Best Way To Finance A FE Car?

[b.reed]

I am looking to finance a FE car and get some races in yet this season and plan to make a full time run next year in the USF-2000 national class. When Im not racing the car I would like to maybe lease it. Does anyone have any good ideas to get a loan for a race car?

Thanks
Brandon
www.brandonreed.org
@_brandonreed_

[RobLav]

The best way to finance a racecar is to pay for it in cash or check with your own money.

[John Duke]

Yeah, I had to check the posting date to see if it was April 1st...

[chrisw52]

you could win the lottery too.

[dc]

You can see this answer on numerous occasions throughout the history of ApexSpeed... the absolute worst idea in amateur racing is to take out a loan for a race car. Monthly payments on a car that you can potentially ball up on turn one, lap one is a good way to be broke forever.

If you can't afford to wreck it the first time you hit the track and walk away from it completely, you don't belong in any race car.

[racerdad2]

Perhaps if you give your banker the full amount in cash, as collateral, he'll loan it back to you...

[b.reed]

Thanks guys! I kinda knew the answer when I posted but was just trying to think outside of the box. I have owned formula cars before and want to really start racing again. Sponsorship is taking longer then expected...wait I think its right on schedule!!!

[Purple Frog]

If you look inside the 'box', you won't see me. I'm way outside the box. I have borrowed money to buy every racecar I've bought. Are you a racer or a financial planner working for Consumer Reports? Face it...None of this racing makes any financial sense. We are hooked on the passion. Jump in the deep end or wimper about sensability. Your choice. But you aren't allowed to come back on Apexspeed and cry about the fact you waded up a $45,000 car that you still owe $40,000 on. Afterwards, If you pick the right watering hole you may get old timers like me to buy you a drink at the bar... cause we have been there, and have the T-shirt.

Anyway, since you are interested in FE. Call somebody like Jay Motorsports and see what it costs to rent a ride. In the short term, renting is cheaper than owning. If you can't afford to rent, you can't afford to own.

To answer your original question. Usually the people that loan you money to race have the same last name as yours... or you have pictures of them frolicking with goats.

[gcoffin]

Here is what I did many years ago.

1. Bought an SCCA Sports Renault
a. Low operating costs
b. SCCA mandated spec series - my car was more or less equal to everyone else's
c. Low depreciation - sold it after 4 years of racing for 5 dollars more than I paid for it
d. Readily available parts at the track - no reason to care an inventory of spares
e. easy for a person of normal mechanical ability to maintain

2. Financed the purchase through a loan from my 401k
a. Paid the principle and interest back to myself via payroll deduction
b. downside - loan was from tax free income, repayment was from taxed income
c. Risk - you can depreciate a race car to zero in just a few seconds.

3. Took it to the RunOffs

I would not consider this with anything other than a used (depreciated) spec car like FE.

4. Hope I have not messed up anyone's marriage

[iamuwere]

If USF2000 is the goal, then both Alliance Autosport and Jay Motorsports already have cars active with good, known, championship winning setups available.

Renting and FE for the weekend from them is definitely cheaper in the short term and simplifies the idea of renting out the car when you are not going to be using it. Getting everything you need to support the car with crew takes a lot of time and effort and then that person could be the one that balls up your car.


In alphabetical order:

http://www.allianceautosport.com/

Scott Rettich (General Inquires) 937-604-6519

Email: scottrettich@allianceautosport.com

Shop Address:
4991 Transamerica Drive
Columbus, OH 43228




http://www.jaymotorsports.com/

Address:
JAY Motorsports, LLC
10101 US Highway 41 N
Palmetto, FL 34221

Phone:
304-610-5663
941-722-8500

Email:
jaymotorsports1@gmail.com




There are others to rent from as well but these two are active now in USF2000 and have been a great help to me along the way.

[robertkroll]

I am looking to finance a FE car and get some races in yet this season and plan to make a full time run next year in the USF-2000 national class. When Im not racing the car I would like to maybe lease it. Does anyone have any good ideas to get a loan for a race car?

Thanks
Brandon
www.brandonreed.org
@_brandonreed_

Brandon,
You cannot get a conventional "auto" loan on a racecar because it doesn't have a vin number and you cannot get conventional auto insurance (which is mandated by the lien holder). So that puts that question to bed.

You must first determine if you have the disposable income to go racing at all. If you can come up with "weekend money", but cannot come up with the whole enchelada, then you will have to consider another method of getting to the track.

OPM (other people's money) is always the best way to go racing. Consider your long term goals and maybe go about it like the big boys do (only on a smaller level). First, register a corporation (LLC) which will cost you under $2k so you can track and write off your expenses. Start depositing play (seed) money into the account. Rent cars in the short term to get on the track and get some experience while you are padding your account. As i discuessed at the beginning of this paragraph, now its time for OPM financing. The thing about racecars is that not many people own them, but many people drewl over them. You can draw a lot of attention with a racecar, and another word for attention is advertising. Its time to put on the thinking cap and start working on your 'angles'...everybody needs to advertise on the side of your racecar...they nust dont KNOW it yet. Now, Go door to door with a very well prepared sponsorship prospectus. The usf2000 series has very good exposure documentation which will appeal to prospective sponsors. If you have equity, you can pull a line of credit from your local bank to use as an expense "shock absorber". The appeal of a racecar is powerful as an advertising tool. I actually had sponsors lined up for this season, but an injury put my plans into the toilet. I had 5 appearances scheduled for a local gas station / convenience store at $3500 each which would have paid for most of my track expenses and all I would have had to do was stand around all day and put kids in the car for photo op's. In addition to that I had an eyewear company that wanted to use the car as a centerpiece at two national shows.

So if you can shamelessly whore yourself out when you're not racing, the possibility of getting to the track may be closer than you think. I'm a bit of an old fart at this point, but many years ago I competed with full sponsorship and actually turned a few bucks profit at the end of it all.

Getting over the initial expense of the car itself is solely going to ride on your shoulders. Any money you get from outside sources has to be with the understanding that it is "burn" money and won't be repaid as cash. The prep shops do an awesome job of putting great cars on the track as Jim said. I had the pleasure of seeing his car close up and it was bulletproof!

If that doesn't work, you DO have two kidneys, and if memory serves me, you only need ONE. What's the going rate on a kidney?

-BoB

[Brian]

It strikes me that if you can afford a season of USF2000, you can afford to pay cash for a used FE car... the car being a far smaller sum of money.

Brian

[Mark_Silverberg]

I would argue that from a business point you should not hold an asset that you are not planning on keeping long term. If you are just planning on being in the class for a year or two you are better off renting - especially if transport is included in the price. Thus you will not have to get a trailer and tow vehicle. While the cost of renting will be high - when you look at all your costs (espeically the cost of purchasing and carrying spare parts) it is not that far away from what your opperating costs will be.

So the best way to finance a race car is to have some one else do so under their business. Yes, you still have the same exposure to loss from vehicle damage - but you have the advantage of not owning and having to fix the car if there is a major loss.

All this other talk about getting sponsorship or making appearances is not dependent on whether you own the vehicle or not. In fact, from a business standpoint it is far easier to document profit / loss if you are renting the vehicle.

I think the strong remarks to this question were because it was phrased in a very conventional manner if you would have stated: " I would like to drive FE for a year or two before proceeding to F2000, given that I will not be in the car for very long and that I would like to minimize my initial expenditures, what is my best strategy" - you would have gotten very different - and more constructive answers.

[Brett Lane]

How 'bout this- If you have equity in your home, buy it with an equity loan. If your lucky not to wreck it after one season, sell it and pay back the loan. write off the interest.

If you're not so lucky, sell your house to repay the loan. One more homeless former race car driver.

[problemchild]

Visa, Mastercard, American Express. Get your credit lines maxed out before you buy the race car. Then use one to cover the other until .....

[reidhazelton]

I'd suggest skipping the "few races" you planned on running this year, save up the money and then buy the car over the winter. I would assume for the cost of about 4 rental weekends you could buy an FE. Skip this year, save your pennies, and see where you are in October.

In the racing budget, buying the car is the cheap part. If it takes all your budget t and pennies to buy the car, you likely can't afford to run it properly, or at all.

Question is if you want to stay with FE for the long term or short term. Long term...save up and buy one. Short term...rent one.

Good luck to you!

[Evl]

In the racing budget, buying the car is the cheap part. If it takes all your budget t and pennies to buy the car, you likely can't afford to run it properly, or at all.

This ^^^^

My rule of thumb is to plan on a season costing about the same as it does to buy the car.

[sherwood]

How Many guys running Spec Miata and some of the other classes have a regular car payment, those cars started life as a real car they have Vin #s ! I bet more then you think

[reidhazelton]

How Many guys running Spec Miata and some of the other classes have a regular car payment, those cars started life as a real car they have Vin #s ! I bet more then you think

I'd bet none. Those things are 15 years old or older.

That would be one hell of a long loan term

T1, T2, T3...SS maybe.

[HazelNut]

I know a guy who took out a home equity loan to buy an 06 van diemen. It always seemed totally insane to me.

I'm of the "buy toys in cash, or don't buy em" school of thought.

[SEComposites]

I know a guy who took out a home equity loan to buy an 06 van diemen. It always seemed totally insane to me.

I'm of the "buy toys in cash, or don't buy em" school of thought.

Hear hear. The world would be in better shape if everyone thought that way

Financing a race car sends shivers down my spine!

[Joe Reppert]

Brandon, great car choice. I am in first year of FE having a blast. It would be great to have you join the crowd but like other posts above I would not take on debt. Maybe wait six months and save as much cash as you can. Good luck.

[Daryl DeArman]

I'm of the "buy toys in cash, or don't buy em" school of thought.

Hear hear. The world would be in better shape if everyone thought that way

Financing a race car sends shivers down my spine!

Cash for everything but the primary residence. Pops advised me a long time ago to never finance anything that depreciates. Took me awhile before I realized he was right.

[gcoffin]

Your Dad was right. We have not financed a car or anything else since 1996. We drive buy and drive fully depreciated cars and have for years. My pristine 85 Carrera had 56 k on it when I bought it and total cash price will end up being about 35% of what my neighbor ends up paying to buy, finance and depreciate their Prius ( they are saving the planet) who won.

Depreciation kills you which is why FE SFR and FM are such good deals........

[Daryl DeArman]

Depreciation kills you which is why FE SFR and FM are such good deals........

add lots of vintage cars to that mix as well.

IMO if you can't afford to pay for the car outright, choose a cheaper class car. If much of your disposable income is going to a loan payment you won't be able to race as often or as competitively....you'll be frustrated and financing your frustration!

[b.reed]

Thanks everyone for the great words and the insults! Iv been doing this a long time out of my pocket and paid for cars out of pocket and even financed a few. Right now Im going to focus on racing with sponsors Im talking to and on my b2b deals and renting with top Mazda Road to Indy teams, in fact Im meeting with one tomorrow. Hope everyone has a great racing season and I will be keeping an eye on the FE cars for sale and if anyone wants me to race their's Im available!!!!

[marshall9]

A lot of HPDE events can give you valuable experience and even get you licensed in an insured street car, covered during the events under your current insurance policy. You may want to consider buying and insuring (Comp&Collision) a donor car, ie: Miata or Spec 944 or others, and own it while getting licensed and then sell that same donor car afterwards for at or near the purchase price, if it is still in tact.

I have helped more than one guy get licensed in SCCA and other sanctioning bodies, renting RX7s for 500 a weekend, not worrying about maintanance and such during the schools......then they climb in their formula cars for the real fun.

I would rent an SRF, to get an idea of the performance of a tube frame race car, with minimum physical damage costs, before jumping into a winged formula car with a steep learning curve .