Ferrari Finance - Do my numbers add up?

Hi all,

I've set my sights on purchasing my first exotic this year (likely an F-car, though the 720S also doesn't look like a bad option). I apologise in advance - I know for a fact many threads have already been made on this topic - but I just wanted to try and get a crystal clear understanding of what exactly the real cost of buying one of these cars is. Obviously the purchase price is one thing, but the actual cost (ie. depreciation etc) is the number that really matters.

In the UK there are currently a few options roughly around the £160k mark (458, 488, GTC4Lusso T, and conviently the McLaren 720S too). The first thing to consider is depreciation; most people I've spoken to seem to agree around 10% p/a is a reasonable figure. So that gives us a starting number of ~£43k over 3 years (I'm aware F-cars do hold their value a little better than other brands but it's better to overestimate here).

So the cash cost there works out to just over £14k/yr (averaged out).

On top of that I know finance is a popular option, a quick quote from Magnitude gave the following numbers:
- HP + Balloon
- £160k list price, £50k deposit, £110k loan, 36 month term, 8000 miles/yr
- 6.9% APR, £1160/mo, £88,600 balloon

The total charge of interest on this is £20k, which would bring us roughly to £65k in costs over the 3 years; or just over £21k/yr in total. 6.9% APR is definitely high (I've just taken out at mortgage at something like 2.05%); are better numbers around the 3-5% range achievable? And if so, how do you go about getting those on your first purchase? Some have suggested remortgaging your house to take advantage of the super low interest rates there, but unfortunately that isn't an option for me at the moment.

This is obviously before service, maintanence, insurance, tax, added fuel, parking costs, etc etc. Perhaps another £5k-£10k here per year depending on big maintanence bills & insurance cost? That would give us a total of £25-30k/yr.

Do my numbers here sound about correct versus the actual cost? Obviously I'm ignoring stuff here like the monthly and balloon payments, focusing over the cost in the long term. £2-2.5k/mo definitely isn't a small amount of money, but to own one of these great works of art & engineering - there is definitely an argument to be made.
Would love to hear your guys' thoughts.

sparkey

 

Appreciate this answer, especially the depreciation part. It’s hard to tell what you can actually afford when you see the whole spectrum from cash buyers to YouTubers financing fleets of exotics out the wazoo.

If I was to go the finance route then I would likely end up either paying off the balloon or selling before the term is up. Paying cash is an option, but for me the tax implication (I have to draw the money out my LLC) ends up being quite expensive compared to the interest on a finance deal.
Unexpected repair costs won’t be a massive problem; I suppose I’m more concerned about making a financial “mistake” with such a big luxury purchase, rather than putting the money towards an investment fund. But I guess this is a question more apt for a financial advisor than an internet forum

Thank you all for your input. It’s not easy to get answers about such a “taboo” topic.

 

No specific car in mind just yet. Still trying to whittle down my options. Seems to be a solid range at that price point, and it's my first foray into the exotic/supercar market (currently have an Alfa 4C, though I don't plan on selling her) so I'm not really sure exactly what to go for.
I think my best bet is going to be hanging on for now and see what still stands out in a few months time. That said, I thought that back in November and I'm still not sure

Thanks

 

Thankyou! I love that car dearly - I don't think it's one I'll ever be able to sell.

Obviously it's impossible to say, but do you have any guestimates as to when the market might drop? Are you thinking by summer, by winter, or 1 year+?

Thanks!