Financing for 458, running into roadblocks, looking for options

I did this when I was young and didn't regret it - if anything the payments motivated me to make more money

as a petrolhead I completely understand why you'd want to spend money on your passion, regardless of what is deemed sensible or not

 

To the OP:
Per the title of your thread..."Running into roadblocks"...there's a reason for that and you should heed the signs.

 

We’re all petrolheads. My recommendation would be to identify a more affordable car that fills the need. Lotus Emira? Ferrari F430? Porsche 997?

I know the original question was on how to finance a 458, but a 15-year loan on a depreciating car, at a high purchase price and high interest rate is a bad financial move. With three bank failures this week and real estate at nosebleed heights, I would be more fiscally conservative.



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he isnt keeping the car for 15 years and 458s cld appreciate....

 

the key is your comment of "cld appreciate" but could also depreciate. Is it worth the risk? Only the OP can say for himself. I think the consensus of advice here is "Don't risk it".

 

But a 458 is still an automatic……LOL, sorry had to do it

 

Well as we know, you pay a majority of the interest in the first half of any loan so it doesn’t take the full 15 years to make it a bad decision.

LOL at 458s appreciating during a normal market.

 

absolutely....people buy new cars every single day, they all depreciate. he wld lose much more on a loaded escalade

 

A new Escalade is an equally bad idea.

 

exactly but tons of people are buying new cars and that wasnt the OP question.

 

I think FFS would like your credit score, but wouldn’t be too excited about your income. If you put 100k down, they would most likely approve it. Then you could finance the remaining 125k over 84 months if you like.

 

If OP willing to sell car after 2-3 years I could be ok with it but I know that’s not answering your question.

My advice is take out a margin loan with your broker after you negotiate the rate down. Etrade will lend me $ at 6%. Im guessing you loan rate is higher. If you don’t have the margin borrowing power then from a fiscal standpoint you shouldn’t buy it. If you’re a car enthusiast there are more sensible cars out there.

Years ago I became a believer that if you can’t pay cash for the car then think thrice.

 

I have to say fchat has some quality members. Just sound sensible advice being given here for free and I’m just going to say it but OP needs thicker skin if he can’t handle the comments. It’s obvious many of the regs here are savvy people. While it may not answer his main question the comments and advice given out are in good spirit.

 

Same here and I agree.

Much can be attributed to timing and luck but as time passed by I had this very strong feeling that the best cars (for me) had already been built. I also felt that appreciation would far outpace cost of financing. (which for me proved to be true).

Not to say (I don't know) if it would apply to a 458 or whatever else but looking back now...and thinking at the time I was overextending myself /taking risks, my only regret is not taking more.

 

I think the OP left this thread after the first page. Regardless, he states that even though he'd be taking out a 15 year loan to be able to attain the car now, he'd plan on paying it off over 6 years. If that's true, then it suggests that he's going to be in a more favorable financial decision in a matter of a couple years. Buying a Ferrari is rarely an emergency and a couple years isn't long if it means a better financial position. Invest the down payment now, contribute to it the monthly payment you would have been giving to Woodridge, and in 2 years apply for a more favorable 8 year loan.

 

I don't think the OP was liking the answers he was getting!

 

The home equity LOC is your best bet imo. Also a personal loan shouldnt be hard since your credit is stratospheric.

Having said that, you are an unknown here since you are brand new and we get LOTS of people playing games. So when someone shows up claiming they are amazingly sagacious at personal finances and then say they are going for a 180 month loan...well you brought the pain on yourself as that loan is not in any way financially responsible unless theres more info you didnt provide.

Dont be so thin skinned as this is the deep end of the pool

 

I'm definitely a cashflow guy. If your net cashflow numbers are correct, save all of that for an additional year, go for traditional financing, and reduce your risk profile significantly. 458's are not going to the moon over the next 12 months.

 

I'm glad the OP did not delete this post after all. It was actually very informative to read members comments on all sides and offer suggestions.

I'm a newbie and currently actively working on structuring a 458 purchase within the next year. Your above comment resonated with me. Although the environment for borrowing right now is less than ideal, this is my thought process as the most practical and efficient way to purchase one:
1- Refinance a rental property I own personally (interest rate around 6% currently)
2- Currently working on renovations to the rental which will increase the rent an additional $2,000- $2,300/month
3- The increased loan on that rental from the refinance will be 100% tax deductible therefore writing off the full cost of interest
4- (See #2) this additional increase in rent will cover the cost of financing/ borrowing
5- This gives me flexibility on how much/ and how quickly I get to repay the loan over above the standard payment

I could sell a rental property but I would incur taxes and doesnt seem as tax efficient or practical to trade an appreciating asset which generate positive cashflow for a "generally" speaking depreciating vehicle purchase.

I'd love to hear your thoughts or anyone elses.

 

There are a lot of questions I would have like why re-finance so that the whole principal is at a higher rate and you are back to paying the interest part of the mortgage. Remember interest is front-loaded on a mortgage. Why not take a second or a HELOC if you plan on paying it off quickly? What is your current rate? How much equity do you have in the property and how much is left on your current mortgage and what is the interest rate and length you have had the mortgage. That's a start...

 

Hey Cory,
Thanks for your response! To answer your questions:
- Its currently a variable (floating) rate so my understanding is that upon refinancing it would be the same or comparable rate as it is currently just with a larger loan balance upon financing (It was a fixed 5 year term and then went into an open/ variable and I didnt lock it in. I understand in the USA you have 30 year terms)
- I could explore a HELOC but generally the interest rates on these are higher (100-300 bps) Generally pre-payment are permitted on the principal amount each year up to 10-20% without penalty. A second mortgage would be at 9-12%
- Current rate is 5.52% (Bank of Canada has indicated they are holding rates for now and assessing inflation/ economy)
- Current mortgage balance is $313,000 / current value is around $1m / Ive had the mortgage for 6 years now
- Current annual net income/ cashflow is $30,000 currently. By September gross rents should increase from $67,000 to $97,000

 

Ahh... So you are already on a variable rate. Since you will be paying closing fees anyway, I would try to get a fixed rate, variable rate is not something I would use for an asset where I need the recurring income to purchase another asset. For a while when governments around the world were artificially keeping rates low, a variable rate was a good thing, but those "free-money" days are over in the near to mid-term. If a fixed rate isn't possible then be aware there is always a risk of a Paul Volcker moment where to stop hyperinflation the big brakes are put on the economy. Just because you are in Canada, don't think it won't happen, just have a mitigation plan. Nothing in life has zero risk, it's all about risk management. Without getting too deep, a simple example of a mitigation plan for rentals is having some cash in the bank to cover mortgage payments for a period of time when your rental property is unoccupied or requires a major repair. Too many people invest with no mitigation plan with the attitude, "I'm in a desirable area so I will always have tenants..." until they have to go a few months without tenants for some external reason like the tenants just decide to stop paying and now your have to deal with Lawyers and evictions.

I do think you are approaching this right. Trying to create passive income, the best kind.

 

I agree. I have a mentor which preaches risk mitigation so when I read your response I laughed a little. It was as if I was speaking to him. We generally follow this chart and build in contingencies when evaluating deals and acquisitions.

Thanks for your feedback! All the best!


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