Exotic Car Financing: How It Works and Where to Find Loans
- Exotic car financing can get you into your dream car quickly, but stringent lender requirements and high interest rates can warrant shopping around.
- Financing may be available through manufacturers, online lenders and traditional banks.
- Leasing and subscriptions may provide a good alternative for those who don’t want to finance an exotic car outright.
Exotic car financing is the process of taking out a loan to buy a luxury vehicle. While lender definitions of what counts as a luxury vehicle may vary, common brands include Lamborghini, Bentley, Rolls-Royce and Aston Martin.
Here’s what you need to know about this type of funding before signing on the dotted line.
How exotic car financing works
Financing an exotic car often involves finding your dream car, prepping your finances and shopping around for the right lender. Here’s an overview of what to expect:
Qualifying requirements for exotic car financing
When evaluating your application for exotic car financing, lenders want to see that you have a strong financial profile. In particular, they look for a high credit score and clean credit history, evidence of a stable income suitable to pay off the loan and an established borrowing history.
Ed Bolian, founder and CEO of VINwiki and a former sales director for a Lamborghini dealership, described the ideal candidate while hosting a Q&A about exotic car financing. He spoke with Mitch Katz, former president and CEO of Premier Financial Services.
According to Bolian, the ideal candidate has the following:
- An excellent credit score: According to Bolian, top-tier credit for this type of financing starts at 750, but it’s possible to find lenders that will accept a lower score.
- An established vehicle credit history: Lenders like to see that you’ve previously borrowed similar amounts for a similar purpose. As a result, you shouldn’t expect to be able to borrow more than 150% of the amount of your last car loan. For example, if you want to borrow $100,000 for a car, ideally, you’ll have a history of borrowing at least $75,000 for your last car loan.
- A reasonable loan-to-value ratio: While exotic cars have a better chance of appreciation than daily drivers, lenders still prefer to see that you’re able to make a down payment of at least 20%.
- A sufficient income: As a rule of thumb, lenders like to ensure that the total price tag of the car doesn’t exceed your annual gross income.
- A sensible loan term: Extended loan terms of up to 144 months are available from certain lenders, but typical terms range from 48 to 84 months.
- Other requirements: Some exotic car makers require buyers to adhere to contracts that prevent reselling within a year. There may also be some preliminary ownership requirements for some brands, which means you’ll need to have a solid relationship with your local dealer. You may even potentially need to complete a background check and strict vetting process before you can purchase an exclusive vehicle.
That said, Bolian states that you can still qualify for exotic car financing even if you don’t meet all of the above requirements. Typically, this can be done by strengthening your application in other areas. For example, if your income is on the lower end, you may be able to secure financing by making a larger down payment.
Exotic car financing interest rate and payment
The interest rates for exotic cars can often be higher than the rates for daily driver vehicles. They can be as much as 10%.
The interest rate can significantly impact the cost of your loan. Let’s say you wanted to finance a $100,000 exotic car for a period of 72 months. You make a 20% down payment and receive a 9% interest rate. In that case, your monthly payment would be $1,442.04.
However, if you have a 7% interest rate for the same loan terms, purchase price and down payment, your monthly payment would only be $1,363.92. This is a difference of $5,624 over the lifetime of your loan, highlighting the importance of shopping around for long-term loans.
If you’re looking for a specific estimate of what your monthly payment could be, use our auto loan calculator to run the numbers.
Where to find exotic car financing
Shopping around is crucial when you’re in the market for exotic car financing options. Since obtaining this type of funding is often more expensive than taking out a more traditional auto loan, getting a loan preapproval from a few different lenders can help you save some money.
As far as where to look for financing, you have several options. You could go directly through the manufacturer, choose an online lender or opt for a brick-and-mortar bank or credit union.
Manufacturers
Many exotic car manufacturers offer the opportunity to finance your new vehicle through them directly. Manufacturers will also often offer incentives, such as low APR deals, in exchange for using this service.
Manufacturers with in-house financing include:
- Bentley
- Lamborghini
- Mercedes-Benz
- Porsche
- Rolls-Royce
Online lenders
Online lenders tend to have fewer overhead costs than traditional lenders like banks or credit unions. As a result, they may be able to pass some savings on to you.
Examples of online lenders offering exotic car financing include:
- LightStream
- Collector Car Lending
- J.J. Best Banc & Co
- Woodside Credit
Banks and credit unions
If you already have an existing relationship with a bank or credit union, it’s likely worth it to see if they offer exotic car financing. After all, it’s usually much easier to do all of your banking in one place.
Examples of banks and credit unions with exotic car financing include:
- Navy Federal Credit Union (NFCU)
- Wells Fargo Bank
- Broadway Bank
Pros and cons of financing exotic cars
Like most financial decisions, the decision to finance an exotic car comes with its own unique potential benefits and downsides. Take a look at what to consider before taking the plunge.
Pros
- Instant gratification: If you can’t afford to buy your dream car outright, financing can get you behind the wheel sooner.
- Opportunity cost: When you direct money toward an exotic car purchase, you have less of to put toward other costs. Financing allows you to free up your assets so that you can achieve other financial goals like buying a house, paying down debt or building an emergency fund.
- Investment leverage: If you finance the car and only pay down part of its value before selling it, you could potentially have the opportunity to make a profit on your investment.
Cons
- Interest charges: Interest charges are the price you pay for the privilege of borrowing money. In some cases, they can add a substantial amount to your total monthly payment.
- Higher debt-to-income (DTI) ratio: Lenders look at your DTI ratio when deciding whether or not to approve you for more financing. An exotic car loan will increase your ratio and may make it harder to borrow more money while the loan is active.
- Depreciation potential: There’s a good chance your car could depreciate rather than increase in value. If you’ve financed a large portion of the car’s value, you could end up underwater on your loan.
Alternatives to exotic car financing
If you’ve weighed your options and determined that financing an exotic vehicle may not be the right choice for you, don’t worry. There are a few other ways you can pay for your dream car, including:
- Traditional leases: Leasing a car involves making monthly payments in exchange for the right to drive the car for a set period of time. Once that time is up, you’ll have the option to buy, return or exchange the car.
- Used leases: It’s also possible to lease a used car either through a certified pre-owned dealership or by taking over a lease from a previous owner.
- Subscription leases: Subscription leases grant you access to multiple cars in exchange for a set monthly payment that includes insurance, maintenance and depreciation.
- Exotic car clubs: Exotic car clubs work similarly to subscription leases, except they only offer exotic cars. You get access to a fleet of luxury cars in exchange for paying the subscription price.
Frequently asked questions
Yes, it is absolutely possible to finance an exotic car. You just have to find the right lender and meet its eligibility requirements.
Some exotic car financing lenders offer loans of up to 180 months, but 72- to 84-month loan terms are more common.
It’s often recommended that you put 20% down or more on an exotic car. However, the required amount may be less, depending on your credit history and financial situation. In general, lenders will ask for down payments that range from 10% to 20%.
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