You want the car. You know you can afford it now, and that your credit is in goodstanding. But financing an exotic car might seem like a daunting task to tackle onyour own, especially if you don’t have much experience with loans and lenders.Don’t worry – we’ve got all the information you need to make this process easierfor you!
1. The Basics of Financing an Exotic Car
The first thing you need to know is that there are different types of loans fordifferent cars. Sometimes, dealerships will offer in-house financing andsometimes they work with third-party lenders. Either way, the basics remain thesame: when you apply for a loan through either method, your credit score will bepulled and your debt-to-income ratio will be calculated.
Your credit score is a three-digit number that ranges from 300 to 850, and it’sused to measure how likely you are to repay a loan. The higher your score, thebetter – because it means you’re less risky for the lender. Your debt-to-incomeratio is simply the percentage of your monthly income that goes towards debtslike student loans, car payments, and credit card bills.
Both of these factors will be important when you’re financing an exotic car, so it’sa good idea to get your credit score in order before you apply. You can get a freecopy of your credit score by signing up for a service like Credit Sesame or CreditKarma, and you can get your debt-to-income ratio by reviewing the last fewmonths of your credit card statements.
Once you have these numbers in hand, it’s time to start looking for financing – butbefore we dive into that step, let’s talk about some common terms you’re likely tocome across when you start your search.
Loan terms can be confusing, but knowing the basics will help you narrow downyour options and find the best loan for your needs. Here are some of ourfavorites: APR – Short for “annual percentage rate”, this is simply the interest on acar loan that is charged on a yearly basis. The lower the APR, the better – so besure to compare loans before you sign anything.
Term – This is the number of years you have to repay your loan. The longer theterm, the lower your monthly payments will be, but you’ll also pay more interest inthe long run. So if you can afford to make larger payments, it’s better to choose ashorter term.
Down Payment – This is the initial cash that needs to be paid by the buyer whenthey take out their loan. A smaller down payment means higher monthlypayments, so try not to skimp! On average, 20% of your car’s value is a goodplace to start, but it also depends on the type of car you’re buying and yourpersonal financial situation.
Monthly Payments – These will be determined by your down payment and loanterm, so they’re one of the most important factors if you want to keep costs low.Just like with any other loan, the higher your monthly payments, the more you’llpay in interest.
Now that we’ve got these terms under our belts, let’s talk about how to findfinancing for an exotic car!
2. How to Improve Your Credit Score
Even if you have a high income and a good debt-to-income ratio, you might not beapproved for the best loan terms if your credit score is low. That’s because yourcredit score is one of the most important factors lenders look at when approvinga loan – so it’s important to make sure yours is as high as possible.
There are a few things you can do to improve your credit score:
● Make all of your payments on time, every time. Late payments will dingyour score and make it harder for you to get a loan.
● Keep your credit card balances low. The more debt you have, the loweryour score will be.
● Don’t open new credit cards unless you need them. Every time a lenderpulls your credit score, it lowers your score a little bit.
3. What You Need to Know About Exotic Car Loans
Even if you have good credit and the money for a down payment, exotic car loansare usually more expensive than regular ones. So before you start your financingsearch, make sure that it makes financial sense to buy an exotic car – becauseonce you sign on the dotted line, there’s no going back!
Exotic cars tend to be worth more than regular cars, so the interest rates on loansfor them are usually higher. But don’t let that deter you – there are still plenty oflenders who offer great terms for exotic car loans.
You’ll also need to be prepared to put down a larger down payment since thelender is taking on more risk by financing a more expensive car.
Just like with any other loan, it’s important to read the fine print and make sureyou understand all of the terms before you sign anything.
4. Finding the Right Dealer and Negotiating a Deal
Once you’ve found the perfect car and secured financing, it’s time to startnegotiating with dealers.
Some of them might be willing to give you a good deal on the car itself, whileothers may be more interested in selling you expensive add-ons or extendedwarranties. No matter what they’re offering, always remember to compare pricesbefore you make a purchase.
And don’t forget to work with your financing team to figure out exactly how muchyou can afford – then, have the dealer write up an official offer that sayseverything is “as-is.” This will protect you if something goes wrong after the saleand prevent any nasty surprises later on!
When it comes to dealers for exotic cars we recommend checking outKoenigsegg for the best possible deals and great customer service.
5. Final Thoughts on Financing an Exotic Car
When it comes to financing an exotic car, the most important thing is to do yourresearch and make sure you understand all of the terms before you signanything. Remember – this is a big-ticket item, so don’t be afraid to askquestions!
Doing these things will help improve your chances of getting approved for thebest loan terms and help you get a great deal on your exotic.We hope you found this article helpful!
If you’re interested in learning more about exotic car loans, check out our finance department.
We offer lots of great information for anyone looking to finance an exotic car – nomatter what their credit score is like or how much money they can put down!
