Yes, You Can Take Out Leases On Expensive Cars At Auctions

Anything can have a monthly payment if you wish hard enough, including cars that cost millions at auctions. Bugatti Chiron on the block that you don't want to pay for upon winning it? Keep raising that paddle. You can pay monthly if approved, just like the TVs and couches you get fliers for in the mail.

Fine, whatever, maybe it's a little more glamorous and financially strategic than just putting off the payments a little longer. But it's still cool to see what can happen after the big bidding war at auction, like signing up for a lease plan for that big chunk of money that just won the item.

Autoweek broke it all down after talking to the founder and CEO of a company called Putnam Leasing, which specializes in leasing luxury and collectible cars. That CEO, Steven Posner, told Autoweek that most people don't know they can lease the car they win at auction, but that it takes getting the credit approved and heading on out to bid.

Posner told Autoweek that his company does open-end leases, meaning there's a purchase option in the end instead of the requirement to give the car back. The person leasing the car can also end the least early once they see something new, shiny and equally as expensive in a few years, leaving the leasing company with a $1.8 million car to do whatever with.

Here were come of the pricing examples Putnam gave Autoweek, via the story:

Confused yet? Here are some examples of lease deals you could do on actual cars that will be auctioned at the Gooding sale coming up at Pebble, where Putnam is a sponsor:

Projected 2010 Bugatti Veyron 16.4 Grand Sport Leasing Figures

A 2010 Bugatti Veyron 16.4 Grand Sport ($1,800,000 estimated value) would feature a $360,000 initial down payment with a $1,440,000 leased amount. A 60-month open-end lease from Putnam Leasing would include a per-month payment of $20,115 (plus taxes) with a $600,000 buyback option.

Projected 1965 Ferrari 275 GTS Leasing Figures

The 1965 Ferrari 275 GTS ($1,800,000 estimated value) offers a $360,000 initial down payment with Putnam Leasing financing $1,440,000 over the course of a 60-month loan term. The per-month lease for the 275 GTS is priced at $19,350, plus taxes, alongside a $650,000 buyback option.

If it wasn't obvious enough from the $20,000 monthly payments, Posner made it clear that this kind of leasing option is for people who can afford astronomical purchase prices but don't want to lay out that much money at once—and don't plan to keep the car forever.

For someone who isn't planning to keep an expensive auction car for more than a couple of years before handing it in, leasing can make sense as a way to pay taxes on the car monthly rather than all at once. That means a person doesn't pay the full tax if they turn the car in early, but it also means they paid the lease for however long they had the car for.

It's basically vanishing money in that case, either way, it's just a choice of how and how often a person wants the money to vanish. From Autoweek:

"Sales taxwise, if you live in California, Connecticut, Florida, Massachusetts, you lease a car, you pay sales tax on your monthly installments."

Which is a lot less than paying tax on the full purchase price of the car.

"In California, if you buy a car for a million dollars, you pay $90,000 in sales tax in Los Angeles County. After a year you say, 'I'm done with this toy' and you want to go buy another toy, there's no sales tax credit for the 90 grand when you go to trade it in at the dealership. If you lease it and your payment is $10,000 a month, you pay 9 percent at $10,000 a month for 12 months. So you pay for it incrementally."

Posner told Autoweek the person who can afford a car at this price "is usually pretty savvy," meaning they might choose to lease it out so they can take the extra million or two they didn't put down and go buy some real estate to make money on it instead. Oh, the decisions of the ultra rich.

But no matter how much cash you've got sitting around, remember that not all luxury and collectible car leases are all well and good, depending on where you get them and which cars they're on. Even when you're rich, there are people out there trying to con you into paying a whole lot more than you should.