Buying a Ferrari - Pay Cash or Finance?

A common question people ask is if most of our supercar buyers pay cash, or finance. Let's discuss the advantages of both, and how that affects the transaction.
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#cash #ferrari #finance

[@01coltcolt19]

Great info thank you for sharing! I financed my last Ferrari no money down and no problem through RBFCU (Randolph Brooks Federal Credit Union) here in TX. That was Jan 2021 at 2.25% great bank to work with!

[@normalguysupercar]

Yup we see them frequently as well

[@cmdrthreeofnine1006]

I typically pay cash for exotics. A lot of traditional dealerships tend to dislike cash buyers. A local Chevy dealership told me that a truck I was ready to buy would be $1000 more if I didn’t finance it. I walked.

[@normalguysupercar]

Yeah that's stupid.

[@brycehunter4521]

I love watching your vlogs and your live vids been watching for almost 4 years love this video and info probably won’t get there anytime soon but hope one day but just so interesting learning how all this works it’s all about very many factors getting a car like that

[@normalguysupercar]

Glad you like them!

[@josephmccormack6910]

Great information and straight forward. But interest rates are the 1000 stabs that corner you. As you pointed out......options are available but few and far between for qualifiers. Great info.

[@normalguysupercar]

Indeed thanks

[@QuintonTV]

Excellent topic, lots if useful information.

[@normalguysupercar]

Glad it was helpful!

[@phibroptik5631]

Dan! We appreciate the answer(s), I was the asker of this question. It help with a current purchase as you noted...conventional banks do not like to finance cars over 10 years old. The purchasing process has been stressful to say the least...just like you stated.

[@normalguysupercar]

Glad to help!

[@4pevans]

Thanks so much!

[@normalguysupercar]

You're welcome!

[@1855Media]

Good advice, but important to keep in mind that a true cash vs. finance analysis would need to account for risk in the other investment. It's not quite as simple as comparing the bank's interest rate to the expected rate of return on a mutual fund (for example).

[@normalguysupercar]

True

[@andviv]

Love this video because it provides real, useful info. On another topic, I just noticed the lift you have behind you; what lift is that?

[@normalguysupercar]

Max Jack

[@EnthusiastsGarage]

Dan gets it. You are losing money when you pay cash for a car that you can finance for cheap. I discussed why I financed most of my GT500 as I was able to get it for 2.79% and with interest rates so high now my investments are far exceeding that.

[@normalguysupercar]

Yes exactly!

[@col_klynkgaming8288]

I used Woodside and like the 10 year loan option to bring the monthly payment down and if I want to pay it off early there’s no penalty

[@cloroxbleach6937]

that's incredibly stupid. A good way to put yourself under.

[@normalguysupercar]

Yup! That's why we send a lot of buyers there

[@pkop2jz]

Woodside usually does have prepayment penalties, I would double check the fine print to make sure

[@hamishcruden7623]

Interesting video. Yes if less than 3% finance is a good idea... In NZ a dealer makes his money from the loan, so the more money they lend the better car you get. GE finance seems to be the main lender to dealers in New Zealand. Insurance is also a problem here in NZ, I only get 3rd party insurance on my cars... and for me it has worked out...

[@normalguysupercar]

Insurance can be quite painful

[@kev-the-windsurfer.]

I ran over a small piece of debris (an old lead wheel balancing weight off someone elses car) on the North Western motorway (Auckland) which caused nearly $10,000 damage to my Ferrari, pierced the rear tyre, smashed through the wheel liner (NLA, so had to be rebuilt), pierced the radiator, and dented the panel, the insurance comapny were great to deal with.... Luckily I have full insurance. I use a broker for my insurance and it costs about the same as my Toyota insurance to fully insure the Ferrari.....the excess is higher though but not unreasonable. Insurance is not a problem if you have a good broker.

[@hamishcruden7623]

@@kev-the-windsurfer. that is just awfull...

[@tg_ny]

Any chance you could do a companion video on insuring Ferraris? How do your friends insure their cars? Do driving records affect your ability to insure a vehicle? Do these cars qualify as a type of classic car? Can policies be tailored for replacement cost coverage? Can insurance costs be controlled by limiting mileage and what are the typical limits? Are the deductables for these cars different than those for common auto policies? Are there any other differences between insuring an everyday car vs. an exotic that people may not be aware of? By the way, your channel is awesome!

[@velocelens]

He did a video on it a while back kzbin.info/www/bejne/mIWTgqpqapeHm7M

[@normalguysupercar]

That would be an interesting video. I'll consider it

[@tg_ny]

@@normalguysupercar There are so many questions. Can you get full glass coverage on a Ferrari like you can on a ordinary car? Can you get enough towing coverage in case you need to be flatbedded to a remote Ferrari dealership? There are probably questions I have not even thought of. Can you tell I am seriously thinking of purchasing a pre-owned Ferrari :-)

[@kevinvanhorn8897]

Insurance rates will vary depending on value of the car, your driving record, your location, even your credit score. In most cases people use collector car insurance through Haggerty or American Modern for example which is who I use. The rate is reasonable and I have zero deductable and agreed upon value, but there are some drawbacks, mainly the car can't be a dialy driver, you must have other vehicles to drive, mileage is limited to 6k miles a year or something similar, must be kept in a locked garage, no minor drivers, etc.

[@cloroxbleach6937]

When buying my first car (2014 Volvo S60 T5), I was able to pay cash for most of it. The rest was paid using a loan for a really, really low interest rate from my credit union. I don't remember what the rate was, but I was basically getting free money and paying like nothing each month. It was a 4-year loan, but I got it paid off sooner than that. Part of me wonders if I should've taken out more money since it was so low. Either way, it was really nice and it's something I would 100% do again...although I'm not sure the loan interest rate would be as low today as it was back then :(

[@normalguysupercar]

Depends how many years ago but probably not given it was a 2014. Rates are crap today

[@mwjunkbox]

8.75% 180 months no early repayment penalty 749 credit score with Woodside this week. CDs are close to 5%, can cut down the loan rate to a theoretical 3-4% if you have capital available or need to be liquid

[@normalguysupercar]

Yup

[@theDFWSpyder]

I opted not to pay in full and reserve the cash for expenses and/or investments opportunities. No problems

[@normalguysupercar]

Yup

[@edwinmedina4338]

Credit unions especially UFCU are great. They love me and I love their interest rates 😅

[@normalguysupercar]

Amen

[@coreycohen6160]

Financing a car under warranty for a period equal to or less than the warranty makes total sense if the interest rate isn't insane, you may lose money due to depreciation but your costs are fixed (i.e. Meg's Mini-Cooper). Financing an out of warranty toy, even one that might appreciate only makes sense if you first can afford the car without a loan because sometimes the bills on these cars for repairs can be in excess of an actual new "average" car and your using the money you would have paid in cash for the car to make more money than the interest rate (i.e. invest in an already existing business you are involved in so you have history to know it will make more money than the interest rate, not one you are starting). Anything else is speculating that the car will be worth more than the cost+interest of the car minus mileage deprecation impact and maintenance/repair costs. With speculating, like any investment, "your mileage may vary" and you could be very lucky or very unlucky all based on factors you do not control. Too many Ferrari and Lamborghini have deferred maintenance or issues because the previous owner could not really afford their car, just the payments and not the actual cost to own.

[@normalguysupercar]

Generally yes but the interesting thing is a toy car doesn't have to be fixed immediately. But I agree if you can't afford the maintenance then absolutely do not buy it.

[@garyleibitzke4166]

How about you or Josh going psychically with the buyer to their bank and having the cashiers check issued in your presence? No doubt it's real that way.

[@normalguysupercar]

That's not always possible but yes that's great

[@blueberrycobbler]

That would be a neat trick, a money transaction done psychically.😎

[@garyleibitzke4166]

@@blueberrycobbler There'd be no doubt it's valid. 😁

[@Philippinesbound42]

If u can’t pay cash. Probably can’t afford it. Especially with interest rates increasing. A year or two ago might of been different. But financing a 15 yr old no warranty Italian exotic at 7 to 9 percent. Is financial suicide.

[@cloroxbleach6937]

Financing a normal car for 7 years+ is financial suicide. People need to understand what they're getting themselves into when they do this. If they go to sell the car sooner than their loan is paid off, the debt is tied over to the next car. Dealers like this guy obviously won't have a problem with people financing for that long because they're not the ones going into severe debt, so they don't care about your financial being.

[@normalguysupercar]

The thing is even if you can pay cash, should you?

[@Philippinesbound42]

@@normalguysupercar I hear you. There are some people that finance for other reasons as you mentioned. If you have an active business and making more than the cost of the loan. Then it may make sense. But I would say most people that finance are buying something they truly can’t afford and want to make the monthly payment fit. Potentially a better indicator on whether someone can truly afford an exotic , would be networth. If someone is buying a 430 from 100 to 140k. My personal opinion is they better have a low seven figure networth. Unless this is like a bucket list thing and you don’t plan on living long. Just my take

[@cbell5017]

Hopefully nobody is dumb enough to finance an exotic at that high of an interest rate.

[@jameswatson7218]

Credit Unions are the largest finance group other than captive OEM

[@normalguysupercar]

Yeah

[@ke0kie]

PenFed 👍

[@philipparana9225]

Penfed is pretty Good

[@normalguysupercar]

They are another option but we haven't had as much experience with them

[@Destroyer-Grizzly-BIH]

LaFerrai Aperta, straight cash!

[@normalguysupercar]

That would be nice

[@JuanRodriguez-km9hl]

Hey Dan What do you think of exotic car leasing companies are they worth it?

[@normalguysupercar]

Eh I don't think they are a good idea

[@PixelVogue]

Alot of places want you to take out finance with them even if you can pay most of the purchase price!

[@normalguysupercar]

Yup

[@ericschifilliti715]

I paid cash for my 360🏁

[@normalguysupercar]

Nice

[@bbroetsky]

Is it Debbie at Woodside?

[@normalguysupercar]

Yes!

[@haroldmclean3755]

I bet the Old " Beg Grandma and Grandad for a Loan " gets used quite a bit too lol 👍😀 Please please please please, I swear I'll pay you back

[@normalguysupercar]

Lol

[@458Aperta]

My opinion! That’s cars for me considered as “toys for old boys “ for this I never I would take a loan for a toy ., meaning needs to be pay cash !

[@normalguysupercar]

Perhaps but these toys can actually appreciate

[@458Aperta]

@@normalguysupercar of course I appreciate them , I have several in my collection, and I appreciate them even more .. because they are payed cash. and belong to me and not to any credit Institut

[@dzikijohnny]

Dan, Does Lambo do the same thing that Ferrari do with financing?

[@normalguysupercar]

I'm not entirely sure but seems probable

[@cbell5017]

I don’t see much wrong with financing, if you can get good rates. I just prefer to pay cash for my toys, much easier. If I needed to use the money for an investment or somewhere else then that’s were it would go, not into a car.

[@normalguysupercar]

Yeah

[@philipparana9225]

If the rate is running under inflation finance. If inflation falls pay it off or refi.

[@normalguysupercar]

That's another good point is you can always refi

[@billbrowning3021]

Opportunity cost.

[@normalguysupercar]

Yup!

[@ericschifilliti715]

I use Zelda at woodside…She is great Howe they are not easy…lots of stips…jj best is easier…both require us to do the pics/inspect…

[@normalguysupercar]

Yup

[@yorbalindason]

IMHO you should only buy a nuts car if you have the cash on hand to buy it outright. If you finance on whatever theory that’s your own rationalization. You need to have the means to suck up sales tax, registration, maintenance, and unforeseen damage that can lead to depreciation. If you are only “making the payment” without the cash on hand to pay off the car in full today then you probably can’t truly afford the car. Anytime you’re upside down in a loan you don’t own the car, the car owns you.

[@normalguysupercar]

True but if you have the cash and then get a loan but utilize the cash to make more money, you might end up with more money than if you just paid cash.

[@Feh60169]

I paid cash for my '19 600LT (and partially traded in a 991.2 GT3), and I regret it a little, because I knew I wanted that 2018 488GTB. But every time I get in it I don't want to sell it lol. One day I'll get a used F8 Tributo.

[@normalguysupercar]

Ultimately it's all about the smiles

[@GavinY]

Is it true that America banks don't have any kind of app that allows you to transfer money to other banks? You only have Venmo ?

[@normalguysupercar]

There's also Zelle but yeah it's really archaic here

[@CoderMan]

Jay-Z started that dumb "if you can't buy it twice, don't buy it" mantra. I agree 100% with finance over cash in 99% of the situations.

[@normalguysupercar]

Yup. But it's always circumstantial so there's no hard rule

[@allenmeadows8780]

This isn't necessarily true. Sure, it CAN be true, but if you're looking to do a cash arbitrage, it's entirely dependent on relative interest rates between the loan rate, or the implied rate inherent in the lease, and the implied duration of your alternative investment choice. Another factor that few people consider is matching risk with risk, e.g,, the rate you're paying is, assuming that it's fixed, doesn't change. In order to have a like-against-like arbitrage, which is the only valid apples to apples comparison, needs to basically be a CD or T-Note. If you can arbitrage a super-car loan against a like-term CD, yeah, it makes sense, but otherwise, good luck finding that arbitrage. And if you really want to get off into the 'financial weeds', be aware that unless you're using your super-car as part of your business, your loan interest is non-deductible yet the interest earned on the CD will be taxable as ordinary income. Again, this reality makes it harder for the arbitrage argument hold up. Lastly, and this again concerns only some people but absent what Dan explained that certain Ferrari dealers do, in essence rig your credit rating info so that the loan isn't reported, you're also using up what could be a large chunk of your available credit. This may or may not be a concern depending on personal circumstances but the individual available credit isn't infinite. All of which is to say, assuming that borrowing or leasing versus paying cash in the hopes of arbitraging the cash isn't a slam dunk assumption.

[@hughmann1908]

Forgot to put in disclaimers “I am not a financial advisor” and “we do not finance” lol

[@normalguysupercar]

That is true I am not

[@gusseisern1151]

CASH 💴

[@normalguysupercar]

Cash is good

[@quaternion-pi]

Would make an interesting video on how you reliably/safely make over 7-10% on your funds to justify financing expensive cars. I'm skeptical the average financed supercar buyer fits this category, especially including maintenance costs. Your overhead business expenses appear to have dramatically increased - but your videos about fixing up your dealership are entertaining. IMHO if you could not actually afford to pay cash for a supercar, you are probably not making the best use of your money. Enjoy your channel.

[@normalguysupercar]

Well I can make 10% selling 1 Ferrari with my cash. Then I can do that probably at least 5 times a year. So I'm probably making 50%+ on the cash

[@quaternion-pi]

@@normalguysupercar Warren Buffett reportedly makes 9.53% annualized return on capital. He should consider purchasing your expertise😀. Seriously, I enjoy your content. These are discretional toys, not investments. At least that is how I perceive my Ferrari.

[@eringodog]

@@normalguysupercar / no math major here, but i don't remember percentages being additive?

[@quaternion-pi]

@@eringodog In my business (healthcare), overhead is ~50% of revenue. Would love to see a video outlining/documenting his business model. These reported results likely are in the 99% percentile for return on investment (ROI) - unicorn grade investments. Business partners must be beating down the door to invest with NGS?

[@gerardgibson9252]

Dan, Can you provide Woodside's contact information, thank you.

[@woodsidecredit]

Ask for Texas Debbie

[@normalguysupercar]

Yup, Debbie is our contact.

[@Samlol23_drrich]

I’ve gotta start a channel “Super Guy Normal Car” about me………

[@normalguysupercar]

Go for it!

[@Jetpropbill]

I always pay for my man toys in cash. Why? Becuase I don't want my wife to hate the Toys once a month when she makes the payment. Still love my Ferrari, Dan, and thanks for helping me purchase it.

[@normalguysupercar]

Lol that's a valid reason

[@anthonym484]

Have you ever had anyone buy a car with a credit card?

[@normalguysupercar]

We have had them ask but we won't do that.

[@Samlol23_drrich]

My theory is if i cant afford to fill the car with gas i probably cant afford it

[@normalguysupercar]

That's a pretty low bar

[@Samlol23_drrich]

@@normalguysupercar have you seen gas prices lately?? Ps If you read this thanks for the great content. Long time sub.

[@michigan_supercars6569]

People taking out loans on normal cars for 60, 72 or even 84 months are so stupid. If you need that much time to pay off a car, then you truly can't afford the car.

[@user-um6qz9cw8k]

Preach!

[@normalguysupercar]

Yes on "normal" cars that depreciate fast, those loans are not a good thing as you can easily get upside-down as well

[@JW-lo2bh]

Absolutely wrong, especially with low interest rates. I can alwways earn more with my money than I would pay in interest.

[@cbell5017]

@@JW-lo2bh until you don’t. Nothing is guaranteed.

[@yodaisgod2]

I'd buy that for a dollar!

[@normalguysupercar]

Love that movie

[@stevenf7683]

Would you finance a full tank of gas after I buy a super car from you? I would have used up all my cash on the car. ;) :P

[@cloroxbleach6937]

haha yeah same here XD

[@normalguysupercar]

Lol sure just for you

[@jesvans]

2nd to last

[@normalguysupercar]

Lol

[@Andino.]

Hey Dan, you completely left your tech job to follow this dream of working on and with Ferraris right?

[@normalguysupercar]

Yup

[@Andino.]

@@normalguysupercar crazy story, glad is working out for you all

[@PixelVogue]

Nefarious selling/buying activities 🤣

[@normalguysupercar]

Lol sometimes

[@grisselkirkendall4497]

😇 "Promo sm"

[@normalguysupercar]

Yup

[@siliconvalley9347]

Last

[@normalguysupercar]

Hmm nope

[@siliconvalley9347]

@@normalguysupercar fuck