A couple weeks back, I shared a story about a 2021 Ferarri SF90 owner who found out he was about $200,000 underwater on his car loan. He wanted to trade the SF90, which he somehow agreed to pay $770,000 for, with a $68,000 Corvette on Alex Cortese’s lot. Alex is an automotive consultant in Dallas who works with clients buying and selling high-end cars, including ordering custom builds. Unfortunately, today, the SF90’s market value is much less than the loan balance. The owner sure seemed stuck, and Alex’s video of the call with the guy ended shortly after calculating the deep negative equity. However, there’s a Part 2. And the Ferrari driver’s car payment situation looks much, much worse now. He’s not just trapped…he’s drowning over his car loan.
This is what owing $700K on a $535K car does to your financial health when crap hits the fan
Alex looks morose as he explains to the caller that there’s really nothing he can do regarding a trade right now. After all, to secure the SF90’s title, someone would have to pay the lienholder $200,000 cash on top of the sports car’s current market value, which falls somewhere in the high $400K to low $500K range. Since neither party can do that, the Ferrari owner is indeed Gorilla-glued to his car payment.
In response to the verdict, the driver explains the reality of his anxiety-inducing Ferrari loan.
He has a $10,000 car payment…and he makes about the same every month
The caller explains that when he purchased the SF90 in 2022, he was making at least triple the car payment. He didn’t put very much down, either, which means that early on his payments went toward interest, not the principal. On top of all this, he paid much more than what a 2021 SF90 listed for brand-new. Used Ferarris can come with significant markups depending on demand, which was apparently quite high in 2022.
In any case, the driver laments that his income recently changed. Unfortunately, it’s getting so tight that the SF90 owner actually had to borrow money to make rent. “The car payments are ripping me in half, man,” he tells Alex. The driver has an Etsy store that covers some of the monthly payments, but it’s just not enough to keep his head above water.
Alex shares some comparable 2021 Ferrari SF90 listings on the market now. “Here’s one with 3,000 miles for $499…” With a $700,000 loan balance, though, there’s just too big of a payoff gap. “I just don’t know what to do in regards to getting you out of your $200,000-plus in negative equity.” Alex goes on to explain that he can’t roll over that amount of cash into a new loan, let alone on a much lower-valued Corvette.
At this point, the caller only has a few options to rid himself of his car payment nightmare. If he surrenders the car to the bank, he’ll still owe the lienholder that gap. It looks like his best bet is to do “whatever is humanly possible” (read: legal, folks) to pay down the loan until the $200K gap is gone. Then, he can sell the car as soon as the market value matches the loan balance. This might mean couch surfing and upping his hustle to get back to his higher earnings. He could also try renting the SF90 on Turo if his lienholder allows it. Otherwise, he’s looking at bankruptcy. At best, he’s probably signed up for several years of building back up his financial health.
