Luxury Car Financing Options

 

Our offerings as the world’s largest retailer of luxury automobiles don’t just end with selecting a color, wood set, carbon fiber applications and leather swatches. Every part of the experience down to the finest detail is bespoke and tailored to you – including our various financial services offerings.

 

Traditional Financing

Traditional Financing is the most common loan product we work with across our retail locations. We have direct relationships with over 20 different lenders that offer traditional purchase finance products that range in terms from 24 months to 180 months. The most used loan terms are between 48 and 72 months but there is no ‘perfect’ term. Instead our team of professionals will work with you to determine the right term and offering based on your budget and needs.

A longer term will result in lower payments but higher interest paid over the course of the contract term. Some lenders allow for early termination or pre-payment without penalty.

Interest rates offered vary for a number of different reasons including (but not limited to):

• Credit worthiness
• New car vs. Used Car
• Age of the car
• Contract term length
• Lender

Contact a member of our team here to learn more about Traditional Financing opportunities.

 

Balloon Financing

Balloon loans for automobiles are more commonly offered by vehicle manufacturers, but banks, credit unions and other financial institutions may offer them as well. We have lenders that offer Balloon Financing terms between 36 and 60 months.

A balloon finance structure shares some similarities to a lease structure in that there are lower monthly payments and residual value at the end of the term, but there are some key differences.

In the case of a balloon loan for a car, the lender lays out a schedule of smaller monthly payments leading up to the balloon payment, also called the lump-sum (or balloon) payment. This amount is usually around half of the automobile’s value. An automotive balloon loan can make sense if you’re looking for a lower monthly payment and have a plan for how you will handle the large balloon payment at the end of the loan.

One big difference between a balloon loan and a lease is the ownership of the car. With a lease, the lender owns the car throughout the lease term, but you may have the option to purchase the vehicle at the end of the lease. With a balloon loan, like with traditional financing, the borrower owns the automobile when the loan is paid in full. Because of this, a balloon loan typically doesn’t come with mileage or other restrictions that are common when leasing a car.

Interest rates offered on Balloon Financing loans tend to be higher as the risk for the lender is incrementally higher than that of a traditional finance arrangement. That said, interest rates on a Balloon Finance loan can vary for a number of different reasons including (but not limited to):

• Credit worthiness
• New car vs. Used Car
• Age of the car
• Contract term length
• Lender

Contact a member of our team here to learn more about Balloon Financing opportunities.

 

Closed-End Leasing

Closed-End Leasing is the most common type of automobile leasing in the United States. A significant portion of new vehicle sales in America are facilitated using a closed-end motor vehicle lease. It is essentially designed as an extended term rental where the contracted lessor is not technically the owner of the car, the lender is.

The bank (in most cases the captive or OEM lender) determines a residual value (the value of the automobile at the end of the contract term) and then applies an interest rate calculation to the spread between the selling price and fees, minus the downpayment and minus the residual value. Then depending on the location the car will be registered in, sales tax and applicable registration fees are added in. Some states allow sales tax to be collected monthly and others require it all up front at time of sale. To learn more about which states require upfront sales tax, contact a member of our team here.

Closed-end leasing terms typically are offered between 12 and 60 months. Usually, the longer term will result in lower payments but higher interest paid over the course of the contract term. However, every automobile and every lender is different. Often times there can be incentives offered based on the preferred contract term set by the lender. Most closed-end lease lenders allow for early termination or pre-payment without penalty. A closed-end lease does not obligate the lessee to pay the residual value at the termination of the lease but almost all lenders offer the lessee the option to buy the vehicle for the contracted residual value. In rare cases based on current market data, a lender will negotiate a lower selling price to the lessee via the dealer.

Interest rates on closed-end leases are determined using a Money Factor. The Money Factor offered on a closed-end automobile lease can vary for a number of different reasons including (but not limited to):

• Credit worthiness
• New car vs. Used Car
• Age of the car
• Contract term length
• Lender

Contact a member of our team here to learn more about Closed-End leasing opportunities

 

Open-End Leasing

Open-End Leasing is the least common type of automobile leasing in the United States. It is a product mostly offered by boutique lenders that cater to luxury and collector cars with many having a minimum vehicle selling price of $100,000. It is, however, very similar to close-end leasing in terms of the product structure. For example, just as in closed-end leasing, it is essentially designed as an extended term rental where the contracted lessor is not technically the owner of the car, the lender is.

The bank determines a residual value (the value of the automobile at the end of the contract term) and then applies an interest rate calculation to the spread between the selling price and fees, minus the downpayment and minus the residual value. Then depending on the location the car will be registered in, sales tax and applicable registration fees are added in. Some states allow sales tax to be collected monthly and others require it all up front at time of sale. To learn more about which states require upfront sales tax, contact a member of our team here.

Open-end leasing terms typically are offered between 24 and 60 months. Usually, the longer term will result in lower payments but higher interest paid over the course of the contract term. However, every automobile and every lender is different. Often times there can be incentives offered based on the preferred contract term set by the lender. Most closed-end lease lenders allow for early termination or pre-payment without penalty. A critical difference between a closed-end lease and an open-end lease does obligate the lessee to pay the residual value at the termination. At the end of the term of an open-end lease the lessee will need to investigate how they want to settle the residual balance of the contract and our team can help review those options.

Interest rates on open-end leases are determined using both a Money Factor and traditional interest rates. The rates tend to be higher as the risk for the lender is incrementally higher than that of a traditional closed-end lease arrangement The Money Factor offered on a open-end automobile lease can vary for a number of different reasons including (but not limited to):

• Credit worthiness
• New car vs. Used Car
• Age of the car
• Contract term length
• Lender

Contact a member of our team here to learn more about Closed-End leasing opportunities.