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Purchase v. Lease v. Finance

Discussion in 'Ferrari Discussion (not model specific)' started by JStone414, Mar 28, 2005.

  1. JStone414

    JStone414 Formula 3

    Sep 23, 2004
    1,091
    Gotham
    Full Name:
    Roman Sionis
    I'm sure this has been asked a million times so sorry if this has been beaten to death.

    But as a first time Ferrari purchaser, can anyone give some advice or experiences of the method of purchasing their first F-car?

    Just tossing b/w leasing, financing (any suggestions on the term length?) and out-right purchasing. Don't know if i want to be sinking too much into the car at a young age so that might throw out purchasing idea (I do own my apartment though). Leasing is a low-cost of entry but I'm not sure of the ability to get out early if another car comes around.

    Sorry if this vague, but wanted to get some feedback on other people's experiences. I appreciate the advice, thanks
     
  2. VS1

    VS1 Karting

    Oct 16, 2002
    197
    Beavercreek, OH
    Full Name:
    Vishal Soin
    Given the above - I'd say outright purchase is your only option. Gives you flexibility and you own the asset [depreciable asset - but still]. Personally, for a toy, I think outright purchase is the only way to go period.
     
  3. Dr Tommy Cosgrove

    Dr Tommy Cosgrove Two Time F1 World Champ
    Rossa Subscribed Owner

    May 4, 2001
    28,825
    Birmingham, AL
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    Tommy
    IMO you shouldn't be getting a Ferrari (ie "toy") unless you can just buy one and pay cash or as much cash as you can with bare minimum financing. You're gonna loose $ maintaining it anyway so don't make it worse by throwing more to the bank too.
     
  4. t88power

    t88power Formula 3

    Feb 19, 2001
    2,396
    Puerto Rico
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    Ernesto
    Be smart: keep you cash and invest it, earning positive return. Dont tie it up in a car.

    Finance/Lease the car, INVEST the cash.

    Ernesto

    PS. Same concept as having a paid-off home. Very inefficient use of money/capital.
     
  5. bobleb

    bobleb Formula 3

    Mar 9, 2004
    1,244
    Las Vegas, NV
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    Bob Lebenson
    One thing to CONSIDER, especially if the value of your apartment has appreciated, is some degree of use of a home equity loan. Your interest rate will be lower than most car loans (I'm not counting the GM "0%" crap and the like), and the interest will probably tax deductible (unlike a car loan).

    Note that I emphasized CONSIDER. I hardly know enough about your situation to know if this is really appropriate.
     
  6. tfazio

    tfazio Formula 3
    Classified Subscribed

    Apr 20, 2004
    1,670
    Michigan
    There are two companies that specifically deal with leasing exotics like Ferrari. They are Putnam Leasing and Premier Financial Services. You can do a search on either of those companies here and find info on both of them. Most that have dealt with either of them have had good results.
     
  7. nberry

    nberry Formula Junior

    Nov 1, 2003
    714
    Give Premier Financial a call. Explain your situation. They are very helpful in sorting out leasing facts and allow you to make an informed decision. What I love about them is there is absolutely no pressure to lease from them. They tell you like it is and you decide.:)
     
  8. ben, lj

    ben, lj Formula Junior

    Aug 23, 2004
    589
    you might call ed at putnam a call (408-614-2488) who was several hundred/mth cheaper than premier on my stradale with a higher residual and other wise identical lease terms save for a better rate. like nick said, if nothing else call him to pick his brain re: products and a comparitive analysis over buying vs. leasing.
     
  9. PMDDMD

    PMDDMD Formula Junior

    Apr 1, 2004
    362
    I've got to agree with everyone above and suggest trying to use someone else's money to obtain the vehicle through lease or loan. When going through a financial institution, they will be doing all of the "footwork" with regard to proper titling, etc. Unless you really know what you're doing regarding proper ownership documentation, and I don't, you can count on the banks to make sure that vehicle is yours/theirs, before they make any payment to the seller. Once the deal is done, you can pretty much rest assured that when you pay off that car, either sooner or later, ownership transfer will be without hassles.

    I went through Premier on my car. They were very helpful and made the process easy. No problems.

    Good Luck!
     
  10. jason1st

    jason1st F1 Veteran

    Mar 25, 2004
    5,936
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    Jason
    I would lease if buying a brand spankin' new Ferrari. Because it's gonna drop like a rock and it comes with a warranty. Lease for the length of the warranty and no longer. The at the end sign a new lease and get another one. This is how I buy all of my cars but I also own a company that pas for all of it tax free.

    If I were buying an F40 or other possibly appreciating, older ferrari I would pay cash.

    I don't think I would finance one at all because your intrest rate is gonna be through the roof especially if buying used.
     
  11. parkerfe

    parkerfe F1 World Champ

    Sep 4, 2001
    12,887
    Cumming, Georgia
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    Franklin E. Parker
    Purchase...NEVER finance a toy!
     
  12. Air_Cooled_Nut

    Air_Cooled_Nut Formula Junior

    Nov 25, 2004
    952
    Portland, Oregon
    Full Name:
    Toby Erkson
    What's a rough estimate to expect in leasing a Ferrari? And is insuring it the same as if you were taking out a loan to buy it (full coverage until paid off)?
     
  13. ghost

    ghost F1 Veteran
    Lifetime Rossa

    Dec 10, 2003
    9,767
    Singapore
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    Vik
    :D - I wish I wasn't at work so I could write a response to the NUMBER of misconceptions about leasing / financing that have been posted on this thread.
     
  14. jason1st

    jason1st F1 Veteran

    Mar 25, 2004
    5,936
    ATL/CHS/MIA
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    Jason
    Insurance is the same unless you do some low mileage collector car insurance.

    Get on e-bay for a rough estimate. Call your local Ferrari dealer and tell him what you want.

    I have never leased a used car so I am not speaking from experience in that arena. I have only ever leased brand new. There is a difference.
     
  15. SROC4

    SROC4 Formula 3

    Mar 16, 2005
    1,875
    San Francisco
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    Alex
    I would love to hear what you have to say about this topic. It is something I've been wondering about as well.
     
  16. markymark360f1

    markymark360f1 Formula 3

    Dec 15, 2004
    1,260
    San Diego
    Full Name:
    Mark
    I only lease new, purchase older or utility type vehicles.

    Putnam is great. Learn how they manipulate the money factor, there is hidden money buried in the payment versus residual.

    MM

    Financing is always personal preference mixed with some tax strategy. Not everyone buys homes the same etc...
     
  17. FrankTavani

    FrankTavani Karting

    Feb 8, 2005
    62
    Philadelphia
    If you own your apartment (or home or condo) and can get a line of credit to finance all or even part of it, that would be my advice to you. You can write off the interest (which is giong to be considerable i would imagine) and the rate is generally lower than a car loan. Best of all, you literally write the check and if you finance the car 100% with your line of credit, you even have the flexibility to elect higher-than-normal insurance deducibles (some banks won't allow more than $500 or $1000) so your insurance premiums are less.

    Of course, I am speaking from personal experience with a '94 348 Spider which cost me $70 grand. If you are looking at a brand new quarter-million dollar, well, things are a little different then. In my case, if I ran up against hard times (knock on wood), I could sell the 348 quickly at a loss of 5 or 10 grand and pay off the line (or the majority of the line) to get myself out of that debt. If you buy a new car that is going to deprectiate about 5 or 10 grand PER MONTH, you might be better off financing with other peoples' money as other's have put it...
     
  18. Jenn B.

    Jenn B. Rookie

    Mar 18, 2005
    1
    Hi Chris --

    We would be more than happy to spend some time with you to discuss leasing v. financing and the ins and outs of our program. We at Premier feel that our Early Termination Program has proven advantagious in most situations for consumers. Please feel free to contact me at your convenience so that I may answer any questions you may have and to provide you with real numbers for you to consider.

    Jenn B.
    Premier Financial Services
    877-973-7700
    jbrandt@premierfinancialservices.com
     
  19. Bullfighter

    Bullfighter Two Time F1 World Champ
    Owner Lifetime Rossa

    Jan 26, 2005
    20,691
    Fullerton, California
    Full Name:
    Jon
    Well, any company can get you out of any lease early -- except that SOMEONE has to pay off the balance owed, and charity isn't part of the car biz, so it's usually just rolled into the next lease. Sometimes, there's enough profit in the next car that the leasing company will "forgive" a portion of the balance owed, but in general terminating a lease early is a very bad idea.

    I lease my daily driver (Jeep right now; had a BMW 3 till last Nov.) so I can dump the car when the warranty's up. The lease payment on these cars (to me) was/is trivial.

    Financing a weekend car like a Ferrari seems like a sign that you would be overextending yourself. Could you be happier with a less expensive Ferrari, or a less expensive sports car? You may be extremely wealthy, so the extra money spent on financing may not matter to you, so take this as a recommendation from someone totally in the dark about your finances...

    Not sure I accept the "leasing to avoid depreciation" argument - a competent leasing company accounts for depreciation in the lease charges. That's why something like a BMW 3 series (retains value well) often isn't a bad lease deal, while a Cadillac (plummets in value in first three years) is more $$ than you would think.

    The advice about the lease term is good. Don't lease past the warranty, and don't lease longer than you can commit, right now, to making those payments.

    Having babbled on for a while, I'll stop ... you only live once. Drive something cool.

    (Maybe I'm blessed -- my favorite attainable Ferrari's are the 308/328, which I can pay cash for. The 550 will have to wait till after the next house.)

    J
     
  20. Dr Tommy Cosgrove

    Dr Tommy Cosgrove Two Time F1 World Champ
    Rossa Subscribed Owner

    May 4, 2001
    28,825
    Birmingham, AL
    Full Name:
    Tommy
    I am really surprised that only one person so far agrees with me on this one. What's wrong with just waiting until you can afford to pay for it? I would recommend buying USED. Let someone else pay for the $$ slam you'll get driving off the lot.
     
  21. ben, lj

    ben, lj Formula Junior

    Aug 23, 2004
    589
    There are several other benefits to leasing - like no exposure to diminished value (though ferrari leases leave you on the hook for it), sales tax only on the portion of the car you use (particularly useful in states like CA where you get no sales tax credit on trade ins), etc.

    As for financing or leasing a Ferrari being a sign you are overextending yourself, I wired the money for my Carrera GT three months after leasing my Stradale. Those who can earn high returns on capital often like to use OPM when it's as cheap as it's been lately. Leasing made sense on the Stradale (better residuals) than it did on the CGT (with horrid residuals). As well, the Stradale is tentatively for sale and I've only paid $200/mth in sales tax for the seven months I've used it instead of 100% of the sales tax had I bought it.
     
  22. TexasF355F1

    TexasF355F1 Three Time F1 World Champ
    Silver Subscribed

    Feb 2, 2004
    36,878
    Houston
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    Jason
    I will never lease anything. Doesn't make sense to me, b/c if you really want something why don't you actually want to own it? My dad always finances his cars, but he always pays back the loan ahead of time. Paying more than the minimum each payment.

    My gaga always paid cash for all of his cars. Of course they weren't anything special or super luxurious, but nonetheless, that speaks for his opinion of the way things should be done.
     
  23. spike308

    spike308 F1 Rookie
    Silver Subscribed

    Nov 8, 2003
    3,878
    Austin TX!
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    Mike Z
    Here in crappy Illinois, when you lease, you get the pleasure of paying the sales tax on the ENTIRE CAR. If you buy at the end, you again pay taxes on the residual! So, leasing blows, unless you must drive a new car with a warrenty at all times.

    For the lease fans... what about "gap insurance"?
    Sure, the value may drop like a rock, but the bank has a figure in their head (and on the paper you sign) of what it is worth. If you total your, say '03 360, they want their $170K, not the $150 it may be worth after you drove it 5K miles.
     
  24. spike308

    spike308 F1 Rookie
    Silver Subscribed

    Nov 8, 2003
    3,878
    Austin TX!
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    Mike Z
    .... and I agree with the good doctor. I may be still reasonably young, and certainly stupid... but I paid cash for mine. My next toy may be financed, but VERY short term. All of the "Invest your cash" folks seem to have forgotten that the market (which ever you chose to enter) can take a significant number two on your financial well being! A Ferrari that you own seems like a much better "asset" than a bunch of shares of Worldcom!
     
  25. JStone414

    JStone414 Formula 3

    Sep 23, 2004
    1,091
    Gotham
    Full Name:
    Roman Sionis
    First off, everyone thank you so much for the advice so far. I work hard, invest well, yada yada yada. We all do, which is why we all are fortunate enough to own and drive wonderful cars, Ferrari or another make. But being young it's always good to get some advice.

    I'm a big supporter of investing my cash (whether it is securities, a business venture, etc) and using the cash-flow to fund my toy. The lease option sounds great for a new Ferrari. What about a used one? For those who support the finance option, what would be a good short term (say 3, 4, or 5 years?) to minimize the interest payments?

    Finally with leasing, how have Premier and Putnam been with residual values - are they pretty fair? Once again, thanks for the advice, it's all good and we all have our own unique situations.
     

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