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How much should I have before I purchase an exotic car?

iivalky

Contributor
Jul 9, 2022
59
79
Canada
(This is my first real thread, I hope I posted it under the right category, apologies if I didn't)
Hi all,
One of the largest components that drives me to do well is the exotic cars. I want to eventually purchase a Lamborghini Gallardo which sells for about $80,000 - $100,000 USD, but whenever I look for listings I always ask myself this: How much money should I have before I purchase this kind of vehicle? It would be very, very unintelligent of me to blow all of my money on it so I need to create some kind of goal. My question is, how much money should I have in cash, how much should I be making annually and how large should my net worth be?

@MJ DeMarco mentioned in his books that he has (or has had) a Lamborghini in in past, some advise from him or anyone else who has experience with this would be great!

I appreciate all responses!
 
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Greg Behnke

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There is a course called Exotic car hacks out there where PJ teaches people how to arbitrage exotics for a small time frame. A lot of people that have exotics have multiples or want to change their vehicle often so while you may want this car now, you may be sick of it in a short time. Might be something worth checking out for you. What is Exotic Car Hacks? - Exotic Car Hacks
 

iivalky

Contributor
Jul 9, 2022
59
79
Canada
There is a course called Exotic car hacks out there where PJ teaches people how to arbitrage exotics for a small time frame. A lot of people that have exotics have multiples or want to change their vehicle often so while you may want this car now, you may be sick of it in a short time. Might be something worth checking out for you. What is Exotic Car Hacks? - Exotic Car Hacks
Ah, thank you! I'll certainly do some research before I buy, it won't be for a few years anyways. I'm more of the kind of person to become attached to my car, but I've never had or driven a Lambo so I can't say if I'll like it yet. I speculate that the Gallardo will also increase in value (5 - 10 years before it's considered a classic with a mere 14,000 examples) so it's for investment purposes as well
 

UK_Mike

Contributor
Sep 10, 2020
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North West UK
I find with cars you've got three main costs - the cost of buying it, the cost of running it (the definite stuff - fuel, insurance, servicing), and the margin you need so that you're not worrying about it all the time - what if it needs the clutch replacing, what if I blow the engine up, what if someone takes a key down the side of it? The more exotic the car, the higher this last intangible cost.
 
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iivalky

Contributor
Jul 9, 2022
59
79
Canada
I find with cars you've got three main costs - the cost of buying it, the cost of running it (the definite stuff - fuel, insurance, servicing), and the margin you need so that you're not worrying about it all the time - what if it needs the clutch replacing, what if I blow the engine up, what if someone takes a key down the side of it? The more exotic the car, the higher this last intangible cost.
Those all certainly need to be factored in, but won't insurance cover most physical damage (such as vandalism)?
 

UK_Mike

Contributor
Sep 10, 2020
88
95
North West UK
Those all certainly need to be factored in, but won't insurance cover most physical damage (such as vandalism)?
Probably, but that just goes back to what MJ was saying about affordability. My insurance, for example, has a "voluntary excess", the bit of the bill that I have to pay out of any claim, so for vandalism I might have to pay the first £100 of any claim. I might have a limited number of these claims before my no-claim discount is reduced, so my annual premium next year will be higher next time. So yes, my insurance covers it, but in a way that might discourage me from making a claim.

If you're the kind of person where that weighs on your mind (and it's clear that I am) then it's to be considered. But it just goes back to the same thing - it's no good buying a £70k car if you've got £70k.

And another thing is what will you do with it? Do you have the kind of lifestyle that an exotic car like that would fit into? I was talking to a mate a few weeks ago about having something nice and sporty, but just taking it to the local racetrack (just as a spectator) is a pain in the neck - both the short routes from here are down small roads and they're in terrible condition, so just because I've got a Ferrari or whatever I've suddenly got to drive the long way around. I can park it somewhere nice when I get there, but I might have to buy new tyres. First world problems, I know. Nothing that isn't obvious, but you can imagine how many people started buying Astons and the like as soon as they could get personal contract hire deals.

When I'm buying stuff I tend to think about how long it'll take me to replace the money.
 

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Those all certainly need to be factored in, but won't insurance cover most physical damage (such as vandalism)?
You have to factor in the costs to hold it.
Insurance
Registration
Yearly maintenance

These cost will probably be $5000-$10000 a year.

The worst part of owning an exotic was worrying if anything would break on it. Just the hassle and cost of bringing it into a shop sucked.
 
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iivalky

Contributor
Jul 9, 2022
59
79
Canada
You have to factor in the costs to hold it.
Insurance
Registration
Yearly maintenance

These cost will probably be $5000-$10000 a year.

The worst part of owning an exotic was worrying if anything would break on it. Just the hassle and cost of bringing it into a shop sucked.
Yeaaaahhh I know some people who have these kinds of cars and it could be dang expensive.
 
Last edited:

iivalky

Contributor
Jul 9, 2022
59
79
Canada
Probably, but that just goes back to what MJ was saying about affordability. My insurance, for example, has a "voluntary excess", the bit of the bill that I have to pay out of any claim, so for vandalism I might have to pay the first £100 of any claim. I might have a limited number of these claims before my no-claim discount is reduced, so my annual premium next year will be higher next time. So yes, my insurance covers it, but in a way that might discourage me from making a claim.

If you're the kind of person where that weighs on your mind (and it's clear that I am) then it's to be considered. But it just goes back to the same thing - it's no good buying a £70k car if you've got £70k.

And another thing is what will you do with it? Do you have the kind of lifestyle that an exotic car like that would fit into? I was talking to a mate a few weeks ago about having something nice and sporty, but just taking it to the local racetrack (just as a spectator) is a pain in the neck - both the short routes from here are down small roads and they're in terrible condition, so just because I've got a Ferrari or whatever I've suddenly got to drive the long way around. I can park it somewhere nice when I get there, but I might have to buy new tyres. First world problems, I know. Nothing that isn't obvious, but you can imagine how many people started buying Astons and the like as soon as they could get personal contract hire deals.

When I'm buying stuff I tend to think about how long it'll take me to replace the money.
Yes, I must admit that I would feel an irrational internal fear of a minivan coming out of nowhere and sideswiping my Ford GT while parked at a Walmart if I owned one, hopefully no insurance claims have to be made during ownership of an exotic but is still a factor to consider.

Basically you're saying I should only buy my Lambo once I can afford multiple of them (with steady cashflow) which is a really smart way to look at it. That I should still have a lot of money after purchasing a supercar, rather than having my entire net worth inside of it.

I like to look at how long it would take to replenish my money as well, especially large purchases as it helps me evaluate whether it's an intelligent move or not.
 
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Myster kouadj

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(Ceci est mon premier vrai sujet, j'espère l'avoir posté dans la bonne catégorie, excusez-moi si je ne l'ai pas fait)
Salut tout le monde,
L'un des éléments les plus importants qui me pousse à bien faire, ce sont les voitures exotiques. Je veux éventuellement acheter une Lamborghini Gallardo qui se vend environ 80 000 $ - 100 000 $ US, mais chaque fois que je cherche des annonces, je me demande toujours ceci : combien d'argent dois-je avoir avant d'acheter ce type de véhicule ? Ce serait très, très inintelligent de ma part de gaspiller tout mon argent là-dessus, donc je dois créer une sorte d'objectif. Ma question est la suivante : combien d'argent devrais-je avoir en espèces, combien devrais-je gagner annuellement et quelle devrait être ma valeur nette ?

@MJ DeMarco a mentionné dans ses livres qu'il a (ou a eu) une Lamborghini dans le passé, quelques conseils de sa part ou de toute autre personne ayant de l'expérience avec cela seraient formidables !

J'apprécie toutes les réponses !
Dad MJ DEMARCO said
If, to buy a boat, you have to make a whole
mental gymnastics to see how you can afford it,
it is that YOU DO NOT HAVE THE MEANS. It is certain that you
can reduce the obstacle and support abracadabrant arguments, which
will often start with, "I can afford it as long as..."
– I have this promotion. »
– the monthly payments of my mortgage do not increase. »
– my stock portfolio is still taking 10% this month! »
– I make twice as many sales as expected. »
– my wife finds a job. »
– I cancel my health insurance. »

For more understanding on this subject, I suggest you read Chapter 7 of the TMF
 
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fastlane_dad

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I have owned multiple exotics. Several Lambos, Porsches and a Ferrari.

To me the original point of affordability was when I imagined the worst case scenario happening (engine going, costly repair, market crashing, AND/OR I have to sell a week after to come up with money for some opportunity etc) - when the COST OF THAT would not hurt me or alter my day to day for any foreseeable future, outside of a sting - THAT was the time to affordability.

For you on a GALLARDO imagine an engine going, and you have to sell for whatever reason SOON after you bought it, so your loss can easily total ~50K.

When you can swallow that without blinking an eye for the most part I say go for it then. I'd say you should be at 500K - 1 MIL net worth before introducing that kind of purchase and risk into your life.

Many people make the jump MUCH MUCH sooner though. My risk tolerance is much lower, especially towards toys that are a non-income producing (typically depreciating) asset.
 

iivalky

Contributor
Jul 9, 2022
59
79
Canada
I have owned multiple exotics. Several Lambos, Porsches and a Ferrari.

To me the original point of affordability was when I imagined the worst case scenario happening (engine going, costly repair, market crashing, AND/OR I have to sell a week after to come up with money for some opportunity etc) - when the COST OF THAT would not hurt me or alter my day to day for any foreseeable future, outside of a sting - THAT was the time to affordability.

For you on a GALLARDO imagine an engine going, and you have to sell for whatever reason SOON after you bought it, so your loss can easily total ~50K.

When you can swallow that without blinking an eye for the most part I say go for it then. I'd say you should be at 500K - 1 MIL net worth before introducing that kind of purchase and risk into your life.

Many people make the jump MUCH MUCH sooner though. My risk tolerance is much lower, especially towards toys that are a non-income producing (typically depreciating) asset.
Thank you for the response, I think that is a great way to look at it
 
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Fox

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I would say hold off for a bit - cars are super overpriced atm.

Great chance the whole car market cools off very soon...

 

UK_Mike

Contributor
Sep 10, 2020
88
95
North West UK
I would say hold off for a bit - cars are super overpriced atm.

Great chance the whole car market cools off very soon...

Indeed, I believe the shortage of electronic components is making new car production difficult, leading to an increase in used car prices. I'm not sure if that's having the same effect in supercar low-volume production as it does anywhere else.
 

iivalky

Contributor
Jul 9, 2022
59
79
Canada
Indeed, I believe the shortage of electronic components is making new car production difficult, leading to an increase in used car prices. I'm not sure if that's having the same effect in supercar low-volume production as it does anywhere else.
Used (and new) car prices are ridiculous. Want a 2018 Honda Civic? Get ready to dish out $20,000! As you were saying, low production vehicles (5 - 1,500 examples) such as high end Lambos, Bugatti and legendary classics seem to be holding their value, if the vehicle market crashes it is unlikely that ultra-rares will be very affected (but if they are might be a good opportunity to buy one if you have the money)
 
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