Do You Own, Lease or make payments on your Ferrari?

I know the value of debt. The companies that I own and the big one that I work for make full use of it.

But, in my private life, I don't have any debt. Anything that is not a specific investment, debt is a no-no. Leveraging personal real estate is even worse in my books. Your home is not an investment, it is a liability. The trick is how do you minimize the liability. My case, I paid cash. If my investments crash and burn, I still have my my home and my lifestyle (and enough cash on hand to maintain both for several years).

Maybe I'm the odd ball, but I would feel offended to be living a lifestyle on someone else's money...

If I can't pay cash for it, I don't need it. And when you're spending YOUR money, you tend to be more selective in what you buy...

 

Every time this topic comes around there are a lot of people that say that one should only pay cash for a "toy". Others worry about how to justify cash/lease/loan by projecting an investment's rate of return to the nearest one tenth of one percent. Yet these very same people think nothing of purchasing/leasing a new $50k SUV, BMW, Benz, Lexus etc. every year or 2. The depreciation and taxes can easily be tens of thousands of dollars with each purchase. Don't forget the 50' boat and the country club membership!

For those whom money comes in faster than they can spend it, no problem and my hat is off to you. The rest of us have to set priorities and live within reasonable financial guidelines which may mean financing part or all of a F-car purchase. I am sure that we would all be driving a '63 GTO if we could afford it but, sadly, only 39 of us can do so. For the rest of us there are Ferraris at all price levels for our various financial positions and they all have the Ferrari spirt.

While I am on my soapbox, why is it that people who may manage hundreds or even thousands of employees and be responsible for millions of dollars have to ask what model, color, interior color or floor mats that they SHOULD buy? Doing your homework is one thing but sometimes I wonder if they know why they even want to own a Ferrari.

Stepping off the soapbox and into my "appropriate for my income" GT4, I am off to enjoy the ride. BTW, I paid cash for it, but then again, I am long divorced, my children are adults on there own, my house is paid for, my winter driver is a 1987 Audi with 230K miles, summer driver is a "paid for" basic Ranger pick-up and I don't own a big screen TV, no credit card debt, no any debt! Hey, wait a minute, maybe I could finance a new 430!

 

I would bet that many of the upper end exotics for sale right now are for sale because people are over-leveraged. Sooner or later, you gotta pay those bills. Investing is great, but many loose. If you play, you could get burned.

Problem with leasing in Illinois is that you get the joy of paying sales tax on the ENTIRE AMOUNT of the car up front (7.75% in Cook County [crook county]). Gets better... if you decide to buy at the end of the lease, you pay sales tax on the residual!
I'm on my second lease for a daily driver, and will not do it again. Pay way too much in taxes!

 

Own.

 

Yer talkin' my language! Totally agree with ya!

My response, or question, to those who ask "why finance a depreciating asset?" is this: If that is the case, shouldn't you be renting/leasing your television, your furniture, your clothes? I guess you should never buy anything that depreciates, eh? Why limit it to your car?

 

I am a form believer in a F car being your business car if possible.
Then deduct all expenses to maintain it as well as associated expenses such as insurance and repairs, gas, etc.
Cash is for sure slightly less costly than financing, but it depends on your business cash flow as to whether you will miss 200k in one year or not. If that is not possible, finance it ( rates are low) and the amortize the loan as fast as you want. You are paying for it with pretax dollars so what is the big deal about 6% interest on the loan, especially if you plan to amortize it over twelve months or so.

 

Gary:

If and when you get audited, and they find that you've got that car being depreciated, expect to remain on their audit list for a while. Worked that way with a 930, didn't get off the list for 10 years. Not a smart idea.

Better to own the car. Ir shouldn't be more than 5% of your net worth, and at that number, its immaterial whether those assets make you money or not. By the way, the new models aren't going to appreciate, they'll lose value, 12 cylinders more than the v8s, but still lose money.

Art

 

Okay, I wen't through and read all of these threads, and have some questions as well as some knowledge myself. I bought my 77 308 GTB outright. I had the cash in savings and could have borrowed against it, but, then I would have been paying interest on my own money. Anything short of putting the money in a money market account involved risk, and I am sorry, I just cant seem to find anyone out there where I can recover more than one or two points of interest on my money without risk.
The real estate story is interesting, and obviously makes sense, but if the man had the cash to buy it wouldnt he have still come out better paying cash than all the closing costs on a loan?
Now regarding all these leases and loans on high buck cars, I don't buy that story so much either. I have a friend who is a salesman at a High line Import dealer and Mercedes BMW dealership. My nephew works there as well. Most of the top line MB cars are bought outright with cash. One gentleman purchased 5 cars on one purchase, a 600 SL, a 500 SL, a 600 SEL, and I forget the other two, but both MB. He wrote a check on the spot and had the cars delivered.
It seems to me, if your buying something like a car, an airplane, shop equipment, or household goods, that buying outright saves you interest and increases your wealth. And if I did run into a jam, because I didnt pay an arm and a leg for the 308, I could dump it on Ebay and in a week have my money back. Maybe not instant cash, but survivable.
Seems there is an old book that speaks of not being indebted to any man. My hat is off to all the "owners" out there.
Paul Colberg
77 308 GTB

 

Problem is buying a 308 or 328 with cash is a no brainer being that the vehicle has already depreciated about as much as it will already, we're talking a lot less cash(30-50K) then say a 360CS cash, big difference between the two as far as investment standpoints(4X). Never finance an older F-Car but leasing through the business sounds interesting on the newer ones...

 

Yeah but what are some legitimate reasons for leasing a car like that for business purposes? Sounds like the thing to do, but I'm struggling to come up with many viable options...

-R

 

I didn't have 45K in the bank, but I bought a 348 anyway. Did a lot of research on depreciation, maintenece costs, etc. etc. Through my research I found the 348 was my car. I financed the whole damn thing, at 4.25%. I own my other two cars, my house, and am single with no kids. I don't care if the smart thing to do was to wait to save 45K in the bank, because I might be dead by the time I hit 43K. I pulled the trigger and bought it today and now, and my cost for doing that is about 100 bucks a month in interest. All other costs would be the same no matter how I paid. I live a little on the edge, I thought we all did that truly appreciated a Ferrari for what it is. I see nothing wrong with my decision and if someone out there wants to blast it, go right ahead, we all are entitled to our own opinion. I could borrow against one of my other two cars to make a quick buck, I also have other resources. And for the short time I have owned it, I drive the sh*t out of it. Used to own a 911 convertible and it doesnt compare to this. When I get home at night, even if it is raining, I open up the garage real fast, just as a reminder of why I work so hard. Just my opinion from someone who lives on the other side, but can still make it happen.

 

tmobileguy - Good for you! Live today, you may be dead tomorrow! If I was single with no other committments, I'd live in a tent and have a very large car collection (past girlfriends have said I'd be happy sleeping in my car)
However, people like myself have other responsibilities... kids, stay-at home wife, big mortgage, etc. But, long ago, when the wife signed on, she knew of my car obsession, and knew it was inevitable. Now she realizes more are inevitable. Its all about your tolerance for risk. Wanna risk loosing assets, including your house, or screwing up your credit, etc? As a single guy... so what!?!?! DRIVE!

 

I sure didnt mean to offend anyone who financed thier Ferrari, and if it somehow seems that way I appologise. I guess it was my thought that the thread started by asking "if you had a choice"....

I had a choice. I could have used my savings as collateral, and paid 5% interest ( in June ) to borrow money against it if I locked it up in a interest bearing account frozen by the bank at something like 1.8% interest. BS. I just bought the damned thing.

I don't know a lot about investing, I certainly dont want to put my money at risk to losing it in some Martha Stewart or Enron account. So I looked at it and thought, why would I pay 3% interest to use my money to buy something I wanted. If I knew somewhere out there paying better interest over 5% guaranteed with access to my money without penalty, I'd go for it. I just havnt seen anyone tell me I can get good interest rates without risk. So my risk is in a car I own and pay insurance on. If it appreciates, I win. It sure as hell isnt going to depreciate at this point unless the economy crashes. Hell, even the 380 SL is going up again