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When it comes to buying supercars, however, even high-net-worth individuals can feel the pinch. When you consider a Bugatti will set you back a cool £1 million-plus or a basic Ferrari will cost several hundred thousand pounds, supercar finance is quite often simply good financial sense.
Supercar finance isn’t about making exotic or luxury cars available to owners who couldn’t afford them any other way. Instead, it’s about making smart financial decisions that work in your favour while still allowing you to drive the best and most exciting vehicles available to you.
Practically, purchasing a supercar is almost always a toss-up between depleting your capital to buy outright or maintaining liquidity to invest in other asset classes that will bring better returns. Supercar finance helps you to do the latter as well as manage your finances efficiently while maximising your investments and income. Supercar finance allows you to:
Supercar finance is the practice of borrowing money to buy a rare, luxury or exotic road vehicles. Because you borrow money to purchase the supercar, you retain liquidity and don’t have to spend significant cash reserves, which you might need for other uses. You spread out the cost of the vehicle and pay back your lender over several months. Supercar finance is usually offered by specialist lenders rather than banks or mainstream creditors. You make an initial down payment to your lender and then pay back the lender in monthly instalments.
At the top end of the market, supercar finance isn’t about making exotic or luxury cars available to owners who couldn’t afford them any other way than by paying in instalments. Instead, this type of financing is generally used to plan finances and manage cashflow. Because supercar prices start at several hundred thousand pounds and extend into the millions of pounds, buying supercars in cash can be prohibitive from a cash planning perspective, even for high-net-worth individuals. Your assets are usually tied up in investments in different asset classes, and it’s unusual that you’d have the capital to the tune of several hundred thousand pounds simply lying in your bank account waiting for a rainy day. You won’t want to liquidate these investments simply to buy your new car, given doing so would mean you risk missing out on future returns. Supercar finance allows you to maintain your current investments and the returns that come with them and still enjoy driving a supercar.
Supercar finance works much like a traditional loan: a lender will let you borrow money, in this case, to purchase a supercar, exotic or rare vehicle. The car is usually used as security for the loan, and your lender will be able to seize it if you default on repayment. That said, you may also need to provide personal guarantees for this type of specialist loan. Deposits are the norm for supercar finance, and you can expect to put down 10-20% of the cost of your car upfront. The more you put down at this point, the less you will need to pay back throughout the loan.
Banks – even private institutions who are used to working with high-net-worth individuals – have little to no appetite for this type of lending. Supercars often don’t fit mainstream financial institutions’ risk or lending criteria, and it’s practically unheard of that they will greenlight a loan for a sportscar.
Speciality finance is most often the best way to secure a loan to buy a supercar. That said, lenders are often tricky to find if you are operating alone, and many will not publicise their services or offer direct contact routes. Instead, you will need an introduction from someone already in their circle. Enness has access to all the players who provide luxury auto loans in this very niche market. Enness will be able to source and negotiate the most attractive supercar finance from respected, vetted lenders who will offer you the best rates and terms.
Specialist lenders offer personalised loans against supercars. Benefits include personalised rates and more flexible terms: a speciality lender might also allow you to pay your loan off early without charging a penalty, for example. Importantly, they will not baulk at the make and model of the car that you wish to finance. Specialist lenders will also be able to work around your current circumstances and background. For example, it’s relatively common for borrowers to have considerable cash flow but lack assets or vice versa. Where traditional lenders would hesitate to let you borrow in such circumstances, specialist lenders will not.
Enness will be able to help you borrow up to 90% of the cost of your supercar.
As with standard vehicle financing, you can arrange for supercar loans with either fixed or variable interest rates. With a fixed-rate loan, you’ll pay the same interest for the term of the loan. You’ll also have the advantage of knowing exactly what your payments are and how much you will pay a month.
A variable rate loan is different because the interest rate will vary based on market rates. The varying rate will apply to the remainder of your loan balance as you make your monthly payments.
The length of your supercar loan will depend on your situation, what you’ll do with the car and what your lender is comfortable with. Finance for two years is usual, but it can be much longer, depending on the cost of your supercar. Four-year loans aren’t uncommon for some of the more luxurious and expensive vehicles.
If you wish to reduce your monthly costs, you can opt for a "balloon payment" at the end of the loan period. Balloon payments essentially postpone a large portion of the price of the supercar by making it due at the end of the loan, thus reducing your monthly charges. Balloon payments also add a kind of "safety net", especially if you wish to keep your supercar as an appreciating investment. If your car rockets in value during the loan period, the balloon payment is already locked in at the start of the loan. As a result, you can enjoy the asset's increase in value without having to pay extra for it.
How you will repay supercar finance should always be a consideration. In traditional car financing, you simply continue to pay back your loan in monthly instalments until you have paid off what you borrow. Because supercars cost so much, this isn’t always an option. Balloon payments – as explained above – are common. Financing 50% of the car and paying 50% upfront to reduce the loan period and either removing the need for a balloon payment or significantly reducing it is another option. You can also sell the car to pay off the loan, but you will need to be aware of potential price volatility and depreciation. Lenders will want to ensure you will be able to pay off the loan even if you can’t sell your car quickly or if you have to sell the vehicle for less than you expect when the loan comes to an end.
The financial requirements for speciality lending are different for every individual. It can prove frustrating to present your needs and circumstances repeatedly to a range of specialist lenders. Partnering with Enness will mean you can go straight to the best sources of finance and you can partner with a broker that has deep connections in the speciality lending community. Enness’ reputation opens doors and some of the lenders your broker may approach for you may not be parties you can approach directly.
Enness will save you valuable time and make the process of sourcing supercar financing go smoothly. Your broker will help you secure the best supercar loan, no matter your background or location.
Enness has access to all the supercar finance lenders in the market. These specialist lenders are highly experienced, discreet, and used to working with high-net-worth individuals. They will introduce you to lenders that will assess your finances and background individually and can offer competitive supercar finance deals.
In some instances, it may make more sense for you to lease a supercar than to use supercar finance. You’ll need to base your decision on whether to buy or lease, based on your circumstances. How you plan to use the car, and your long-term ambitions will also define whether leasing makes sense.
You’ll find that leasing provides some advantages over financing in certain circumstances. For example, leasing is ideal if you want to change vehicles every two to three years. With a lease, you can access the latest supercars on the market continuously. At the end of the lease, you can simply hand back your vehicle and enter into a new agreement to enjoy using another car. Alternatively, you’ll also have the option to buy the vehicle and potentially sell it at a profit. In this way, it’s a cost-effective way to maintain a steady rotation of the best exotic and luxury cars available.
As an example, you can lease a Lamborghini Huracán for around £2,000 a month. You’d typically have to make a £16,000 down payment to enter into the lease agreement. However, you would be able to enjoy a new, top of the range sports car at a relatively low entry-level: £16,000 is a small price to pay to drive the perfect supercar. In total, you may spend £88,000 over three years before you hand the car back. That’s around half of the manufacturer’s price of £170,000.
Leasing can also help you to avoid the costs of ongoing maintenance, which can be costly for supercars. As a result, a lease can lower your cost of ownership.
Of course, leases have limitations. For example, you most likely cannot drive the vehicle more than 2,500 miles per year without incurring hefty extra mileage fees. For this reason, you’ll want to think carefully about how you will use the car and whether or not ownership is attractive to you vs leasing.
Just like a mortgage, there is always a premium for supercar finance – you pay for the privilege of borrowing against advantageous terms and in a way that allows you to retain liquidity. That said, some lenders in this space can charge exorbitant prices for supercar finance, and the cost of your car will skyrocket well beyond what is a reasonable price at term. Who you borrow from and how your deal is set up is especially important in this part of the market, as is working with bonafide players who are discreet, trustworthy and operate according to certain principles.
Enness have the contacts that can meet all your needs and who can offer competitive supercar finance. These lenders may not publicise their services in traditional marketplaces and usually require an introduction from a source already known to them for some time, like Enness. Introductions are especially important at the very top end of the market or if you wish to buy a collectable, highly exotic or particularly expensive supercar: these lenders do not accept all borrowers and Enness will need to present solid reasons for why they should do so. Your broker will only negotiate with specialist lenders who are willing to personalise deals and offer financing that meets your requirements and matches your personal situation.
Understanding your options for supercar finance is the first step in securing your next supercar. While many costs are associated with owning and maintaining these vehicles, owners will agree that driving a supercar is worth every penny. Purchasing an exotic car is worth considering whether you’re a passionate collector or you simply wish to diversify your assets.
Enness will be able to source and negotiate straightforward, fast and flexible supercar financing for you.Speak To A Broker Now