How To Get More Ferraris For Your Money

you know, that permier finanical services really sounds like a good deal. i mean im not in the market for an exotic....yet. but since my dream car constantly changes when i get older, this looks like a good thing for me.

 

The F430 example seems too good to be true. First of all, where can you buy one for $200K? Next, lets look at the present value of the cash flow:

$10K down payment: PV=$10K
Monthly payments: PV=$132K at 5% discount rate (rate I could earn with relatively conservative investments over 5 years)
Balloon Payment: PV=$54K (at 5%)
TOTAL PURCHASE PRICE AT PRESENT VALUE = $196K

Think he'll offer me this deal if I call him?

 

so you're leasing it, right?

that means you pay money to drive this nice car for a while. give it back at the end of the term, and then have nothing to show for it but memories and pictures (and maybe a [new] wife)

it sounds like a good business (to own) to me, not a good place to patronize, financially speaking that is

 

Thats the only thing is paying all that money and then not buying it would just suck I would prefer owning it fully. Although I think the nice thing is you can switch cars regularly or something... I dunno. All I know is at the moment I really adore the 575 maranello in blue with tan which I hope I can one day own somehow or any ferrari but particularly one of these.

 

I agree with you. It sounds like this guy mention has alot of money to buy the car, why not just buy it? If he doesn't like it, just sell it. Your "hit" is prolly as bad as the lease and give back. I don't think with the high-end exotics, still requires a good amount of money.

 

Definitely sounds like the business owner is the one that is the winner. My take is that if you can't pay cash for "toys" you don't need them! (flame suit zipped up today).

Carol

 

Matt, re-read - the leases on exotics are more like the classical 'balloon finances' than what we normally think of as 'leases' so at the end, you don't turn it back in, you either pay it off or sell it. Most of these companies don't want your car when you're done, they want you to buy it (and either keep or sell on your own) - it's obviously still cheaper and easier to pay cash, but it's not quite as bad as being forced to turn your Ferrari in after 5 years. Also, in my experience, most of the people who lease are out of the car in 1-3 years even on a 5 year lease, so they trade or sell the original and do a new lease after the old payoff is made.

 

Ok Rob, I'm no finance guy, but won't the balloon pmt PV be a little higher? By my non-finance guy calculations, your $54k PV for the balloon will only be ~$69k by the end of 5 years at 5%.

Either way, call him, get a 430. Sell me your car.

 

i get pv of the balloon = $77,920

 

Sorry. I am a finance guy but have sloppy fingers on the calculator. PV=$78K.

 

Buy it!!!!!!!!!!!! F leasing it.

 

in this situation, it really depends on how long your gonna keep the car. i'd hate to pay the govt sales tax on 200k to only flip the car out a year later.

what would you think the actual FMV of the car would be out 60 mths anyhow???

 

Is a 430 hard to lease, with the sold-out demand?

 

this premier lease looks like it would only be good for those that flip in and out of cars often. why else in the world would you borrow money at 7+%.......

 

Judging by 99/00 360's, maybe $100-120k.

 

Assuming the guy was on the list, wouldn' the get it at MSRP?

-R

 

The lease still looks too good to be true because you can't buy a 430 for $200K. Re-running the numbers with a 7.5% interest rate puts the PV at around $203K, which is consistent with the assumptions the CEO laid out - mid 7% interest rate, $200K car. If the car is really worth $230K then the implied interest rate is about 3.75%. (Someone can check my math, I tend to make mistakes when I multi-task while on a conference call.) Additionally, with the lease you have insurance on the residual value in 5 years.

As Robin points out, someone buying from the dealer and financing through the leasing company could have done this, but the rest of us won't be able to get this deal.

 

That's easy...buy cheaper Ferraris and don't service them. But, NEVER lease or finance them! If you can't afford to pay cash, you can't afford a Ferrari. I understand that that seem harsh, but it is true.

 

In my opinion, only a financially challenged moron would fall for this.......Perhaps "fleece" should be the key word here?

 

I've heard of people using leases to flip cars and avoid paying most of the sales tax (e.g. in CA). Anyone know how (if) that works? Even if you sold the car after 2 years that's still a lot of $$ you could save on the sales tax (3/5 of 8.25% of 200K... ~$10K).

Nick

 

As a finance guy I continue to get annoyed by this advise. Whether or not you can afford a Ferrari (or anything for that matter) is related to Net Worth, expected income, and liquidity of assets. Finance, lease, or buy is all about interest rate. If you can get an after tax risk free return on your investment that is higher then the interest rate on the lease or loan, you should finance instead of paying cash. Doing anything else would would be financially foolish.

If you could buy a Ferrari for a fair market price and get 0% financing, would you still pay cash? Anything below 3% is an absolute no brainer - finance.

 

You and I are on the same page!

Carol

 

I know Rich Sirota. First, he has the money, as far as i know, to buy and own any of these cars. Second, he is in and out of more Ferraris than most people i know- he's also had some great cars. Third, he often buys at sticker and flips the car, so the Barchetta, the Enzo or any of the other cars he's had, briefly, went out the door for more than the cost to him.

Leases can make sense in a couple different situations. Take the 740i BMW i got in 2001, new and got rid of in 2004. It cost around 63k dollars for a fully loaded Sport version, they were blowing them out in 2001, since the car was 'obsolete' (and imo, far better than the 745 which suceeded it). No money down, lease payment was like 740/mo for 36 months. At the end of the lease, i did not own a 40,ooo mile sedan that might have been worth 32 grand, tops if I sold it. I also didn't have to write out a check for the 63 grand and change. (Unfortunately, in NY, you prepay the taxes on a lease, whereas in some other states, you can defer that through payments as well).

Do the math? Did i lose money?

 

I've heard both sides of this argument many times now. Yet seeing things like this make me agree with Mr. Sirota and Rob (jakermc). For people who *could* afford it, who could do something better with the money, leasing makes sense.