Hello All! I am looking for some advise from business savvyies!! Planning to buy a Ferrari using a bank which offered a good APR with a 84 month duration loan. During a conversation with Ferrari dealership, they offered the same APR with 74 month duration loan. They also mentioned that if I go with Ferrari financial the debt may not be reported and I will have a better relationship with them for newer cars in the future. How you all see this from your point of view? Should I consider Ferrari financial for a better realtionship or go with the bank and save money/have local banking relationship? Thanks
They are suggesting that the loan may not show up on your credit report? I don't see how that can happen. 84 months is a long time to be paying and could be under water for a long time. Maybe a lease would be better.
or...saving your cash and...paying cash. If the economy takes a step back later this year (as predicted) expensive toys will be slaughtered.
Sorry but the rule is......you only finance appreciating assets........always pay cash for toys. If you can't pay cash; you can't afford it.
FCOnyn has the rule correct! In down cycles toys become available at ridiculous prices because those that were financed, can no longer be afforded, cars, boats, planes and vacation properties. Which is a great time to buy toys for cash. jimpo1 - Have a wedding you can afford to pay cash. If it doesn't work out who wants to be paying off a wedding and divorce attorney at the same time?
I do agree that you shouldn't buy what you can't afford. However, paying cash for vehicles and housing? Not for me. If I can get financing that is 1/2 to 1/3 lower rate that I can make on investments - then I will finance. And, if I'm offered zero percent - I'm all over that. To me, it makes more financial sense, if I can have the money working for me, rather than the finance company. It's sort of like having your cake, and eating it too. Having said that - I don't finance anything that I don't have equivalent or more cash put aside in investments. It's very satisfying to have money socked away - and growing. Perhaps more so than driving a new toy. Sid
although I agree with the gist of what you're saying, I'll have to respectfully disagree with this "rule". one should have the ability to pay cash for toys, no doubt. but with interest rates where they are, the cost of money is practically free. not sure about F-cars but finance rates are what, 1-2%? I guess if you can't earn well in excess of that on an after tax basis investing, maybe paying cash is the right thing for you. but I feel I can earn a significantly better ROR taking that $$$ and investing it...not to mention the benefits of having the added liquidity. but hey, opinions are like...well you know
These cash only comments get old. He didn't ask about paying cash. He's asked two financing questions.
Thank You all for the advise. As sushimon355 said money is cheap now my bank is willing to lend me and I felt that it is time to latch on to it. The rate I was offered is 2.99 for 84 months.I do put my money to work at higher ROI deals and would like to have a toy to play. I am not sure if all the F car owners paid cash for their cars. If so, I agree that I am in the wrong league. Would you all consider leasing it instead of owning one. BTW this is not my first Ferrari. I have owned 2 others before. Thanks.
you are looking for facts and there are none. leasing can make sense if you own a business and are able to write off the payments. if you aren't planning on doing that I wld definitely buy the car. Lets say a risk free 8 percent a year turn existed. you wld be a complete moron to not borrow and 3, even if the thing is going to depreciate. When ur expected return is unknown and cld be negative even, then paying cash makes sense. The idea of borrowing at 3 percent is something anyone with a healthy balance sheet should do in spades - borrow as much as you can. If you don't have a healthy balance sheet then you shldnt borrow anything at all, or just borrow what you need.
Generally speaking, housing tends to appreciate, so financing that is usually a fine move. Again, just passing along the ethos of people whose professional lives revolve around financial best-practices. Listening to them worked out for me in the end.
it's irrelevant if the object is going to depreciate or appreciate. the only thing that's relevant is the opportunity cost. if you can make X and you can borrow at a fraction of X you shld borrow as much as you can for as long as you can.
Financing is one thing......but this kind of duration makes my head scream UNDERFUNDED But I am curious....what rate did they quote? When I was considering buying a new Gallardo in 2013, the rate quoted for this kind of duration was 6%. Of course I'm glad I didn't do it as the combination of paying $25,000 in interest over the life of the loan plus 7 year depreciation of around $75,000 just wasn't something I could accept.
As someone else said the "pay cash for everything" gets old.... I've financed cars off and on all my life - and I have a FICO of 802 - not an 850 but good enough for most things..... As Robert Heinlein wrote: "Budget the luxuries first." - oh, and drive your Ferrari every day.
Well for what it's worth and since you quoted me.....I did not say "pay cash for everything". What I clearly said was, "pay cash for TOYS".
Look at your carry cost in the 84 month term. I never go past 72, myself. I financed my first Ferrari. I bought another one with a 401K loan. Both have advantanges/disadvantages. Interesting that an Italian company does not report to US Credit Bureau. That's a nice twist!!! ONly you know "What's comfortable".....
Just because the loan has a long term doesn't mean you can't make additional principal payments. Take the long term with the very low rate and pay it off in a 1/4 of the time.
Certainly didn't mean to offend or misquote... I'm 74.... lived, worked, and played on five continents - watched the sun come up and go down over 58 countries.... as I stated earlier... have "made payments on cars - and stuff - over the years - still: have an 802 FICO..... ... would I change anything? A few things, but all those have to do with marriages and raising kids.... otherwise.... it's been a blast - and a long way from over. As I also said before: "drive your Ferrari daily...." "Life's a banquet and most poor suckers are starving to death" - Auntie Mame - and it has NOTHING to do with how much money one has.....
Yes, but it's not about the numbers. It's about conservative money management. If times get bad the toys are the first things to go. If times ever get bad toys which you own outright can be liquidated. Liquidated at a loss perhaps but enincumbered by a loan. If the value plummets, which Ferrari's have 3 times over the recent past, you won't be upside down on a toy. Nothing worse than having to sell something and having to add money to the sale out of your pocket. I know you don't agree with me or see the logic of this but a lot of very successful people around here who are much smarter than me stick to this principle like glue and I think they're right.
