Starting to see a lot more cars on the market

If. Remember... They have to keep buying... And not take their money off the table. And the banks have to want to lend at those numbers. If the bank doesn't believe in the deal or the cars value the purchasing power has been reduced.

Also in the car business... And in most businesses. The end user is the least informed party. Of course there are parties that know far more than the sellers but that is percentage wise a small crowd.

Wall street is a gleaming example of this... Unless your last name rhymes with felosi

 

Ok serious question. How many people are actually taking loans out on Ferraris? I can't imagine ever financing a toy...

 

The majority…? If not the majority, it’s still way more than you might think. Financing is pretty easy to justify when rates are low. It’s also easy to justify when inflation is high. My mortgage is 1.625% (long story…it’s a 7/1 jumbo and I do a ton of commercial business with this bank). FWIW, I would borrow $10B at 1.625% if someone were willing to give me the loan.

 

We covered this in another thread a bit ago but the answer was all over the place. It is very dependent upon the power of that money. What your financial position is may not be the financial position of someone else, which is a different position of whether you can afford a Ferrari.

For me, it was better to leave my money in the market over the last year and earn 40% on that. Also, it was better for me to purchase a large amount of equipment that has brought an additional 30% return on it. Should I have taken that cash and lost all that money that was earned or take a 5% loan with other peoples money? Everyone’s position is different and it matters as a whole how we grow, and everyone, from fortune 50 businesses to retirees who see inflation increasing and a market play as a better use of their assets then a small interest loan against those assets.

Also, my car has appreciated so much more than the interest on that loan and if I would have waited I would have taken a large money loss overall to my financial position.

Long answer, but it was important to know everyone’s reasons may not align with how you may see it. Of course, if you don’t have the money, don’t buy or get a loan for a Ferrari.

 

I'd say the majority.

The vast majority of the cars I buy people have a loan on.

Many through Ferrari financial.

Then you have the Putnam's of the world etc...

I'd say almost all of the Bentleys I buy have loans.

Rates were so low even people who could write a check for several times the cars dollar amount financed it.

The motorcycle dealer asked me if I wanted to finance a new bike... And its only like 7k-8k and I was like people do that? He said ya rates are so low... Why not? I said what's the rate he's said below 3%. I laughed but then just said no thanks I don't plan on keeping it very long and I don't want to deal with a payoff etc

 

Fair points, to be sure. We all have different financial situations, and there are indeed situations in which it absolutely makes more sense to finance. I'm just allergic to debt for things that are not intended to produce a financial return. Admittedly of course, had I known what would happen in the last 18 months, I would have bought an entire lot of late model exotics and done rather well as compared to the S&P...

 

might have a 10+ car collection coming on the market here in atlanta

guy was long a bunch of ****cos stocks and coins. bought cars on leverage

rumor mill

 

Each car has its own seal composition. I suggest asking the maker as I did. For example the Holly carb on my racecar had an issue.The new one looked exactly the same but solved it.

 

One thing about letting engines sit allowing the oil to dry on metal components is that with the newer synthetic oils, the ability to retain some lubrication is much better than the older conventional oils, and if most owners start their cars every other week and let them run then that should help keep everything including seals and such from drying out. Letting any engine sit for a year or more is just asking for trouble IMO.

 

Acording to the fed, it's a whopping 1.3 Trillion USD in auto loans. The trend was there even before the pandemic and the money printing press. Nothing new in people financing cars.
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I had no idea that 85% of new car purchases and 53% of used car purchases are financed. Btw, this data is old just adding it to the conversation/question.

https://uspirg.org/feature/usp/driving-debt


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I’m surprised the number isn’t higher if anything

 

This is nothing, you should see my pitch deck. We go deep into the nerd fields of data with auto loan debt...It's frightening (disparity of affording and thinking they may afford...)

 

I’ve always thought it entertaining how SO many people can front with premium cars due to financing programs. Can you share what your data looks like ?

 

The NY fed published this report in May. They say delinquencies are rising but have been low historically. How much longer before stuff hits the fan based on what you know?

https://www.newyorkfed.org/newsevents/news/research/2022/20220510

 

I'd guess it's mainly because people buy off payments, and in their head, 84 months of $850 doesn't seem like a lot...when in reality, going full term + insurance +registration +gas+ repairs...get's out of control quickly.

I'll fire up some stuff in a little. But here's a typical scenario for us. Once a week we take all of our users rounded up debit transaction purchases (typically $15-20 per person) and debit from their account for these funds. I built in, basically a stop gap in the code, that ensures a MINIMUM of $50 threshold is met, before that person is included in that weeks file. Well...christ almighty, our users are broke. I would say 60-70% of each "would be" file, shuffles off for people not meeting the minimum threshold of $50 in their checking account. A quick scan after, and MANY are in the negatives...

 

Many that buy cars like this don't drive them, they buy in hopes of additional appreciation down the road. It will sit around for bragging rights until the market goes up from where they bought it.

 

Rosso although i tend to agree (the worst cars I owned were low km in terms of reliability)
But i think due to being an exotic car, there is so many people that just dont care
And as the next owner wont drive it much they dont care either

My f430 has 47000km on it and ive replaced many parts
Its actually the best looking example of seen even compared to low km
Im talking ocd replacing anything worn

 

This CPO 458 spider has dropped $25k from its original asking price, most recently dropped $20k last week. Market softening appears imminent with the interest rate spike and market turmoil:

https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePageModel&entitySelectingHelper.selectedEntity=d2064&zip=44128#listing=317234195/NONE

 

You do realize that the 458 is from the same F136 series as that "Maserati engine that should never been in a Ferrari"?

 

My co wroker has sold his 348 to a guy how is financing the car through some third party lender...yikes..

Others have pulled equity from thier overly inflated home to purchase thier overly inflated Ferrari..

The amount of luxury goods that have been purchased and financed through the hopes are dreams realestate market is shocking. Free money right?

300k for a 2010 458? 200k for a 360? Those are high production cookie cutter cars.

You wanna see where this is headed? Look into the late 80's Ferrari bubble. 500k for a testarossa etc..for 20 years they were a 50k car..of not less. Countach you could grab for 45-60k..this is where these overly inflated cars are heading. And many will all be peices of crap because they won't be worth fixing. Trouble is..there is no 30 year window to wait like last time. This is the last hurrah for these cars. Sad..

 

Sadly I agree with a lot of this.

 

Disagreeing with a lot of this. 80s bubble had a couple major differences.

Newer and better models were continually coming out increasing the supply of desirable cars. For many newer cars are not as attractive due to lack of manual transmissions, numb electric steering, hybrid systems, fake engine noise, etc. With gas performance engines being phased out by many companies in the next few years the supply is no longer increasing. If you do not like what is currently on the market, chances are it won't have a gas replacement.

Many have realized we are getting to the end of the road on cars. That road will take awhile. It does however mean that you have enthusiasts who realize they cannot wait 10-20 years to buy their dream car. If they wait, it won't be viable even if they can afford it. You run into a bit of a yolo situation where you have people stretching to buy their dream so they can enjoy it for a number of years.

Performance. 90s cars had more performance than 80s cars. It saw a return to pre malaise era power levels. Not only that but they were slow enough to be able to use that performance on public roads. Countach was what 450hp in the 80s? Testarossa was 385? Sports cars started to achieve this to a fraction of the cost of maintenance on the older exotics. For those with the pockets to afford the service there were newer, faster cars. Today cars are still getting faster, but it is diminishing returns. Can go out and buy a 600hp factory car that is 10 years old. A newer one might shave seconds off your lap time, but on a public road we have hit too much power for most people.

 

I can see the points that you're making here. Especially the point about decreasing options and supply of desirable cars for fans of engaging ICE platforms. However, you can't underestimate the demand side of the equation either. The pool of ICE fanatics will continue to shrink. Most people just don't care. As EVs and other ICE alternatives continue to improve and proliferate throughout the market, the demand for these cool machines will decrease and impact their market values. Keep in mind that this is a broad, general statement...

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