Explore your options for exotic car financing.
Getting a loan for a luxury car is a lot like getting a regular car loan — but at a much higher amount. With loans of this size, you might have trouble qualifying unless you have strong credit and can prove you can afford the monthly repayments.
How do luxury car loans work?
A luxury car loan works the same as a regular car loan but you’ll be committing to a larger amount of money — most luxury cars costs upwards of $40,000. A loan of this size is a serious undertaking, and you should make sure your budget can handle the monthly payments before you start browsing lenders.
Fortunately, there are plenty of loan options out there. Whether you’re seeking a secured or unsecured loan or a loan with a fixed or variable interest rate, you can find something that suits your needs.
How to finance an exotic car
- Secured car loans. Backing your loan with your car makes it less of a risk to the lender, making it easier to qualify for a competitive rate.
- Unsecured car loans. You won’t risk losing your car but you could end up paying higher rates than you would with a secured loan.
- Business car loans. Business car loan come with payments structured around your business’ cash flow, and some don’t even require a deposit.
- Dealer financing. Most dealerships offer a financing option when you purchase cars from them, usually with low monthly repayments and a balloon payment at the end.
Compare car loans
144-month loans: what you need to knowWhen you’re looking into buying a luxury or exotic car, these terms start to pop up. The interest rates are typically around 6.99% for this 12-year loan, and it takes a knowledgeable buyer to get the most out of it.
So who should borrow? The ideal customer is someone who knows luxury, exotic and classic cars well. There are certain makes and models that appreciate in value, and an initial down payment combined with a loan could actually be worth the investment, making you a profit. The car you invest in should be low-maintenance to reduce ownership costs. Try to find a way to pay off your loan early — usually by selling the vehicle at a show or auction.
But, 144-month loans aren’t for everyone. If you know what you’re getting into and understand the risks, you may be able to finance an exotic luxury car for far less than you would have paid in cash or with a smaller loan.
How to compare exotic car financing
Beyond loan term, fees and repayment options, you’ll want to keep an eye out for loans that have these features:
- Fixed or variable rate. Would you prefer a stable monthly payment, or are you willing to take a gamble on a fluctuating interest rate that could be lower down the road?
- Secured or unsecured. Do you want to can use your new luxury car as collateral to get a lower rate, or pay a little extra to avoid losing your exotic wheels?
- Flexibility. Look for a lender that allows you to pay off your loan early with no fee and has customer service with a strong reputation
4 mistakes to avoid
- Small down payments. A hefty down payment helps reduce the cost of the loan and lower your monthly payments.
- Adding one-time costs into the loan. Some lenders might let you include the taxes and cost of vehicle registration in your loan but remember — anything added to your loan balance gains interest.
- Not comparing your options. A luxury car shouldn’t be a spur-of-the-moment purchase. Take your time to review your loan options and your finances to be sure you can handle the payment schedule.
- Long terms. Unless you’re buying your car as an investment, going for an extra-long term means you’ll pay a lot more in interest.
How to apply
Although all lenders are different, here’s some basic information you’ll need when applying for a loan.
- Personal information, including your name, Social Security number and proof of identity
- Employment information, including your income, your employer and the length of your employment
- Financial information, including your assets, credits, debts and liabilities
- Vehicle information, including make, model, condition and price
- Business information if the car is being purchased by a business
Since you’re borrowing a large amount, your credit score needs to be high with a near-perfect payment history. Lenders are unlikely to extend a loan to someone whose score and history don’t reflect upstanding financial decisions.
Can I qualify?
It depends on your lender but generally you must:
- Have good or excellent credit. If you want an unsecured loan, you’ll likely need to have near-perfect credit to be eligible for a loan of that amount.
- Have a low debt-to-income ratio (DTI). You generally can’t qualify for a loan with a DTI over 43%, though it’ll likely need to be much lower for a luxury car loan.
- Make enough to afford repayments. Lenders for loans of this size often require you to have an income nearing six figures.
Most popular luxury car brands in the USThese luxury car brands are known for their speed, power and reliability. Some even cost as low as $35,000 for someone with a budget on their mind.
- BMW. One of the most well-known German car brands, BMW produces luxury cars around the world. Whether you want style, eco-friendly features or handmade design — remember, BMW owns Rolls-Royce — you can find it with BMW.
- Audi. Another German company — much renown Audi is owned by Volkswagen and is among one of the top sellers of luxury cars around the world. You can purchase an Audi new, used or certified pre-owned with specialized financing options.
- Lexus. Under the luxury division of the Toyota brand, Lexus was once known for stuffy, conservative designs but has recently reemerged with the intent that users Experience Amazing.
- Mercedes-Benz. The top-selling luxury car brand of 2016, Mercedes-Benz is known for beautiful design and great engineering, and the price you pay reflects it.
- Porsche. Also owned by Volkswagen, Porsche is even more luxurious and glamorous than its Audi counterpart. Best known for its sport cars, it also offers trendy coupes and stylish SUVs. You could get a loan to buy a Porsche with Porsche Financial Services directly, or consider an auto loan from a separate lender.
- Acura. Part of Honda, Acura produces luxury vehicles that are sleek and powerful. Models range from sedans to SUVs, and the Acura NSX is a sports car that screams exotic design.
When you’re ready to buy a luxury car, finding financing is an important step you shouldn’t overlook. Most cars are bound to depreciate, so understand how much you’re paying and how much debt you’re signing for. Speak with a financial advisor and compare your options carefully until you’re sure you’ve found the best deal available.