458 A balloon offer? Quote attached

Lots of fees

 

Also make you realize how much California sucks with it's taxes and registration fees. If you have the ability to register your vehicle outside LA County, you can save on that 10.25% sales tax on your lease payment. I'm not in front a computer right now, but what is the money factor or effective interest rate on that 60 month term?

 

If the finance amount is $181,300.00 and the balloon is $95,000.00 I would assume that means you're financing $86,300.00 as the balloon is owed at the end. If that's the case the 60 payments at $2,635.00 equates to a total of $158,11.93 which would put you pretty much at 27% Interest. No wonder there's nothing about rates in that quote. I guess they're hoping someone just says yes. What's odd is its obviously a lease structure based on how taxes are collected but this type of structure is generally not for this long of a term (60 months).

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Balloon payment is a way to lower the monthly payment, but gives you a big surprise at the end. Essentially, you need to refinance or pay off the balloon balance at the end of the term. The amount you are financing is the purchase price less down payment and balloon payment. Monthly payment will cover amortization of the financed amount and some interest. The question is how big is the interest piece. BTW, I believe this is considered a lease since the sales tax is on the monthly payment. Note that at the end of the term, any unpaid sales tax not paid through monthly payment will be due as part of balloon payment.

"An open-end lease is a type of rental agreement that obliges the lessee (the person making periodic lease payments) to make a balloon payment at the end of the lease agreement amounting to the difference between the residual and fair market value of the asset. Open-end leases are also called "finance leases.""

 

27% interest is what i calculate. Let's say you do a straight loan for 83600 at 9% over 5 years. 9% is even a high auto loan rate today. Your payment would be $1,791/mo. In my opinion, that lease quote is a joke. Take your $75k down, find a 458 in the $180k range and get traditional financing. You can get a nice 458 for $180k today, they're at a low point in my opinion. For $240k, I would think you could get a 488. You could definitely get a 720s for that price.

 

Shop elsewhere and use traditional financing
Care to tell us the dealer offering you 27% interest?
WTF

 

terrible. cash for toys.

 

Agreed with Kent, this is no deal. This is hilarious.

 

Correct, you are financing $181,300, not $86,300.00. The payments calculated are interest on the principal amount of $181,300 plus a repayment of $86,300 ($181,300-$95,000) over 5 years. That will leave you with the balloon payment of $95,000 after the 5 year period.

Equates to about a 10.1% interest rate.

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Based on the above and without getting into fees/taxes for simplicity. Car is 240k - $2635 pymt. x 60 months = $158,100, plus the $95,000 balloon and the initial $58,700 down payment. ($158,100 + $95,000 + $58,700) = $311,800 total cost to purchase not including fees and taxes. By a rough calculation equates to 11% rate overall. This also assumes having the 95K balloon at the end and one doesn't need to refinance that amount which would further increase the total cost.

 

Personally if one has to go through so many mental gymnastics (11% or 27% or something else? How to finance to ballon payment? etc.) then it's probably either not the right time to buy, or not the right car to buy, or both.

Just my 0.02. No interest charged, of course.

 

No, it’s not 27%.

I’m not in your country so can’t comment on the 10.1% comparative interest rate. In Australia it would be high. Car loan rates are around 6.5% to 8.5% here, but can be as high as 11.5% depending on risk.

 

If you want to finance, try giving Woodside a call just for comparison. I believe they do longer terms to lower monthly payments. Just payoff when ready. You just need comps

 

generally speaking, your money factor times 2400 will equal the interest rate.

 

Only buy such a nice car if you have the mony by hand ... imo

 

I’m not addressing the loan rates but the aspect of doing business with Ferrari Financial. In 2016 I did a closed end five year lease with them. Everything was fine until the end. It was a nightmare for many reasons. They closed the lease timely but then “forgot” to return my security deposit and that problem went on for over two months. One time I called and was told by the rep she was looking at an image of the check which had been mailed and that was a complete lie. I had to talk to over 10 different people and with many unreturned phone calls and emails. I finally threatened to call the President of Ferrari North America and the the check finally came which was dated after the date of my call with the rep who said she was looking at an image of it. Many times I called at the beginning and the reps all said the file showed the lease was closed and they didn’t see anything about a security deposit. My dealer got involved too and he finally gave up.

I did find a high value car leasing company in California named Amazon Leasing Company which has no connection to the Amazon online company. They do closed end leases using Murphy Bank. That transaction went smoothly and at a fair rate. Give them a try.

 

I know its been said but it is so TRUE.....CASH for toys or wait til you have the cash. I sure paid by cash for my Aperta

 

Typically (at least in Europe for what I know) financing cars is a bad idea... one gets far better deals (rates) on real estate for instance; what I did some years ago was to borrow more money than I actually needed to buy my flat, just to free some cash for other purchases.

 

Not bad advice, if you can't make more money off your own money than it will cost to finance and use someone else's money. However, if you can get a higher return off your own cash than it will cost you to use someone else's money, take advantage of the positive arbitrage. We're not yet in a market where I can't outperform the cost of capital, but your YMMV. Right now, the delta is getting closer, but still pretty far away.

 

Good in theory yes but I think what is alluded to is that often people do not have the cash elsewhere.