some classic cars, I can debate if they are real investments too.

Back to your speciifc question; as you seem smart about thinking ahead, if you haven't done it, run your credit scores with all 3 bureaus, did the school loan bring down your credit score? Any surprise on the scores? Once you have those FICO numbers, than you can get advice how to build up the scores. I would think taking out a $500 personal loan, new credit card(s), paying the bills on time, then and over time (many months) you will slowly increase your FICO score. Actually probably better and faster than financing for jumbo 458 loan.

 

I am not dead set on getting rid of the 458, I could end up loving it and the TTS could just be a flip or keep as well. Was thinking to buy a pre owned 458 coupe and order a 14 spider if I can bribe a salesman to get me one before next summer. I know these cars are not investments, I just took a massive loss on one of my track cars but seems if u can get them new you can basically drive free (correct me if I am wrong here)
Also the 15 comes in to play as its a change right?

My score is mid 655/625/655
I have a cc and Amex, use Amex and let the cc sit. Never late etc
I don't have any real bills as I own everything, double edge sword it seems

 

If you have the cash (or other liquid assets that you can turn into cash) to buy almost anything that depreciates, then financing is almost always an arbitrage decision: can I make more money on those assets than the financing costs me, adjusted for risk and liquidity? Leveraging yourself to buy appreciating assets is a totally different discussion, and is how much of the wealth of the US has been built. A 458 is not an appreciating asset, of course, except in the very short term.

When I bought my 458 in April, I was offered financing at 2.49%. Paying off such a loan (any loan) is a totally risk-free "investment", i.e. you most definitely get a 2.49% return on paying off any part of the balance. If you can invest the money totally risk-free and get a 2.49% return net of taxes, and the liquidity of that investment is high, then it's almost a no-brainer decision to take the loan.

Of course, there is no risk-free 2.49% net investment today. Not even close. So then the calculus is what you can get if you invest the money with whatever risk and liquidity levels are acceptable to you. As most F-chatters are, I'm guessing, relatively liquid and sophisticated, you're probably getting >7% or more long-term in your portfolios, with some risk and ups and downs. So it's not a no-brainer to take a 2.49% loan, but it's worth thinking about. At 4.99%, requiring maybe a 10% return with moderate risk, it's not so clear.

There are edge cases, and everyone is different. Is it better to have a 4.99% car loan if it allows you to more quickly pay off 22% credit card debt? Sure, but only if you then stop running up credit card debt, which is seldom the case for folks who refinance that particularly egregious debt burden.

Building credit may be important to some. Taking out a car loan and have it perform for 2-3 years is not a bad way; it's what I did when I first came to the US in 1991, and it helped.

 

This is most immature comment about building credit I have heard in years. Lots of cash and no credit? Your self advisement on financial matters is not working. That or you are a poser.

Go get a Visa card and push your monthly living expenses thru it - charge and pay it off each month. Don't carry a balance. Your credit rating will soar. My late teen's children know this....

 

And, if you choose your Visa card correctly, you'll get around 1.5% of everything you get as a cash rebate deposited to your bank account, some measure of protection against bad goods or services, and no annual fees. What's not to like about that?

 

Get a couple of credit cards and accomplish all you need to do by paying them on time. Absent any liens or defaults, your credit rating will soar. Don't make your life complicated by leasing for the sake of leasing. As someone said, although presumably you are smart and able enough to have earned the money to spend, clearly, your question represents a person who is unfamiliar with fianance and with the discretionary money you have and the choices to save/spend ahead, seek financial advice. Best

 

On additional reflection, I am leaning more towards the OP being a poser.

You want a 2012/2013 F458 as your "pacifier car" until your Turbo S build comes in? You have $300k in cash sitting around and don't have a credit history? Great income?

How could you be so financially naive unless the money was handed to you or this is B.S......

 

I always dreamed of owning a Porsche turbo (flame me lol) so I ordered one after waiting for the new 911 to drop etc... now that I sold my main track car ( wife is preggo and racing needs to be on backburner to calm her nerves) I want something just to go to dinner and whip around. The 458 catches my eye so I was thinking to get that. As I mentioned if i love the 458 I will keep it or get a spyder and ditch/keep TTS


I buy everything cash so why would I have credit history, I own my own biz and live nice.

 

Because paying cash for everything is a pain in the ass and you actually get money back by using credit cards. How do you have enough money to buy a ferrari and not understand this? Typically one comes before the other.

 

This is such BS. If you own your own business, you would knowledgeable enough to finance the car via an associated business entity given this stellar business performance.

Also - if you rent, lease, or own your residence you have credit history. Still with mom and dad or did you you buy your home with cash as well?