Conventional wisdom is that supercar financing and ownership is an abysmal decision from a financial vitality standpoint. It's also common belief that supercar ownership is reserved for the ultra wealthy; those who can stand to lose tens or hundreds of thousands of dollars in depreciation without batting an eye, and while paying exorbitant maintenance fees along the way.
We're going to offer a slightly different perspective: given some discretion and relatively favorable timing, modern supercar ownership doesn't necessarily have to be a financially perilous event.
Cars in general are recognized as financial sinkholes partly because there is an inevitable, and drastic depreciation from new (for most). And generally speaking, the higher the initial cost/value of the car, the greater the overall depreciation figure.
Buy a new Subaru for $20,000, drive it for 3 years and 30,000 miles, and you might lose $4,000 in depreciation.
Buy a new $100,000 Maserati Quattroporte, drive it for 3 years and 30,000 miles (or less), and you might lose $50,000 in depreciation.
For this reason exotic cars and supercars have long been associated with money out the window with every day and mile that passes.
But this drastic depreciation schedule doesn't always apply to used supercars and exotics. In fact, the depreciation factor with many used supercars is actually less than experienced with a new BMW M3, or even mom's deluxe Chevy Suburban (easily spec'd to $80,000) or Cadillac Escalade (easily spec'd to $95,000. Yes, seriously).
But put a new $80,000 Chevy Suburban next to a used $80,000 Audi R8 in a parking lot and ask 100 passersby which is the more financially damaging decision, and 99 of them will point to the R8 in a heartbeat.
In actual fact, the Suburban might triple or quadruple the R8 in depreciation over the next couple of years.
At the time of this writing, long term loan rates are particularly low. For example, an 84 month loan is available at 2.95%.*
"An 84 month loan?! Who would keep their car, even a supercar, for seven years???"
Basically nobody, and that's yet another perception myth associated with supercar acquisition and ownership.
We're not sure if this "thou shalt carry a loan to term" tenet has its roots in 1950's era mortgages, or what. Pay on the 84 month loan while the car is owned. If/when it's sold, the loan can be paid off with the resale proceeds.
Not to mention, the big three automakers regularly lead with long term financing campaigns -- 60 month, 72 month, etc. And so we're really only talking about 1-2 extra years on the loan, and it's not for an F-150.
A $70,000 supercar loan at the specified rate and term would come to $923.35/month. A high monthly payment to be sure.
With initial down payment rolled in, a $65,500 Chevy Suburban (not an $80,000 version) can be leased for $900 per month on an "ultra low mileage" lease. Over 48 months total lease payments will amount to $43,200. Unless you Magoo your way into lease equity, that's $43,200 gone for good.
Over the first four years of the 84 month supercar loan, one will have paid down $39,000 in loan balance, with a remaining balance of about $31,000. Total interest paid over the first four years is $6,174.
Ok, but you'll blow through tens of thousands on maintenance, repairs, and replacement parts, right?
For example, the Audi R8's running costs aren't notably more than an ///M or AMG.
Numerous Ferrari f430 owners have managed to keep their annual running costs to a few thousand dollars, or less.
And of course the Porsche 911 and Nissan GTR are near-supercars that won't necessarily break the bank as the miles accrue.
Much like the depreciation misconception, modern supercars are not as unreliable as they once were, and are not necessarily financially ruinous to drive with some regularity and maintain.
Supercar ownership isn't a "smart" financial decision, and we're not claiming that it is. But America's roads are clogged with poor financial decisions cloaked in domestic badges, modest body styles, and three rows of seating.**
Viewed through the lens of the accepted American automotive norm, supercar financing and ownership isn't that financially foolish after all.
*Woodside Credit Union offers up to 144 month loans, but at a higher interest rate.
**Chevy sold over 55,000 Suburbans in 2014.