A shiny, orange classic Chevrolet Corvette would elicit head-turns in any town across the country. But deep in Nassau County, just off Route 25, it’s barely worth noticing alongside the rows and rows of classic Porsches, Mercedes-Benz and souped-up Ferraris that neighbor the American classic.
Inside the nondescript brick building at 100 Gordon Dr. in Syosset is a football field-sized showroom containing a collection of classic and high-end cars that practically render the Javits Center’s annual New York International Auto Show a junkyard. Yet to most Long Islanders, and even many auto enthusiasts, it goes unnoticed.
The showroom belongs to Exotic Classics, a company that trades in high-end automobiles (and keeps them on display for eager enthusiasts to enjoy). But the seemingly reasonable explanation for these vehicles’ presence is defied by a group of about 25 cars — including Maseratis, a 1959 Jaguar E-Type and a 1981 Delorean DMC — in the back corner with a distinct “not for sale” sign. Exotic Classics doesn’t own these cars, in fact, their ownership status at the moment is somewhat murky. The cars are acting as collateral against hastily issued business loans.
The loans are extended by Borro, a four-year-old London-based company headed by Paul Aitken that opened a headquarters in Manhattan in early 2012. Borro offers hefty loans within 48 hours and without credit checks by securing them against assets. Aitken said the typical loan his firm has extended of late is about $50,000 over a six-month term. Most often, the loans are secured against fine diamond jewelry, watches and artwork.
However, high-end or classic cars secure a small but significant portion of the loans — especially the larger ones Borro extends. Aitken describes the typical borrower as a risk-taking businessman that wants money quickly to pursue a rapidly materializing venture.
“Between auction house fees and the margin a buyer would seek for profit, selling a classic car often means relinquishing 25 to 30 percent of its value,” Aitken said, explaining why customers come to him. “Plus, collecting the capital from a sale can take considerable time.”
Meanwhile, even though appraising high-end cars is a notoriously inexact science, Aitken actually prefers these assets as collateral because there is so much documentation attached to them. Since car ownership documents are registered, Borro doesn’t face potential legal hand-wringing in a case of delinquency. Especially since Borro physically takes the cars.
And that’s where Exotic Classics comes in.
When a car is used to secure a loan it must be kept in pristine condition, without incurring the costs associated with moving it far from its owner. Because the typical Borro customer in the U.S. hails from Manhattan, the Syosset car showroom offers a perfect resting place.
“We have air filtration systems to suck dust out of the air, industrial strength epoxy floors and a controlled temperature,” said Will Branston, owner of Exotic Classics. Most importantly, he said, the floor is wired so that cars batteries’ can easily be maintained.
Borro collects 4- to 5-percent interest while the cars, which secure loans worth no more than 70 percent of their value, sit in storage with their “not for sale” signs. Once a car-secured loan becomes delinquent and it becomes clear that the borrower is unlikely to repay the loan Aitken taps an established network of dealers to sell the car for the best possible price. “Clearly we don’t want to hold on to these assets,” he said.
But until that becomes the case, or until the borrowers repay the loan plus interest in full, the cars “absolutely do not see the light of day,” Aitken said.