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Buying a 100k+car

jazzy2000

Well-known member
Joined
10 Nov 2015
Messages
69
Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.
 
since when is a Porsche dealer a trusted financial advisor :wink:

have not bought from OPC but have seen posts from bunch of people with enough cash to buy this kind of model outright saying they still take the dealer finance if they're looking to build a long-term relationship with said dealer & eventually try get allocated a (new) GT3 or similar. they then often pay off the whole thing pretty quickly because the rates are generally appalling...dealer doesn't care by that point.

think you'd have to do well on stock market once fees & tax are taken into account to reliably make more than the interest you'd pay on typical opc finance. granted, am no financial advisor either!
 
jazzy2000 said:
They always suggest that i invest my cash to earn more than the interest they charge.

Hilarious! Did any of them actually tell you exactly where you could invest your cash to achieve such a return...? No? They will earn commission on finance deals remember.

You shouldn't really finance a depreciating asset (which is generally the category under which most cars fall) and via a pcp you will not actually own the asset without paying the balloon payment (so you're effectively renting the car for the term) so for me cash would be the way.

Even with very low interest rates, unless you have more lucrative uses for the funds then the opportunity cost is unlikely to be greater than the interest you'll pay.

PCP's are rumoured to be the next PPI compensation payouts too so that's indicative of how bad they really are.

Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!
 
I can't see any condition where finance at 5.5-6% per annum is a good idea.....
 
squelch said:
jazzy2000 said:
They always suggest that i invest my cash to earn more than the interest they charge.



Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!

The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.
 
dombo said:
squelch said:
jazzy2000 said:
They always suggest that i invest my cash to earn more than the interest they charge.



Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!

The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.

very true. fine if you have the discipline to pay off the extra borrowed on the mortgage over say a 5 year period, I personally couldn't stick to it.
 
dombo said:
squelch said:
jazzy2000 said:
They always suggest that i invest my cash to earn more than the interest they charge.



Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!

The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.

Crossover point in this example is that the "cheaper 2% mortgage" is actually more expensive (total interest) if you have more than 8years left on the mortgage. It gets to circa 22k at 21years vs 8k finance

OP - the real answer is it's different for everyone. Purely down to appetite for risk (gambling on investment knowledge/ability), your other uses for the money and allowances available (as wide ranging as a car allowance from work or pension tax relief at 40 or 45%), or they may be buying through their companies to leverage commercial allowances etc.

The gt3 example is an interesting edge case due to the flippers market. as a Simplistic example, buy 1 car with cash and make something like £70k when you spin it Putting 100k at risk. Use the same 100k for multiple cars as deposits with finance and make 65k per car (rough allowance for finance cost) But with a much higher risk profile. In financial terms bubbles are short term.

PCP finance is a very specific financial product that has huge benefits for commercial use, but it was not developed for car finance. It can fit for cars in the right circumstances, but other finance routes will likely be better suited to most cases.

I am not an independent finanancial advisor, this is just my personal view. However the OPC finance and sales guys are the least independent people in the whole transaction :) PCP feels like it pays the most commission as it's the hardest to sell as the "flexibility" comes at a higher cost

Ps I did ask an IFA friend about buying cars. His response at a bar was "what? buy an expensive, usually depreciating asset that comes with maintenance bills running costs and that you will want to buy all kinds of shiny upgrades for that might not make money on. Why do you want to buy this?"....my response "cos i wants it and it's my new precious!"

Just remember that nobody should pay the first or second interest rate offered by an OPC on a new or used car :) haggling during the buying process is part of the fun :thumb:
 
Not necessarily porsche specific but I know plenty of high people who buy on finance to getting better discounts / manufacturer contributions and then simply pay off the finance in full after one month. I did this with my last Range Rover and saved £5k extra in my pocket for very little extra effort. The dealer was happy as he got his commission on the finance and I got a cheaper car than I would have without doing the finance.

If I was going to finance for the term I would never use the dealer finance unless you value convenience over cost as you can get much better terms via 3rd parties and some of the high street banks.

Ps I would never add a car to a mortgage, again I know people who did that but now regret it ie car now gone but they are still paying for it, in the end it will cost them a lot more than they could really afford, they should have just got a cheaper car :roll:
 
Whilst there are going to be a fair few high net worth individuals on the forum, for some a 991 is within reach on a monthly basis but not outright.

Whilst prudence *should* take the lead, we often get taken over by the heart rather than the head!!

I'm not sure without depleting a lot of my rainy day fund I could afford a 991 outright, but i can afford a deposit and monthly fee. I expect to get some/most of my deposit back because i put a reasonable deposit down and got finance at 3.7%.

I might never get to experience a 991 again if life circumstances change so I feel it was right to live in the moment and enjoy this amazing car. I wouldn't have done it if i could not afford the deposit and monthly though.

I also like to change my car every 2 year, as i get bored quickly, so car cost has come down to a monthly+deposit value to me.

Each to their own and i definitely would not accept these 5-6+% deals. Quite ridiculous!

Just my ten pence worth! :D
 
jonttt said:
Not necessarily porsche specific but I know plenty of high people who buy on finance to getting better discounts / manufacturer contributions and then simply pay off the finance in full after one month. I did this with my last Range Rover and saved £5k extra in my pocket for very little extra effort. The dealer was happy as he got his commission on the finance and I got a cheaper car than I would have without doing the finance.

Take the finance and the incentives and then pay it all off the next day.

I did with a used golf and got £500 off, 2x free services and extra warranty.

Thank the EU for letting us change our minds about crippling financial products.
 
jazzy2000 said:
Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.

I had to smile as when I bought my bmw, the sales person gave me the exact same spiel. He was quite insistent that I would be much better off financially by taking their PCP scheme rather than pay cash. In the end I paid cash.

I always pay cash for my cars, as when you workout the yearly cost of ownership, if its on finance then immediately you have those interest payments.

However when we bought the wifes Ford Edge last year, Ford were offering such a good cash incentive, plus 0% that it made sense to take up their PCP offering.
 
G2 said:
dombo said:
squelch said:
jazzy2000 said:
They always suggest that i invest my cash to earn more than the interest they charge.



Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!

The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.

Crossover point in this example is that the "cheaper 2% mortgage" is actually more expensive (total interest) if you have more than 8years left on the mortgage. It gets to circa 22k at 21years vs 8k finance

OP - the real answer is it's different for everyone. Purely down to appetite for risk (gambling on investment knowledge/ability), your other uses for the money and allowances available (as wide ranging as a car allowance from work or pension tax relief at 40 or 45%), or they may be buying through their companies to leverage commercial allowances etc.

The gt3 example is an interesting edge case due to the flippers market. as a Simplistic example, buy 1 car with cash and make something like £70k when you spin it Putting 100k at risk. Use the same 100k for multiple cars as deposits with finance and make 65k per car (rough allowance for finance cost) But with a much higher risk profile. In financial terms bubbles are short term.

PCP finance is a very specific financial product that has huge benefits for commercial use, but it was not developed for car finance. It can fit for cars in the right circumstances, but other finance routes will likely be better suited to most cases.

I am not an independent finanancial advisor, this is just my personal view. However the OPC finance and sales guys are the least independent people in the whole transaction :) PCP feels like it pays the most commission as it's the hardest to sell as the "flexibility" comes at a higher cost

Ps I did ask an IFA friend about buying cars. His response at a bar was "what? buy an expensive, usually depreciating asset that comes with maintenance bills running costs and that you will want to buy all kinds of shiny upgrades for that might not make money on. Why do you want to buy this?"....my response "cos i wants it and it's my new precious!"

Just remember that nobody should pay the first or second interest rate offered by an OPC on a new or used car :) haggling during the buying process is part of the fun :thumb:

How does a 2% mortgage ever become more expensive than a 6% loan?

Simple mathematics - 6% is costing 3 times more than 2% (assuming the same capital repayment on a monthly basis, comparing apples with apples rather than comparing apples with oranges etc)

Especially as most mortgages providers are flexible with regards to overpayments.

With regards to pension tax relief it is possible to effectively get 60% tax relief on the portion of salary between £100k - £120 rather than 40%
 
jazzy2000 said:
Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.

What interest rate are the OPC offering you?
 
Bikeracer1098 said:
How does a 2% mortgage ever become more expensive than a 6% loan?

My understanding of that:

IF you pay the borrowed (car) amount over 20 odd years and NOT pay it within the same time frame as the 6% loan :dont know:

:thumb:
 
HSC911 said:
Bikeracer1098 said:
How does a 2% mortgage ever become more expensive than a 6% loan?

My understanding of that:

IF you pay the borrowed (car) amount over 20 odd years and NOT pay it within the same time frame as the 6% loan :dont know:

:thumb:

Exactly, simple mathematics, no science behind it 👍

Why I think he was doing was comparing paying the capital back within 4 years rather than 25years which is like comparing apples with oranges. Also will be paying the 6% interest on the ballon payment for 4 years etc. So the loam is actually never fully payed unless the lump sum (ballon payment) is paid at the end of the term. On a £150k car the ballon payment will probably be £100k
 

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