So, you’re ready to buy your first exotic car.
Congratulations!
This is a major accomplishment, but can also be a very scary process for the uninitiated.
In this blog post, I’m going to teach you what you should be doing TODAY…
To make sure your 1st exotic car purchase experience goes as smoothly as possible.
In order to make things easily understandable, I’m going to use the Audi R8 as an example throughout this post.
Let’s get started.
Phase 1 – Your Buying Power
Your buying power is defined as how much you can afford based on the total purchase price (cash, finance, or both), not how much money you can afford monthly.
Instead of wondering how much a month you can afford per month…
You should be asking “How much the bank be willing to lend me?”.
Why?
Because we’re not talking about buying a normal car like Honda…
We’re talking about buying an exotic car.
If you’re a borrower, like most will be, then this will require you to prove to the banks that you actually have the funds and the capacity to repay what we call a leisure buy.
So the 1st step is to actually get pre-approved.
How does that process work?
Let’s assume you’re doing this all on your own, not with dealer assistance.
You’ll approach a bank or credit union and ask to obtain a pre-approval for a car (in this case an R8).
Assuming you don’t have an exact car yet, they may ask you to provide a VIN number, which you can find from a car listed online and just make it clear that your final VIN will be different but the year, make, and model will be the same.
The bank will then respond to you by saying how much they are willing to finance for you. Depending on many factors including your income, residence, credit profile, and auto loan history, they may be willing to finance 100%, or they will offer less and expect you to bring the rest as a downpayment.
But you need to remember – not all pre-approvals are equal.
Some banks REDUCE the variety of the cars you can buy DRASTICALLY (because of stipulations).
If you are an Exotic Car Hacks insider, we have a page where we break down the entire list of lenders that are exotic car-friendly (plus the best opportunities).
Now, let’s say you got the pre-approval at one of these lending institutions for around $140k.
If the R8 you’re targeting is $170k you’ll have to bring $30k to the table.
Now, let’s say you only have $20k in liquid cash available that you’re willing to put down on your car.
That means you have a buying power of $160k (which is less than the amount required for the vehicle).
This is the part where you get to the research phase and see how you can still make this work.
Phase 2 – Research
You need to know a couple of things:
- The trade-in value of a car (liquidity index) so you are not exposing yourself to too many risks
- Basic issues with each car of each year (so you’ll know what alternative is better than the other)
On our Blog, we have buyer’s guides for many popular makes and models out there, offering a very good baseline understanding of what to look for with each car (maker, model, year, etc.)
Flexibility of purchase
After you determined what to buy – let’s say Audi R8 2017 V10 Plus ($170k at the time of this writing) – you want flexibility.
Flexibility means you’re open to also purchasing a 2018, or a non-Plus.
It is important to research not only your core car but also alternatives close enough to the car in model year and mileage.
This will give you a broader range of research to find the right car.
With buying power of $160k, you have a lot of flexibility to find a great non-plus 2018 R8 if you can’t find a 17 Plus.
Phase 3 – Find The Car
You can use basic tools like:
- AutoTrader
- CarGurus
- eBay Motors
- duPont Registry
- Facebook Groups, etc.
Remember, premium cars bring premium dollars, AND they sell faster on the open market. Don’t buy the cheapest example of something, buy the best one. That means:
- No salvage or accident cars
- High-option stickers with lots of carbon fiber, etc
- Attractive color combos
- Tasteful mods acceptable
After you found some great cars to target, there’s not necessarily a need to accept asking prices.
It’s an open market! We’re going to negotiate.
One of the strategies for negotiating a car that works really really well is this:
Find multiple cars you’re interested in, and play the deals against each other until you find the best deal possible.
I recommend finding the best 3 deals for you and playing them against one another.
Again, NEVER aim to buy the cheapest advertised car, but the better value.
One rule-of-thumb is to aim to pay less than $1 per mile to own your exotic.
You can figure out your expected cost per mile by figuring out the cost of the car today and subtracting the expected value of the car after 12 months and 3,000 driving miles added. Again, these methods and calculations are taught in Exotic Car Hacks.
After talking to all sellers, you’re ready to make an offer!
Now it’s time for our next step – the MOST important:
Phase 4 – Inspection Process
You want to prevent yourself from being a person that falls victim to the false promises of a shady seller.
They might tell you the car is in perfect condition, but after you’ve had it inspected rigorously… you find out it’s totally messed up.
This has happened to us on dozens of cars that dealers claimed were perfect.
As Roosevelt said: “trust, but verify”.
Inspections happen in two parts.
First, research the history of the car yourself. This actually happens before you start negotiating because a red flag here ends the deal.
- Are there any service records?
- Do we have any opportunities to see documented services?
- Do we have a clean carfax?
- Was it a Canadian car, or exported previously?
After you’ve checked the title and the history, you have to make an OFFER.
An offer is not just throwing a lowball number out and seeing if they accept.
It is making an educated offer that you’re willing to pay based on your understanding of the market, and your willingness to place a deposit to lock in your car.
Usually, the deposit is NON-REFUNDABLE.
When you are making an offer and putting a deposit on a car, you want to make sure you have the ability to go through with the transaction and purchase the car.
That’s why we’re doing things systematically.
After your offer is accepted and you do the paperwork, we’re going into the next step: PRE PURCHASE INSPECTION with an INDEPENDENT private party.
Again, you will want to have your price negotiated BEFORE sending the car to PPI.
At this point, you agree to send a deposit that is ONLY refundable if the PPI repairs exceed $1,000. If the PPI is clean, you move forward and buy the car. If an issue comes up, you can get your deposit back or you can renegotiate, depending on what it uncovers.
The pre-purchase inspection process allows you to look at 3 main areas of of the car:
- The Outside (the body of car, the paintwork, shape, etc.)
- The Inside (tears, sticky buttons, issues with stereo, etc.)
- The Mechanics
- Is it leaking anywhere?
- Is the undercarriage coming off?
- Are the valve cover leaks?
- Are suspension components worn?
Again, you want to use a respected, independent inspector for this process to go as smoothly as possible. If they’re AT the selling dealer, or friendly with them, you are not going to get a truly honest result.
Inside Exotic Car Hacks, I provide you with a list of approved PPI shops across the United States.
If everything checks out, it’s time to buy!
Purchasing The Car
Most people think they have done the hard part with the research and inspection process, and they neglect the details of the purchasing phase almost completely.
It gets a little tricky because you have two types of purchases:
- Dealer
- Consumer
Purchasing a car really comes down to one thing: The Title
Who has it, and where is it?
If there is a payoff, are you gonna be able to pay off the bank directly and request them to send the title?
If it’s a dealer and the title is being handled, do they have a guarantee of title? Do they have the actual title in the house?
Note, when purchasing from a private seller who has a lien on the car, you can ask a local dealership to handle the transaction for you to make title work and registration easier. They typically will do this for a fee of $500-700, which is well worth it for a smooth transaction.
If there is no history of damage, and the car inspects clean…
While also has a title with it…
Plus the dealership/seller has a good reputation
You can proceed with the wiring transfer or reaching out to the dealer giving them the pre-approval and working with your bank.
After we’ve done the paperwork, we’re going into the final step:
Scheduling your shipping (if the car is out of town)
There are many ways to do schedule shipping:
You can call a shipping company that picks up car directly and does this for a living…
You can call a broker, an intermediary that schedules through a central dispatch and finds it…
And in many cases, you can also ask the dealer to provide you with their recommended shipper.
For cars above $100k, we ALWAYS recommend shipping ENCLOSED, and expect to pay $2,500 or less coast to coast.
A question to consider before hiring a shipper:
Do they have the right insurance per car AND per load?
Sometimes the carrier is insured for 5 million dollars per carrier (load) and if it carries a 5 mil Bugatti and it breaks?
Guess what happens – all the insurance is going to be spent on the Bugatti and the other cars will get ZERO.
That’s why you need to make sure they have the right insurance.
Now that you shipped your car…
There is only one thing left to do:
ENJOY YOUR CAR!
This is the best part of the process 🙂
Keep in mind that in order to execute this model incredibly well…
You need to understand there’s more detail that goes into it.
However, this is a very solid baseline for what you need to do.
If you want to learn more in-detail and join me plus other 10,000 students that are legally “hacking” their luxury cars daily?
By the way – if you need help selling your car, read this!