Best way to fund a SuperCar??

[S1M VP]

Hi guys ..

I was just wondering if everyone saves/buys their cars outright, or take out car finance and stick it through a business somehow?

(it's not meant to be a personal question .. I'm just wondering if I am missing a trick)

I had a bad & expensive experience of car finance previously ... So promised myself never to take a car on finance again.

However, I wondered if lease schemes or contract hire schemes actually work out better in the long run, by reducing net profit and lowering corp tax, together with investing my cash into an interest acct or something that'll give a +return?

I'm hoping I've been missing a trick and someone can enlighten me that my Accountants are not looking at the whole picture ... as I REALLY REALLY want an Aventador! Ha ha

(I have 3 separate Ltd Companies and have just set up an LLP if it's makes any difference??)

[ted 191]

S1M VP said:

Hi guys ..

I was just wondering if everyone saves/buys their cars outright, or take out car finance and stick it through a business somehow?

(it's not meant to be a personal question .. I'm just wondering if I am missing a trick)

I had a bad & expensive experience of car finance previously ... So promised myself never to take a car on finance again.

However, I wondered if lease schemes or contract hire schemes actually work out better in the long run, by reducing net profit and lowering corp tax, together with investing my cash into an interest acct or something that'll give a +return?

I'm hoping I've been missing a trick and someone can enlighten me that my Accountants are not looking at the whole picture ... as I REALLY REALLY want an Aventador! Ha ha

(I have 3 separate Ltd Companies and have just set up an LLP if it's makes any difference??)

With a ltd company the benefits in kind will far out weigh any savings on tax.

[lordbluf]

S1M VP said:

Hi guys ..

I was just wondering if everyone saves/buys their cars outright, or take out car finance and stick it through a business somehow?

(it's not meant to be a personal question .. I'm just wondering if I am missing a trick)

I had a bad & expensive experience of car finance previously ... So promised myself never to take a car on finance again.

However, I wondered if lease schemes or contract hire schemes actually work out better in the long run, by reducing net profit and lowering corp tax, together with investing my cash into an interest acct or something that'll give a +return?

I'm hoping I've been missing a trick and someone can enlighten me that my Accountants are not looking at the whole picture ... as I REALLY REALLY want an Aventador! Ha ha

(I have 3 separate Ltd Companies and have just set up an LLP if it's makes any difference??)

-dont bother putting it through the company Broon and Blair taxed that idea our of existence.
-I find part finance (balloon) part deposit works well; so you dont put all your money in the car, and you dont get your trousers pulled down fully with silly APRs on finance.
-Also, if you buy a care 3-5 years old, someone else has hopefully taken the core burden of depreciation; just looks at Bentley GTs, the dog of depreciation....

[Shmee]

lordbluf said:

-dont bother putting it through the company Broon and Blair taxed that idea our of existence.
-I find part finance (balloon) part deposit works well; so you dont put all your money in the car, and you dont get your trousers pulled down fully with silly APRs on finance.
-Also, if you buy a care 3-5 years old, someone else has hopefully taken the core burden of depreciation; just looks at Bentley GTs, the dog of depreciation....

Not going to find a 3-5 year old Aventador though any time soon, unless I've really missed something...

OP, for what it is worth, about 70% of supercars are financed in some fashion (from previous threads and discussions).

[anonymous-user]

Cash.

[jdw1234]

Cash only if you are not able to generate the Pistonheads standard risk free return of Libor + expected car financing costs + your mortgage interest cost + 10%.

Everyone on Pistonheads who has a Ferrari or Lambo on finance can do this and they laugh at people who used cash.

[franki68]

I am puzzled about all this,ive always thought if you cant write a cheque for it ,dont buy it.Any form of finance is so expensive ,here is a car for 100k,use finance it will cost you 120k and depreciate at the same rate that someone bought the same car for 100k cash experiences.
The argument that you can use the money you are not tying up in the car is all well and good,but only if you can obtain interest rates well in excess of the finance rate you are paying,something I have never been able to achieve.

[jdw1234]

franki68 said:

I am puzzled about all this,ive always thought if you cant write a cheque for it ,dont buy it.Any form of finance is so expensive ,here is a car for 100k,use finance it will cost you 120k and depreciate at the same rate that someone bought the same car for 100k cash experiences.
The argument that you can use the money you are not tying up in the car is all well and good,but only if you can obtain interest rates well in excess of the finance rate you are paying,something I have never been able to achieve.

Are you suggesting the Pistonheads standard risk free return is bull sh*t??

;-)

[anonymous-user]

jdw1234 said:

Cash only if you are not able to generate the Pistonheads standard risk free return of Libor + expected car financing costs + your mortgage interest cost + 10%.

Everyone on Pistonheads who has a Ferrari or Lambo on finance can do this and they laugh at people who used cash.

Cash has always worked well for my Italian exotica over the last 20 years, the numbers have shaken out well. Nice to hear cash buyers can make you laugh, it can save trudging along to a John Bishop gig. It's good passing some smiles around

[jdw1234]

Bo_apex said:

jdw1234 said:

Cash only if you are not able to generate the Pistonheads standard risk free return of Libor + expected car financing costs + your mortgage interest cost + 10%.

Everyone on Pistonheads who has a Ferrari or Lambo on finance can do this and they laugh at people who used cash.

Cash has always worked well for my Italian exotica over the last 20 years, the numbers have shaken out well. Nice to hear cash buyers can make you laugh, it can save trudging along to a John Bishop gig. It's good passing some smiles around

Oh for god's sake.

Is there a sarcasm smiley?

[MrFreight]

I agree with the above entirely!

Ask yourself this :-

Can I afford it ? Have I got the Cash to pay for it ? Do I want it ? Do I NEED it ?

If the answer to all of the above is Yes then there's your answer!

If any of the above is No they you have your answer again!

Can't get my head around the ethos of getting into crazy finance deals etc etc for a Supercar or any other unecessary depreciating item!

The above can by applied to everything you may come across in life a shame this simple disipline of thought wasn't applied to most of the things happening worldwide today!

Rant over!

MF

[anonymous-user]

jdw1234 said:

Oh for god's sake.

Is there a sarcasm smiley?

Unfortunately not

[kbf1981]

franki68 said:

I am puzzled about all this,ive always thought if you cant write a cheque for it ,dont buy it.Any form of finance is so expensive ,here is a car for 100k,use finance it will cost you 120k and depreciate at the same rate that someone bought the same car for 100k cash experiences.
The argument that you can use the money you are not tying up in the car is all well and good,but only if you can obtain interest rates well in excess of the finance rate you are paying,something I have never been able to achieve.

I'm not in the fashion business, but let's say you sell clothes and have a couple high street stores.

Buy at £10 - Sell at £50 - Stock Turn Rate is once a month = from an original investment of £10 you've made £40 x 12 (£480) at the end of the year. From this you'd take your overheads, staff costs, marketing expenses etc.

A typical small business may be earning 30% profits - if they're in a growth sector they may also be growing at 20% p.a.

If you owned your own business and it was doing well, why would you ever want to buy for cash? Loans are cheap money.

The fashion example makes it sound exagerated....but let's give it for someone who owns, say, an online American Confectionary shop. They'll buy Lucky Charms at £2.50 as a landed cost, sell online at £6 or something, repeat thousands of times through the year.

In a job I agree, you'll be hard pressed to get a return rate of 7%+ after tax, but if you're a business owner as many supercar owners are, it's cheap money for many.

[kbf1981]

MrFreight said:

The above can by applied to everything you may come across in life a shame this simple disipline of thought wasn't applied to most of the things happening worldwide today!

If credit didn't exist Tesco's wouldn't have a business, nor would any large retailer, all of whom use 30-90 days credit because it allows them to buy / sell more than they have in readies.

[johnnyreggae]

It sounds like you are mixing up your money with the company's - see post 2 and/or discuss with HMRC at a later date

Edited by johnnyreggae on Friday 17th February 13:21

[S2Mike]

For a few hundred pounds a day,. . . . . .Hire a Supercar when you need it and hand it back when the adrenaline rush cools a bit. Then hire another one next time, you should get regular user discount and no depreciation. For the times you can really use a Supercar, unless you wanna commute in it, I reckon it would be cheaper this way!

[MrFreight]

Yes that is correct about Industry taking credit for whatever period (I myself run a business and am quite aware how things work) My point was really aimed at the individual rather than corporate - eg taking out Mortgages which you can't afford etc etc then ending up in difficulty for WHATEVER reason.

My comments are NOT aimed at the original blogger - if he wants to go down the road of finance or whatever then that's up to him - maybe I'm just too darned old fashioned in my outlook (Plus the fact i'm from Yorkshire with all that implies!)

MF

[jdw1234]

Bo_apex said:

jdw1234 said:

Oh for god's sake.

Is there a sarcasm smiley?

Unfortunately not

Touche!

;-)

[ferdi p]

Never ever ask this question on Pistonheads!!!
Now go buy a piggy bank & when you have saved up enough, go buy yourself an old ford focus 1.6 Ghia

[bqf]

MrFreight said:

Do I NEED it ?

If any of the above is No they you have your answer again!

Jesus H man - you'll have us all shot! My wife reads this you know!

Of course we don't NEED it. I don't need a convertible, a second home, or in fact more than 3 pairs of shoes. Doesn't stop me though.