Chris is right. Sure there are plenty of people that can just write a check for whatever amount they want but for te most part there's plenty of wealthy people that finance big rings.

 

Yeah, I don't see anything wrong with financing even if you've got the dough. Interest payments are at record lows so it's actually a good idea to pay things off monthly.

 

Chris Harris states outright in that video about his switch to the 599 that he financed a large chunk. I believe he refers to it as "... and put x amount on the drip" :]

It's been awhile since I watched the video and I have too awful a connection in the country for the holidays to rematch at the moment.

I found it interesting that he was so candid about his finances with regard to the purchase.

 

There’s this knee jerk reaction or stigma associated with financing large purchases based on the stories of people who lived beyond their means. However, all things being equal, if you had the cash to immediately pay for the car (i.e. you’re not living beyond your means), you’d probably be better off financing. Salesmen are incentivized by banks to promote financing to customers so they will work w/you more on price if you agree to finance. As long as there are no origination costs, you could leverage the salesman’s incentive and immediately pay off the car. But there’s another consideration that weighs against doing so. Interest rates are incredibly low, so if you finance you essentially have access to your equity at a low rate of interest (one cannot get a line of credit against a fully paid off automobile as one could against their home). Lastly, there’s the opportunity cost associated with using the cash for something other than a typically appreciating asset or investment. Assuming the cash was not simply sitting in a bank returning next to zero interest, you would be liquidating a position to make your purchase. Pretty sure a generic “500” fund is returning better than 10% annually.

Re: trade-in, you should consider RAC Performance. They do consignments which will net you a number closer to your car's value which you could then use to purchase a car they have in their inventory, thereby avoiding tax on that larger trade-in value. If they don't have a 599 in stock, I'm pretty sure they could source one as the probably have a pretty long customer list from their servicing operation.

 

I agree with you, but I think the OP stated he had four more years of payments on his GTS, and the Ferrari purchase would extend those in both length and amount. Sounds to me that in his case, he might very well not have the cash to pay for the car, and is not simply choosing to finance it over paying cash. Sounds like it could be a case of "living beyond your means" as you described.

To each his own, but I would never own a Porsche or Ferrari if I couldn't afford to pay cash for it. I am not saying one should always pay cash, and you have described examples of when financing could be advantages. But to buy a Porsche or Ferrari with the only way to "afford" it by making payments, is living beyond your means.

 

I get all the comments about financing v cash, so let me give you a little bit of my thoughts on the subject as it relates to my decision here:

1) There isn't a problem of making the payments, it's more of a decision whether to pay the GTS off and have it as my 'keeper' for years to come (and maybe buy a Ferrari after that), or to buy a Ferrari now with the realization that I'll probably never keep it for that period of time.
2) Cash is cheap right now. Even for a used loan, 2.99% is cheap. I'd rather pay 3% for a loan while I'm making 5%+ in other places with my cash than to put all that cash up front into a depreciating asset.
3) Speaking with a couple of Ferrari dealers, most of their clients (even the regular ones) finance their cars through them. Basically, none of them plan on keeping those cars past 2-3 years, and they would rather have their cash put in other 'investments'

So from my perspective, there's nothing here related to a finance v cash issue. I actually see the finance route as a better use of my disposable funds than by keeping $150K or more around to buy on a car. When I have those times that I do have that kind of free cash available, it gets invested or put to use for property items...not for a car.

BTW: still working on a couple of cars, with one planned for PPI this week. But the snow in Dallas has pretty much brought the town to a slow crawl this week.

 

sorry I confused 599 with 612..in which I have once driven..briefly. Dont tell me that this is a "beast too"..

PS: the 599GTO is really more agressive than 458? - you are sure about this?

 

Absolutely disagree. By that logic, you should never mortgage a house, lease a car, etc.....

 

Hi Scott,

Well, I disagree with you..but maybe its just my opinion. A Ferrari or a Porsche is a luxury, which is not the 1st priority in life. I admit I am car nut..and that my Porsches are high up in priority..but - for me its clear: I only buy what I pay on the same day. If one looses his/her job - leasing rates for a Porsche or Ferrari are an unnecessary burden.

None of my cars is payed in rates..and it will stay the same way. For a house its clear..I dont have half million in cash so need to rely on "external funding".

Nevertheless, I think that leasing is sometimes "perverse" for some people. A Porsche sales man told me once "25K cash and you can out of here with any new 911 you want"...of course the rest to be done by monthly installments..

Of course if somewhere else your sure to get more than 5% than its cheaper to lease..but only if this is certain - than I would lease.

 

Who's doing the PPI? Would like your feedback when you're done. You can PM if you don't wish to name names or offend. Thanks.