How to Finance Your First Exotic Car

[Wiscoblue]

When I was a resident, all I wanted was a Beamer.

I drove a minivan for years. My wife drove the Honda Accord because she had a long commute.

25 years later, I drive a Toyota. She drives a Nissan 4 cylinder.

One thing I have to tell you young guys, the family doc who is sending you patients hates to see you drive a $200,000 car. Live simple, take a wheelbarrow to the bank at the end of every month.

[Craigy]

Wiscoblue wrote:

When I was a resident, all I wanted was a Beamer.

I drove a minivan for years. My wife drove the Honda Accord because she had a long commute.

25 years later, I drive a Toyota. She drives a Nissan 4 cylinder.

One thing I have to tell you young guys, the family doc who is sending you patients hates to see you drive a $200,000 car. Live simple, take a wheelbarrow to the bank at the end of every month.

Click to expand...

But then the only person having fun with your money is the bank.   

[ajagannathan]

This used to matter more, but now given how many primary docs who refer are employed by the hospital systems, it's more important not to show up the administrators, at least from the standpoint of a contracted doc.  :lol:

[I Find This Humerus]

Wiscoblue wrote:

When I was a resident, all I wanted was a Beamer.

I drove a minivan for years. My wife drove the Honda Accord because she had a long commute.

25 years later, I drive a Toyota. She drives a Nissan 4 cylinder.

One thing I have to tell you young guys, the family doc who is sending you patients hates to see you drive a $200,000 car. Live simple, take a wheelbarrow to the bank at the end of every month.

Click to expand...

Possibly worst advice I have ever heard. First of all it's spelled Bimmer which tells me you know nothing about cars. Secondly, telling others not to buy things that they want because of what their referring docs would think? Ha!

 

Tell you what, I know you make a 6 figure salary so I think you should take a 50% pay cut because what will your secretary think?

[Craigy]

I Find This Humerus wrote:

Wiscoblue wrote:

When I was a resident, all I wanted was a Beamer.

I drove a minivan for years. My wife drove the Honda Accord because she had a long commute.

25 years later, I drive a Toyota. She drives a Nissan 4 cylinder.

One thing I have to tell you young guys, the family doc who is sending you patients hates to see you drive a $200,000 car. Live simple, take a wheelbarrow to the bank at the end of every month.

Click to expand…

Possibly worst advice I have ever heard. First of all it’s spelled Bimmer which tells me you know nothing about cars. Secondly, telling others not to buy things that they want because of what their referring docs would think? Ha!

 

Tell you what, I know you make a 6 figure salary so I think you should take a 50% pay cut because what will your secretary think?

Click to expand...

No flame wars in this thread please.   

[Kamban]

Beamer and Beemer are used for BMW motorcycles, and Bimmer for BMW cars.

[Ryan]

I watched this as most members here probably did-- to see an alternative view on something that I've already formed an unchangeable opinion against doing. His framing of the depreciation you pay as a first owner just being the dealer's profit-- I wonder if that's more true for exotics than "commodity" cars. Anyway and as expected, the rest of the video was wholly irrelevant .

[ajagannathan]

Ryan wrote:

I watched this as most members here probably did– to see an alternative view on something that I’ve already formed an unchangeable opinion against doing. His framing of the depreciation you pay as a first owner just being the dealer’s profit– I wonder if that’s more true for exotics than “commodity” cars. Anyway and as expected, the rest of the video was wholly irrelevant .

Click to expand...

Shouldn't matter whether it's "exotic" or not, the delta between what you paid the dealer and what you could sell it private party as soon as you drive it off the lot is the dealer's profit.

Some limited edition exclusive cars (Porsche GTx cars, Ferrari exclusive editions, etc.) you can sell for a profit private party as soon as you drive it off because the dealership has been limited from doing an adjusted dealer markup over MSRP by the manufacturer (by limiting their allocations, etc.).  Now that's the real game as a car guy, to get to the point where you have access to these vehicles, of course if you don't have connections you have to sacrifice some big bucks over years to get to that level.

[Ryan]

iradoc wrote:

Shouldn’t matter whether it’s “exotic” or not, the delta between what you paid the dealer and what you could sell it private party as soon as you drive it off the lot is the dealer’s profit.

Click to expand...

That's the price you paid above market value, it's not synonymous with "dealer profit." The dealer doesn't get 100% of price above market, the whole supply chain does. Car manufacturers make a profit too. Add operating expenses and the picture keeps getting more and more murky. The question I'm asking is comparing those profits between exotic cars and commodity ones.

I don't think you can answer this without presenting hard data.

[Craigy]

Ryan wrote:

I watched this as most members here probably did– to see an alternative view on something that I’ve already formed an unchangeable opinion against doing. His framing of the depreciation you pay as a first owner just being the dealer’s profit– I wonder if that’s more true for exotics than “commodity” cars. Anyway and as expected, the rest of the video was wholly irrelevant .

Click to expand...

It's true of all cars, except it's magnified as the price gets larger.  There might be $50k of room on a $300,000 car, whereas there might only be $3,000 of room on a $30,000 vehicle.

I believe he's just referring to the initial "drive off the lot" depreciation, which is essentially 100% the dealer profit.  If Adam buys a 2018 Honda Accord DX for $22,000 and Bob buys a 2018 Honda Accord DX for $20,000, resale book value on both used cars is only $19,500 on day 1, Bob's saved $2,000 on "depreciation" thanks to being a better negotiator while Adam left a lot of money on the table for the dealer profit and salesman commission by overpaying.

Of course after that initial drive-off period, days, weeks, first few months or maybe a year, everything continues to depreciate beyond that dealer profit margin.  If Adam and Bob each drive their Accords for 10 years, and book value is now $9,500, they didn't lose another $10,000 to dealer profit, they lost it to true depreciation from a variety of other factors.

Same thing as paying a big commission on anything.  If you buy a $20,000 mutual fund and pay a $2,000 load/commission, you could say your $22k investment lost $2k of value, but you really just paid a $2k profit to your broker/fund manager.

[Ryan]

Craigy wrote:

Ryan wrote:

I watched this as most members here probably did– to see an alternative view on something that I’ve already formed an unchangeable opinion against doing. His framing of the depreciation you pay as a first owner just being the dealer’s profit– I wonder if that’s more true for exotics than “commodity” cars. Anyway and as expected, the rest of the video was wholly irrelevant .

Click to expand…

It’s true of all cars, except it’s magnified as the price gets larger.  There might be $50k of room on a $300,000 car, whereas there might only be $3,000 of room on a $30,000 vehicle.

I believe he’s just referring to the initial “drive off the lot” depreciation, which is essentially 100% the dealer profit.  If Adam buys a 2018 Honda Accord DX for $22,000 and Bob buys a 2018 Honda Accord DX for $20,000, resale book value on both used cars is only $19,500 on day 1, Bob’s saved $2,000 on “depreciation” thanks to being a better negotiator while Adam left a lot of money on the table for the dealer profit and salesman commission by overpaying.

Of course after that initial drive-off period, days, weeks, first few months or maybe a year, everything continues to depreciate beyond that dealer profit margin.  If Adam and Bob each drive their Accords for 10 years, and book value is now $9,500, they didn’t lose another $10,000 to dealer profit, they lost it to true depreciation from a variety of other factors.

Same thing as paying a big commission on anything.  If you buy a $20,000 mutual fund and pay a $2,000 load/commission, you could say your $22k investment lost $2k of value, but you really just paid a $2k profit to your broker/fund manager.

Click to expand...

"Price over market" does not just go to the dealer. The dealer gets price after his costs, which you're assuming equal market costs. Maybe they do, maybe not. Here's to hoping somebody can present data.

[NaOH]

.

[ajagannathan]

Ryan wrote:

iradoc wrote:

Shouldn’t matter whether it’s “exotic” or not, the delta between what you paid the dealer and what you could sell it private party as soon as you drive it off the lot is the dealer’s profit.

Click to expand…

That’s the price you paid above market value, it’s not synonymous with “dealer profit.” The dealer doesn’t get 100% of price above market, the whole supply chain does. Car manufacturers make a profit too. Add operating expenses and the picture keeps getting more and more murky. The question I’m asking is comparing those profits between exotic cars and commodity ones.

I don’t think you can answer this without presenting hard data.

Click to expand...

Yes, you're right I misspoke, the price above market is *part* of the dealer profit, not all of it.  How does anyone else in the supply chain get a piece of this, they've already been factored into the dealer's cost on the car?

[ajagannathan]

NaOH wrote:

iradoc wrote:

 

Click to expand…

Some limited edition exclusive cars (Porsche GTx cars, Ferrari exclusive editions, etc.) you can sell for a profit private party as soon as you drive it off because the dealership has been limited from doing an adjusted dealer markup over MSRP by the manufacturer (by limiting their allocations, etc.).  Now that’s the real game as a car guy, to get to the point where you have access to these vehicles, of course if you don’t have connections you have to sacrifice some big bucks over years to get to that level.

Click to expand…

And then you run the risk of getting flagged by the manufacturer as a flipper and summarily losing your access to those special order vehicles…

Click to expand...

Yes, usually true.  But if you keep the dealer happy and flip it back to them you'll both do well, as they're not restricted by the manufacturer in how they can price a used car.

[Craigy]

Ryan wrote:

Craigy wrote:

Ryan wrote:

I watched this as most members here probably did– to see an alternative view on something that I’ve already formed an unchangeable opinion against doing. His framing of the depreciation you pay as a first owner just being the dealer’s profit– I wonder if that’s more true for exotics than “commodity” cars. Anyway and as expected, the rest of the video was wholly irrelevant .

Click to expand…

It’s true of all cars, except it’s magnified as the price gets larger.  There might be $50k of room on a $300,000 car, whereas there might only be $3,000 of room on a $30,000 vehicle.

I believe he’s just referring to the initial “drive off the lot” depreciation, which is essentially 100% the dealer profit.  If Adam buys a 2018 Honda Accord DX for $22,000 and Bob buys a 2018 Honda Accord DX for $20,000, resale book value on both used cars is only $19,500 on day 1, Bob’s saved $2,000 on “depreciation” thanks to being a better negotiator while Adam left a lot of money on the table for the dealer profit and salesman commission by overpaying.

Of course after that initial drive-off period, days, weeks, first few months or maybe a year, everything continues to depreciate beyond that dealer profit margin.  If Adam and Bob each drive their Accords for 10 years, and book value is now $9,500, they didn’t lose another $10,000 to dealer profit, they lost it to true depreciation from a variety of other factors.

Same thing as paying a big commission on anything.  If you buy a $20,000 mutual fund and pay a $2,000 load/commission, you could say your $22k investment lost $2k of value, but you really just paid a $2k profit to your broker/fund manager.

Click to expand…

“Price over market” does not just go to the dealer. The dealer gets price after his costs, which you’re assuming equal market costs. Maybe they do, maybe not. Here’s to hoping somebody can present data.

Click to expand...

The whole price goes to the dealer.   

Dealers buy their cars wholesale - from the manufacturer/manufacturer's distributor.  I'm not sure what "market costs" you're referring to.