affording to own a Ferrari

Hi there

I think you need to be careful; what you buy. If you buy a newer car, such as 599, 612 or 430, and to a slightly lesser extent, 360 or 575, costs are pretty good, its just the servicing (£600-1200) per time normally, and then tyres and consumables, which doesnt run too bad.

Costs seem to come as the cars get older, and of course due to older style manufacturing standards on parts in older cars, which mean that there are more failures the older the vehicle. In addition, the servicing requirements and practices, plus the knowledge required, for the older designs does mean that even servicing costs escalate quite a lot.

I love Ferrari, and every car they make, but I try to stick with newer cars for a lower risk of expensive issues (although anything can happen - and usually does)

 

With all due respect Sid, I agree your comments are undoubtedly correct in regard to risk of expensive repairs being greater with older vehicles especially since new cars are usually under factory warranty but I would point out that a lot of falling used F-car prices really outweigh any service issues. My point would be I can get a really nice 575 for around 100K or a nice 430 lets say an 06 model for the 150K range but I can get a nice 360 for 90K or even better a really nice 355 for the 60K range. Most 599/612 are in the upper 200K area. My point is I can afford a lot of repairs no matter how high the cost when compared to an initial purchase of 150-200K verses 60-90K. Just my thoughts

 

If it hurts in any way to fork over the money you either can't afford it or you don't really want it.

Russell

 

+1

 

With a new one, you're paying for depreciation.

When friends rag on me for the cost of service on my 328, I ask them how much they lose replacing a Lexus every three years.

I bought my 328 during the dot com collapse. Yes, I've put a bit into service.
But ten years and a barrel of miles later, it's still worth about what I paid for it.

And if you put every penny you have into the car .... when would you drive it? You'd be afraid to park it anywhere.

I bought an older Ferrari, maintain it, and drive the wheels off it.
I've even been known to park it at supermarkets. (I can use the minivans to screen it from shopping karts. )

 

FYI, it is much less expensive to own an older Ferrari than it is to own a modern one. Even the classic V12s of the 60s are cheaper to service and repair than any post 355 Ferrari, albeit that are much more expensive to buy....

 

You can get 308s in the 35-45 range and have a maintenance reserve. 328s in the 60s. With maintenance, both are realtivly free of catastophic repair, (melted headers, etc) that occured on some ot the later v8s

I understand that 550s are easy on the wallet and they sure are reasonably priced.

 

you guys forgot to mention that "YOU DRIVE THE DAMN THING" that the less issues you tend to have.

and believ it or not they are mechanic friendly so plenty of things could be done by the owner.

I'm a truck driver so I could afford it then its manageable...

 

It is not much different. Even though the newer cars are supposed to be easier to service, the parts costs are still through the roof, and the increase in the amount of computerized things makes the list of future maintenance items loom larger. So, yes, you still have to be rich to keep your Ferrari. I fell out of that group a few months ago.

 

interesting question. yes the operating cost of a modern ferrari is pretty low as they are pretty reliable. even the insurance on my ferrari isn't that bad really.

but yes, i'd say you do have to be rich ... not filthy rich but IMHO you do have to be rich (a millionaire) to buy a $100,000+ toy.

 

The service costs for a modern Ferrari (355 and newer) are not huge, but they can be costly. There's not much on a Ferrari that is inexpensive. If just buying the car is a strain, then most likely you are already in deep water. Also, as mentioned, if you aren't dealing with 7 or more digits in your bank account, buying a $100K car is probably a bad financial decision to begin with.

As I have said in other posts, if you can't afford to pay cash, then you might want to reconsider. With the two Ferraris I have purchased, I paid cash for both (a 355 and a 360). In the case of the 355, it equated to about 10 days pay. In the case of the 360, it was about 1/2 the net profits from one good options trade in the stock market.

Depending on the condition of the car, I would budget about 5 to 10% of the cost of the car for service and upgrades over the couple of years you'll probably own the car. This is assuming the mileage is under 20K miles. When the cars start to get up into the 20K to 30K miles, then service could run a bit more as unexpected things crop up (belts, clutches, etc.)

My advice if you are seriously consider buying a car is to find one which has around 3000 miles on it. Buy it and then drive it until it has about 14K or 15K miles. If at that time you feel you can't afford the services and/or are tired of the car, then sell it. Keep in mind also, the hit you'll most likely take on the value of the car will be more than the service. With that said, the cars have taken a great decline in price over the last couple of years, so further declines in value based on miles might not be quite as bad as we have seen over the last few years.

On my 355, I think I once calculated it cost me about $3 per mile to drive the car, including gas. On my 360, I drove the car about 10K miles and I think total cost (with the decline in value and service/upgrades) ended up being around $6 per mile including gas (just a rough estimate). Most of that figure is based on the big hit the car took in value as the economy declined and the 430 hit the market and pushed prices down.

Let's assume you are looking for a 360. One with 3000 or 4000 miles in good condition is probably going to set you back around $90K. Service over 2 or so years might run any place from $2000 to $4000 - depending on what the car needs, etc. If you decide to install a Tubi and a few parts, then you could easily be looking at another $5K.

Okay, so you drive it for a couple of years, then decide to sell it with say 15K miles on it. You will probably be lucky to get $70K to $75K for it in a few years. So you've driven 10K miles and taken perhaps a 20K to 25K hit. Like I say, with gas, you can figure about $3 per mile roughly.

In my view, unless you own your home (or pretty close to it) and have zero debt, then you probably can find better uses for your money than buying a Ferrari. You should also have steady income, etc. In other words, if you have to rob money from some other source, then think twice about buying a $100K asset which does nothing but decline.

Ray

 

A friend of mine (fairly rich and VERY frugal) once told me,

"If you do not have at least 10 times the price tag as the amount of "spare cash" IN your wallet, you cannot afford the toy."


I took that to heart and didn't buy my lowly 308i 2V which I could have afforded 15 years earlier by ANY OTHER measure, until I was 46.




I am 100% with RayJohns. If you have to finance a toy, your WRONG (IMHO).

 

Well yes and no...If you can still get one and get a power warranty then its a good deal.

For example, a replacement gearbox will cost over £9500, excluding installment cost. Not sure what it'll be in the states but I reckon north of 16K at the very least.

Other niggles can add up to the cost hugely.

If you drive it a lot it'll even out though. I know that the EVO long term 550 ended up being cheaper in the long run than their BMW 535 Diesel (cost per mile*). IIRC the 550 was 102P per mile versus the beemer 105P. Now which would you rather drive...

*This included everything, from tires, fuel, servicing (the Ferrari needed a replacement gearbox at the cost of 10K, but where covered by the warranty) and depreciation. Remember that the 535D was new, and the 550 barely lost anything in value since it was used.

 

Hmm I'm not sure. I'm not an owner as of yet, but there are some people who finance their car purely for cash flow reasons. I read a post on here from an EVO writer and he said he financed his LP640 purely because the 180K extra the car would cost him new would get him a deposit on 5-6 houses he could do up and sell them on. He recently bought an aston martin DBS and still owns his LP640 among the orange Murcielago (over 120K miles!).

 

+2

 

+2...makes perfect sense.

 

Nor am I an owner, yet. But in the scenario you mentioned he didn't *have* to finance the car. He had the cash and chose to use it for another purpose. Someone who's got the cash but chooses to finance the car for cash flow purposes, is quite a different thing from someone who needs to borrow, when they otherwise were unable to afford, to buy what is at the end of the day, a very nice toy.

 

Do not know to whom you refer, but I did the SAME thing for my DD, a 2002 Volks Wagon Polo (borrowed at 2% when I was making 5-25% in the market, pre-crash. BUT, and it is a BIG BUT, I had the cash to pay it off instantly if ANYTHING went south.

IMHO, IF the guy could pay cash but chose not to, Ok. Your example sounds like that was the case.

If he HAD to borrow the money, NOPE; bad move. The house of cards WILL come down. Again, IMHO. There are owners here that HAD to "get rid of their (debted) rides."


A smart man learns from his mistakes.

A WISE MAN learns from the mistakes of others.

 

Fair do's.

I'm not to speak for anyone's finances, but I assume, since he also purchased a DBS and kept his other lambo along with the LP640 he has the cash to buy the car outright.

 

Having the money in the bank and then electing to finance the car because you feel you can use your money to generate a return higher than that of the finance charge on the loan is one thing. Financing the car because you do not have the cash to buy it - and are therefore spending future (and thus unearned) cash - is quite another.

My basic rule of thumb for buying a Ferrari (or any expensive luxury item) is this: spend no more than 5% of my net worth (ideally my liquid net worth, i.e. cash in the bank and/or highly liquid assets) on any item. Additionally, try to select an item which will, ideally, hold a large portion of its value.

So when I bought my 360, I believe I had maybe $1M in cash in the bank and about that much again (or maybe a little more) in assets which could be readily converted to cash if needed. I don't remember the exact specifics, but you get the idea. I had not anticipated the 360 falling so much in price, or I probably wouldn't have bought it. I paid roughly $127K for the car and had anticipted getting out of it at maybe $110k or $115k. That would have worked out to a loss on the car of only maybe $10K or $20K once you factor in the cost of a few of the upgrades (tubi, etc.) Anyway, in the end, I took a much bigger hit than expected due in part to the economy taking a nose dive.

Anyway, so if you guys ever see me buy an F40, then you'll be able to do the math and figure out that I've cracked 8 digits on my bank account Sure, I could buy an F40 now, especially if I financed it, but it would be a silly decision most likely. Especially if they continue to drop in value. Now if they hit $250K again, then I might bend the rules a bit. But until that time, I am sticking to the basic "no more than 5% of my net worth rule". I can take a 5% hit. I can't take a 25% hit, nor am I willing to assume debt to drive a Ferrari or own a Yacht, etc.

Just my view.

Ray

 

The oft repeated cliche rings true here: The full puchase price is only the down payment.

 

Hey look, another dick-swinging thread. "I only buy my toys with the change from the ash tray of my Bentley"

To the OP: You could die tomorrow. Why put off for 15-20-30 years a little joy?

 

My feelings exactly. While I have decent liquid assets, they aren't millions. I have a family, and one that isn't overly sympathetic to the car thing. To be fair, I can't have everything while they have nothing, so there is give and take, but if I had to wait for that level of liquidity, I'd probably be 60 or more.

Other than my mortgage, I have no debt. I would (and probably will) finance a purchase. In my case, it would be a 3x8, more likely a carb'd 308. The bulk of the depreciation is gone and I'd be willing to lose a little if I had to sell.