Exotic Car Financing

You might have fantasized about driving an exotic sports car like a Lamborghini, Maserati, or Ferrari. People commonly think of low-slung sports cars when they hear the term "exotic cars," and these vehicles tend to have a striking look and a hefty price tag to match. If you're one of the fortunate few, you can probably afford to buy an exotic car with cash. If not, you can always choose exotic car financing.

What does it mean by exotic car financing?

It's common for exotic car loans to be significantly greater than those for more common automobiles. A brand-new exotic car can cost anywhere from $100,000 to $400,000 or even half a million dollars, depending on its features and the market demand.

Lenders that focus on exotic vehicles are the most likely to offer loans for such vehicles. Especially if it's your first-time shopping for an exotic car, having someone with expert experience on your side might be invaluable.

How does exotic car financing work?

Before choosing exotic car financing, you should know about the exotic car you are planning to purchase. Once you choose the car, you will know the loan amount you should opt for. With the loan amount in mind, you can select the potential lenders to finance with you. Potential lenders include banks, credit unions, and online lenders.

What are the requirements for exotic car financing?

Here are the factors you require to become eligible for exotic car financing.

• You should have a credit score of 740 or more to qualify for exotic car financing easily. For credit scores below 740, you'll have to make a 10% or 20% down payment.
• Your credit record should be comparable, meaning the current amount you requested should be within 50% of your previous borrowed loan amount.
• Your monthly debt-to-income ratio should be less than 50%. Buying a car shouldn't cost more than your annual gross income.
• You should be able to make a 20% down payment.
• The auto loan term should range from 48 to 84 months. You can extend the loan terms up to 144 months (even though not always recommended).

What are exotic car financing interest rates and payments?

Loan rates for luxury vehicles can go up to 10%, with the typical loan term between 48 and 84 months. Credit history, loan term, and down payment all play a role in establishing your interest rate. For every $1,000 you finance, you may have to pay around $20 per month, depending on your annual percentage rate (APR).

Loans with longer durations often have higher interest rates, so while the monthly payment may be lower, the total cost of the loan will be higher. A greater down payment is the way to go if you're trying to get a lower interest rate and cheaper monthly payments. You can use our auto-loan calculator to determine the monthly payments you must make based on the loan amount.

Which are the different exotic car financing options?

Before choosing a particular lender, you should always shop around to find the best possible rates. Below are the potential lenders who are ready for exotic car financing.

Online lenders

Finding the best rate on a luxury vehicle loan is now easy with the help of online lenders. Some of the best online lenders are LightStream, J J Best Banc & Co, and many others.

Banks and credit unions

Your regular financial institution, be it a local or national bank or credit union, is another viable choice. These include Wells Fargo Bank, Credit Union Of Texas, and Navy Federal Credit Union.

However, you will need a strong credit score and income to borrow a large loan.

Car manufacturers

The financing divisions of most automakers have the incentive to assist clients in obtaining loans to purchase the automobiles they make. When you finance with a company like this, you can qualify for discounts like lower interest rates.

Some such car manufacturers are Audi, Rolls-Royce, Mercedes-Benz, Lamborghini, and Porsche.

Car dealerships

The interest rates and loan terms that car dealerships offer are less favorable. Choose this option only after shopping around, and if other options don't won't work for you.

What are the pros and cons of exotic car financing?

Exotic car financing has many benefits and drawbacks. So before choosing this financing option, look at its pros and cons.

What are the alternatives to exotic car financing?

If you want an exotic car, other than financing, there are many options available. Here are some.

• Pay Cash

There are no hidden costs or interests to worry about when you buy a car outright with cash. It's common knowledge that paying with cash helps you save money when buying a car.

However, you could need a sizable emergency fund to buy an exotic car. If you go this path, ensure you can still meet your other financial commitments.

• Traditional lease

You can lease a car directly from the manufacturer through a dealership for a predetermined time. You have the option to buy it or return it at the end of the lease.

• Used lease

A used car lease is a cheaper option that you can choose. Here the lease payments are calculated based on the used car's sales price and residual value, which, when compared with a new car, will be lower.

• Subscription lease

For a monthly payment, you can lease a car for a specified period. However, leases are typically shorter and more adaptable, giving you greater freedom to trade vehicles mid-term if you want. Although subscription services usually cost more than a standard lease, they do provide certain additional benefits. Insurance and upkeep are two such examples.

• Refinance

A refinance can help you lower the monthly payments on an exotic car you own. Refinancing is switching out your current loan for better terms, such as a reduced interest rate. You might be able to get a loan with a cheaper interest rate if your credit score rises or if interest rates fall.

Bottom line

Exotic car loans are available to those who need assistance financing the purchase of exotic cars. A good credit score and reliable repayment history might help you negotiate more advantageous terms and interest rates with a specialist dealer.

Refinancing your loan is something to consider if you think you can get a lower interest rate somewhere down the road. It's possible to save money throughout your auto refinance loan by getting a lower interest rate.