Here’s how to finance your high-value collector car in the United States

Leasing a car, whether it’s new or classic, can be the most efficient method of financing your high-value purchase. Steven Posner, CEO of Putnam Leasing, one of the biggest vehicle finance companies in the US, explains how and why classic car leasing is done.

Who are you and what do you do?

I’ve been involved in the automotive leasing business since 1977 and at Putnam since 1989. Our company provides a method of financing collector cars in a less expensive manner than bank financing, based on the way that we structure the deals that we do.

How do you do that?

We write something called an open-end lease, which works like a balloon note loan. If you went to a bank and you wanted to borrow a million dollars against a car, you’d have to pay all the sales tax on the million dollars, and a bank would amortize a loan anywhere from five years to seven or eight years down to zero. We do something called a lease, where you borrow the same million dollars and, depending on which state you live in, you pay your sales tax incrementally and there’s a residual value or a balloon at the end. So, the amortization of the lease or the loan is based on what you finance and what the residual is, hence making your payment a lot lower, giving you the opportunity to buy more of a car for less of a payment.

Are there any other differences?

The one thing that differs in what we do is with classic car leasing is that we go to one of our lenders to borrow the money and lease you the car, which doesn’t show up on your personal credit. So, for the collector who wants to get a lot of cars, or the real estate guy who wants to buy buildings and doesn’t want to show the banks that they’re overly leveraged, it doesn’t show up on their credit. It’s up to that individual to be forthright with their lender, being that it’s a lease and it’s not really a loan, even though they are responsible for it.

What happens if they fail to make payments?

We do everything we can to help the person along because good people can experience financial issues and if arrangements can’t be made, we ask for the return of the car. Unfortunately, in some cases, we don’t get it but based on the kind of customers that we do business with, our default rate is extremely low.

Who are your typical car finance customers?

More and more customers in their late 30s and 40s are looking at classic car leasing, people who are really starting to make money and are focusing not only on cars, but on watches and collectable stuff, too – but mostly automobiles.

What sort of cars are you financing?

We lease all the exotics; Ferrari, Lamborghini, Porsche, etc, but the collectors that I deal with have really focused on the 1990s and early 2000 limited-production cars. There are some cars that a year ago sold for $350,000 and are almost a million today, which is very, very surprising. I’m optimistic that the market will stay strong but, as with everything else in the world, what comes up eventually comes down a bit. I don’t think it’s going to fall on its face, but I think eventually there’ll be a little bit of an adjustment, which is normal and helpful in any market.

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