Exotic Car Financing: How It Works and Where to Find Loans
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Exotic car financing provides loans that are typically for larger amounts and longer terms than regular auto loans. A $500,000, 144-month exotic car loan could even be an option. Lender definitions on what counts as exotic can vary, but luxury vehicle brands include Lamborghini, Bentley, Rolls-Royce and Aston Martin, among others.
How exotic car financing works
To get exotic car financing, you first need to choose an exotic car. Once you’ve decided, potential lenders include big names in the exotic car financing business — such as Woodside Credit — as well as credit unions, banks or online lenders.
Qualifications for exotic car financing
The factors that exotic car financers strongly consider include the potential borrower’s credit score, credit history, loan-to-value (LTV) ratio and ability to repay.
Ed Bolian, founder of VINwiki and former sales director at Lamborghini Atlanta, says an applicant for exotic car financing ideally has the following:
- A 740+ credit score. This score is considered the start of top-tier credit. Some lenders specify that a FICO Score of 700+ falls within their guidelines.
- Comparable car credit history. Your requested loan amount should be within 50% of the amount you borrowed for your last car loan. For example, if you want a $90,000 exotic car loan, lenders like to see that you had a previous auto loan of $60,000.
- Reasonable loan term. While extended loan terms of up to 144 months are possible, traditional auto loan terms (48 to 84 months) are still the norm.
- Loan-to-value ratio of 80%. While exotic cars have a greater chance of appreciating over time compared to a normal passenger car, lenders like to see a 20% down payment.
- Ability to repay. The hard-and-fast rule for exotic car financing is that the total price of the car shouldn’t exceed your verifiable annual gross income. Regarding payment, your monthly debt-to-income (DTI) ratio should be less than 50%.
If you don’t meet one of these ideal qualifications, don’t sweat. Lenders look at the whole picture, and you could potentially compensate for one by being overqualified for another. For example, if your credit isn’t the best, you could choose a shorter loan term and provide a down payment greater than 20%.
Exotic car financing interest rates and payments
Exotic car financing interest rates can reach up to 10.00%, Bolian says. He says the average term is 72 to 84 months, though he doesn’t see 144-month terms as reckless.
Depending on your APR, your monthly payment should be about $20 for every $1,000 you finance. This usually means that payments fall in the thousands.
If you want to do the math on your own planned purchase, here’s our auto payment calculator.
Where to find exotic car financing
It’s important to shop around for exotic car financing, so look at various manufacturers, online lenders, banks and credit unions. Many people who buy from a car dealer seek financing through the dealer. What dealers don’t disclose is that they can often raise your APR by two percentage points.
When you’re looking for exotic car financing, get a few offers directly from lenders so you cut out the middleman. Even relatively low APRs can add up to a lot of cash when you’re talking about borrowing the large amounts for the long periods of time that are typical with exotic car financing. Here’s more on how to get an auto loan preapproval.
Potential lenders
Manufacturers
Most auto manufacturers have finance arms, which in turn have a vested interest in helping customers finance those vehicles. You may also be able to find incentives, such as low-APR deals, by financing through this type of lender. Some examples:
Online lenders
Online financial institutions don’t have the same overhead as lenders with brick-and-mortar branches, which may allow them to offer lower interest rates and specialize in luxury car financing. Some examples:
Banks and credit unions
Your local or national bank or credit union with which you already do business may offer exotic car financing. It could be convenient to do all your financial business with one source, so it may be worth asking. Some examples:
Exotic car financing pros and cons
There are pros and cons to financing any large amount of money. One thing for sure is that auto insurance for exotic vehicles will cost more than insurance on a Toyota Corolla.
| Exotic car financing | |
| Pros | Cons |
| Get the car you want now. If you can’t afford to buy the car of your dreams in cash, financing it could be a solution.
Use financing as investment leverage. If you finance a car and only pay a small portion of the car’s value before you sell it for a profit, you could have a larger return on investment. Lessen opportunity costs. By financing, you keep your liquidity to invest in any opportunities that may arise during the loan period that you may have missed out on if your cash was tied up. |
You have to pay interest. To borrow money, you have to pay interest and fees. Money is a commodity and lenders levy charges.
A loan eats up room in your credit profile. Lenders like to ensure that borrowers have a reasonable DTI and can make payments. By taking out an exotic car loan, you may not be able to take out another loan until you pay off the loan or pay down the principal. Depreciation potential. Your exotic car could depreciate rather than appreciate. Financing a very expensive vehicle that loses value could put you underwater on the loan. |
Alternatives to exotic car financing
You could buy an exotic car outright if you have the funds. The argument for financing — even when you do have the funds — involves investment returns. If you could use your cash on a great investment and get a 5% return, it might be smarter to do that and finance your car if you receive a financing offer with an APR lower than 5.00%. If you’re caught between the two choices — financing or buying outright — consider financing half of the vehicle.
Another option is leasing, which can include traditional leasing, used leasing or a subscription service.
- Traditional lease: Lease a car from the automaker for a set period by going through a dealership. At the end of the lease, you could return it or buy it.
- Used lease: You could possibly lease a used exotic car if you apply through a dealership or private company. If you go with a private company, you might be able to choose your car from a private owner or auction rather than a dealer’s inventory. Premier Financial Services (PFS) is one such provider. The PFS lease could finance any car with a value greater than $50,000 and allows you to switch vehicles as often as you want and end your lease at any point.
- Subscription lease: Choose from a fleet of vehicles and drive what you want for a monthly payment that includes the cost of insurance, maintenance and depreciation.
Similar to a subscription service, an exotic car club could offer a wide range of different luxury and exotic vehicles for you to drive for a monthly or yearly subscription price. This also gives you the benefit of not worrying about a warranty and maintenance, and it potentially adds socializing opportunities with people who have similar interests. Depending on the club, whether you already own an exotic car and how many types of exotic cars you want to have available to you, membership prices can vary from $2,900 if you are an owner to $65,00 if you want access to a fleet of cars.
Other ways to finance an exotic car include using funds from a home equity loan, brokerage loan or almost any asset you could think of that would furnish the liquidity you need to obtain the vehicle at the cheapest price for the money. For personal advice, talk to a certified financial planner or accountant.
Exotic car financing FAQ
How long is an exotic car loan?
An exotic car loan can go up to a term of 144 months, although 48- to 84-month terms are more common.
How much is a down payment on an exotic car?
A 20% down payment or more can be required, but the exact down payment will depend on the specific car deal.
What credit score is needed to buy a Lamborghini?
A credit score in the 700s or above is best, but you may be able to compensate for a lower score with a down payment greater than 20% and a shorter loan term.