Liquid Assets and Expensive Car Purchase

Dr. Gonzo

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I see a bunch of people on here with expensive cars and I've often wonder if they buy them outright or finance them. If finance, how much money they put down? Reason I ask is come spring time I, myself, am buying an expensive car as a toy and the price range could be anywhere from $30k - $100k.

I'm 33, single, the only debt I have is my mortgage, and I have excellent credit. I make good money as a construction project manager, pay into my 401k, Roth IRA and savings account, and I live a pretty modest lifestyle; my daily driver is a 2004 Subaru, I hardly take vacations, etc.

The reason why my budget is so wide is because I am inheriting a large sum of money, north of $250k, from my grandmother’s estate and I’m not sure how much a reasonable amount is to use on a car purchase. The cars that constantly cross my mind are a built C6Z, ZR1, C7Z, 997TT, Gen 4/5 Viper.

There’s no way I’m going to spend all my inheritance on a toy (if I did I’d go buy a UGR Lambo), but after unexpectedly losing my father a couple years ago I’ve learned how precious and short life really is to not enjoy as much as possible so that’s why I’m buying a nice toy; I just don’t know how much to spend. Whatever I don’t use in going straight into investments and my savings account. Since I don’t really have any debt would it be wise to put down a large deposit on a more expensive car and make monthly payments on a low interest loan, or buy a lesser expensive car and own it outright?

To you guys who own expensive, enthusiast cars, how did you do it? This is not intended to be a bragging thread, I’m very quite humble, I’m just looking for some serious advise. If you’re more comfortable responding via PM, that’s fine.
 
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Booky

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I started out with a 1986 GT Mustang.
After it was paid off I sold it and used the proceeds to help purchase a '03 Cobra.
I sold the Cobra and used the proceeds to help purchase a used Shelby GT500.
For my Hellcat I put down $25K from the sale of my Shelby and financed the rest at 1.7 % interest.
 
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jrandy

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You should be able to easily beat any reasonable auto interest rate. I'd say invest the $250k and finance whatever car you decide on.
 

13COBRA

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I think it just all depends.

For example, if you find a car for $100k I would see what kind of interest rate and terms you could secure. Rates are low right now.

Then I would see what your investments are yielding. If your investments are yielding considerably more than the interest you'd be paying out, I would consider taking out a loan for the full amount...or at least a VERY large chunk of it.

If it's a wash, then you're still better off having a loan on the car and cash in the bank, as the car is a depreciating asset 99% of the time.

If you'd be paying higher interest than you're yielding, I would get a new financial adviser.
 

nickf2005

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Another variable that you throw into the mix when weighing your loan versus investments is what kind of debt are you "Ok" with on a personal level.

Yes, you may "make" more money in the long run holding the loan and investing more, but is a $70,000 car loan something you want to pay on for X years?

In your situation, I'd personally drop a $70,000 check on a fun toy with minimal maintenance costs, then throw the rest in your investments. Own the car outright and not worry about the loan officer. To each his own.

Another option is to use the inheritance to pay off your mortgage to save interest money. Then you have some disposable money to invest and buy toys.
 

Zemedici

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I think it just all depends.

For example, if you find a car for $100k I would see what kind of interest rate and terms you could secure. Rates are low right now.

Then I would see what your investments are yielding. If your investments are yielding considerably more than the interest you'd be paying out, I would consider taking out a loan for the full amount...or at least a VERY large chunk of it.

If it's a wash, then you're still better off having a loan on the car and cash in the bank, as the car is a depreciating asset 99% of the time.

If you'd be paying higher interest than you're yielding, I would get a new financial adviser.


This. You’ve gotta weight your options / interest to see how you come out. It’s usually beneficial to throw down just enough to secure the loan at a decent interest rate, and throw the rest in the Bank.
 

Dr. Gonzo

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I appreciate all the input and it's definitely a lot to consider. Fortunately, I have time to since I won't be making a purchase until Spring time. I don't think I'd be comfortable carrying a $70k note on a car, even if it was low interest and over 5+ years.

A Corvette, Viper and 911 are very different cars so can anyone give input on each? I know a handful of guys on here have Vipers and Corvettes but I don't see any with 911s.
 

13COBRA

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I appreciate all the input and it's definitely a lot to consider. Fortunately, I have time to since I won't be making a purchase until Spring time. I don't think I'd be comfortable carrying a $70k note on a car, even if it was low interest and over 5+ years.

A Corvette, Viper and 911 are very different cars so can anyone give input on each? I know a handful of guys on here have Vipers and Corvettes but I don't see any with 911s.


What are you looking for?

Street use: 911, Vette, Viper
Track use: Viper, 911, Vette
Cool factor: Viper, 911, Vette
Do you wear a gold chain: Vette, 911, Viper
 

IronSnake

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I would personally feel better about owning my toy outright.

I'm a big fan of establishing myself so that if I had much less income I could survive. Having a 70k dollar car note is hardly liquid when you've got to pull from your savings in the event you lose your job or reduce your income.

I also am the type to enjoy the crappiest car as much as I enjoy the most expensive i've owned. You don't need a high end, high dollar, money eating machine to have a good time. It could be an old DOHC cobra with a paxton on it and it'll still put a grin on your face.

Don't think the only way you'll have a good time is by spending 50-100k.
 

Dr. Gonzo

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Looking for a fast and (relatively) reliable street car that handles great for winding roads but can still pull hard when I open it up on the highway, and something that's not going to break me on maintenance cost. I would have to drive all of them to make a definite decision, but input would be great.
 

Mojo88

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I would personally feel better about owning my toy outright.

I'm a big fan of establishing myself so that if I had much less income I could survive. Having a 70k dollar car note is hardly liquid when you've got to pull from your savings in the event you lose your job or reduce your income.

I also am the type to enjoy the crappiest car as much as I enjoy the most expensive i've owned. You don't need a high end, high dollar, money eating machine to have a good time. It could be an old DOHC cobra with a paxton on it and it'll still put a grin on your face.

Don't think the only way you'll have a good time is by spending 50-100k.

I am kindof in this camp ^^^^^^^^^^^^^^^^^^^^^

You should be able to find AWESOME car for $30 to $40k. Buy it outright and enjoy the crap out of it. Plus you will pay less in incidental things like: property tax, sales tax, insurance, maintenance, etc.
 

Rem152

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Personally if it were me I would invest in a Vintage car especially if its not going to be a daily driver. Maybe my frame of thought may be wrong or I'm getting old, but I see owning a vintage car especially matching numbers and all as an investment in itself. Not to mention at the price point you are speaking of you can buy at least two if not more if you are smart about it and look. The other factor is Porsche's are skyrocketing as far as prices are concerned in the market especially the older models of 911. Now if you wanted to you could easily have a very nice pro-touring or pro-street vehicle with all the modern amenities and the added benefit that you wont see the vehicle depreciate like modern cars do and you have a work of art that will not only handle and drive well but grow in value. I would then take the rest and either invest, pay off bills or if you have a mortgage pay it off if you plan on living in your home for the rest of your life. However on the flip side they say owning a home is a terrible investment, but to each their own when it comes to that frame of thought.

In summation buy a vintage car invest the remaining money.
 

Never_Enough

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Former C6Z owner here & I'd go Gen5 Viper next time if between the 2. However, my vote is a resto mod classic that will not lose value & may go up. I'm planning to do just that for my next big toy.

Keep your $ in the bank making $ for you & finance the car. I don't see why you would not be comfy carrying that $70k loan. You are fine as you could pay it off or sell the car at any time if need be so no hardship will come from it.

I normally pay tag & tags then finance the rest. Better off having the $ in the bank IMO.
 

Blk91stang

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Since you're looking at a high value car, I would shop for loans and see what the % finance charge is and compare that to what you can get from investing it. If you can invest at 8% and spend 4%, I wouldn't pay outright for it.

As far as what car and from a $ standpoint, buy what you think you can justify the depreciation on and the cost of ownership (parts, insurance, etc.). For me as much as I'd love to own a ZR1, I wouldn't want to deal with the potential high $ costs to repair the engine, brakes, insurance costs. etc all while taking a constant hit on depreciation. I have a 69' Pro-Street Camaro that will be finished this year, 91' mustang gt, and my 14' F150 STX 5.0. Everything I own I can work on, will not depreciate much or at all, and have very low costs of ownership (Antique Insurance on the 69' & 91' = $600/Year for Insurance with full coverage).

Personally I would look at putting enough down on 1-3 rental properties to offset the monthly rent by a few hundred at least. I bet you're paying a ton of tax from your paycheck like I am and having "business" write offs from rentals along with a potential to turn that 250k into a life long monthly income plus equity in each property would give me a better idea of what I can actually afford with that 250k.

I received an inheritance also similar to yours at 23 years old (32 now, single, no debt except 11 years left on my mortgage) and used it for a 20% down payment on my house, upgrading the house sooner than later, side fed more into my 401k, and am currently pending a rental condo which if it works out well I will look for another. My net income after these investments for me will dictate what I can afford since new cars are mostly highly depreciating assets.

My .02
 
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gasyone

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Cars depreciate in value. If can swing the payment keep your money in the bank.


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Coiled03

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with the $250k, can you pay off your mortgage?

That's my line of thinking.

Then again, I drive a rusted out 2007 F150 with nearly 150K miles. I haven't had a toy car for years, now.
 

Rct851

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Disclaimer- I'm a cheap mofo

I wouldn't buy anything you couldn't afford before the inheritance. Just let the extra cash in your pocket let you doing it with a little more peace of mind. 250k is an amazing sum of money to be given but it's also a dangerous amount. It could be ****ed off real easy.

For example you're on a car forum discussing 100k cars.
 

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