How to pay for a 40-50k car? Finance, cash etc??
Discussion
I'm currently looking at purchasing a high end sports car (to me!). 360, 911, AMV8 etc....
I'm in a bit of a pickle. Most of my money is tied up in stocks, property and other investments. I am loathe to sell anything inorder to raise the cash.
In terms of liquidity, I have £20k at my disposal for a deposit.
Say i was to buy a £45k car. I put a deposit down of £20k and finance the remainder.
When i come to sell it. Would ALL the finance have to be paid of beforehand????
This is what my wife reckons....
Surely not everyone out there is buying high end cars with straight cash. I find i can use my cash better elsewhere. Hence my reason for not realizing the full £50k for the car purchase.
In short. How the heck do i go about putting a £20k deposit on a £50k, and sell the thing if i want to at a later date.
I'm in a bit of a pickle. Most of my money is tied up in stocks, property and other investments. I am loathe to sell anything inorder to raise the cash.
In terms of liquidity, I have £20k at my disposal for a deposit.
Say i was to buy a £45k car. I put a deposit down of £20k and finance the remainder.
When i come to sell it. Would ALL the finance have to be paid of beforehand????
This is what my wife reckons....
Surely not everyone out there is buying high end cars with straight cash. I find i can use my cash better elsewhere. Hence my reason for not realizing the full £50k for the car purchase.
In short. How the heck do i go about putting a £20k deposit on a £50k, and sell the thing if i want to at a later date.
Surely the question is as simple as: do you expect the net return on your investments more or less than the interest you'd have to pay on a loan over the same period?
I'm not good at finance details, but I believe it is possible to sell a car with finance on it and then use the money from the sale to pay off the finance. Otherwise you could always just take a personal loan for a few days to tie you over the period of the sale.
I'm not good at finance details, but I believe it is possible to sell a car with finance on it and then use the money from the sale to pay off the finance. Otherwise you could always just take a personal loan for a few days to tie you over the period of the sale.
kambites said:
Surely the question is as simple as: do you expect the net return on your investments more or less than the interest you'd have to pay on a loan over the same period?
Looking at some of my stocks. The net return far outweighs loan interest. So i will have to stump all the finance for the car before i sell it......amiright?It's pretty simple
You borrow the £30k by any variety of formats - loan, PCP, balanced payments etc
You then own the car but owe the finance co £30k which you pay off bit by bit.
If you arrange finance on the car it will probably be marked on the HPI database - so when you sell the car, you must pay off the balance remaining.
If trading in at a dealer, they are used to paying off finance and it will not cause an issue. They can probably roll your finance agreement onto your next car, if you choose to.
It does create a bit of extra hassle if selling privately, as a private buyer will want the finance cleared before they pay you. One option is to make two payments on handover day, one to the finance co, one to yourself, and have the finance co confirm to the buyer that the finance is paid off.
Obviously this doesn't matter if you borrow the £30k privately, and then you just repay this at your leisure
You borrow the £30k by any variety of formats - loan, PCP, balanced payments etc
You then own the car but owe the finance co £30k which you pay off bit by bit.
If you arrange finance on the car it will probably be marked on the HPI database - so when you sell the car, you must pay off the balance remaining.
If trading in at a dealer, they are used to paying off finance and it will not cause an issue. They can probably roll your finance agreement onto your next car, if you choose to.
It does create a bit of extra hassle if selling privately, as a private buyer will want the finance cleared before they pay you. One option is to make two payments on handover day, one to the finance co, one to yourself, and have the finance co confirm to the buyer that the finance is paid off.
Obviously this doesn't matter if you borrow the £30k privately, and then you just repay this at your leisure
Tyson1980 said:
Looking at some of my stocks. The net return far outweighs loan interest.
You can sell it and pay the finance off as you do so, dealers are often buying financed cars, they just pay off the finance direct.If your stocks are "far outweighing" the cost of loan interest I'd be far more inclined to use all credit available to borrow as much as possible and invest in more stocks, free money! You'll be able to afford one outright then.
Of course if you don't feel comfortable borrowing to invest then why do it this way at all, since borrowing cash to pay for something when you have enough cash already invested is effectively the same thing.
PaulB81 said:
I would also say personal loan for the difference. One that you have the ability to pay off as you go along. That way you can loan 20k over 3 years but just pay a chunk of each month with returns from your other assets.
Aye i was thinking this.Take a personal loan out for the remainder of the finance, and pay it off in increments right?
kambites said:
The other option would be to extend your mortgage, assuming you have one. That's often the cheapest way to borrow that kind of sum of money.
Yes, because that has been proven to be a foolproof way into a nice car over the last few years.....Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
Good question. You may have no luck here. Everyone here is apparently awesome and so buys cash. Ha ha 
Obv with an IFA hat on that is the best thing to do, but this is a car lover site and so I imagine some people won't mind a little bit of debt / finance cost to jump into something tasty. I would say that some could say the cost was part of a hobby / lifestyle choice.
Even though just looking at the cars on the average road vs average salaries, in any area I have been to in many years, and then hearing info from dealers of these cars show most have an element of finance. Some can’t afford them via cash and some can but would rather a package for whatever reason.
I would say Loan, HP, or PCP. PCP will be set on a guaranteed future value. A high one will give you lower monthly payments, but the closer you get to this the closer you are to just putting that whole money per month just against the finance cost and the depreciation. You will have to buy the car or give it back at the end. With a low GFV you can just sell it on and pay the cash, decided you love it and buy it or use the excess towards the next one. I’m not sure about this option really.
The other side of the coin is to get a car loan / unsecured personal loan over say 3 – 5 yrs work out the interest and then see if you fancy that. I did this, on a small scale as I wanted my M3 then after coming out of my 944, and borrowing approx £7k for 2 years cost me about £450. So under £20 pcm in interest to have the car 2 years before I could if I had simply saved up, so I was happy with that as a charge. The payment was £318 and I had just finished my student loan which by then was more than that, so I didn’t even have to re budget. I guess you could look on it the same way but with bigger numbers, and then at least you own the car.
I guess it is worth looking at depreciation, i,e, an older minty 911 / E Type / etc will still be worth the same in 3 yrs give or take a few % I imagine, but a GTR / Maser GT / V8V / Newish M3 etc etc may still have £15 - £20k of depreciation to go. That on top of finance is starting to look like a costly buy to me. I’m a lover of older / classic cars so it is not a problem for me , but does need to be considered!
HTH
Obv with an IFA hat on that is the best thing to do, but this is a car lover site and so I imagine some people won't mind a little bit of debt / finance cost to jump into something tasty. I would say that some could say the cost was part of a hobby / lifestyle choice.
Even though just looking at the cars on the average road vs average salaries, in any area I have been to in many years, and then hearing info from dealers of these cars show most have an element of finance. Some can’t afford them via cash and some can but would rather a package for whatever reason.
I would say Loan, HP, or PCP. PCP will be set on a guaranteed future value. A high one will give you lower monthly payments, but the closer you get to this the closer you are to just putting that whole money per month just against the finance cost and the depreciation. You will have to buy the car or give it back at the end. With a low GFV you can just sell it on and pay the cash, decided you love it and buy it or use the excess towards the next one. I’m not sure about this option really.
The other side of the coin is to get a car loan / unsecured personal loan over say 3 – 5 yrs work out the interest and then see if you fancy that. I did this, on a small scale as I wanted my M3 then after coming out of my 944, and borrowing approx £7k for 2 years cost me about £450. So under £20 pcm in interest to have the car 2 years before I could if I had simply saved up, so I was happy with that as a charge. The payment was £318 and I had just finished my student loan which by then was more than that, so I didn’t even have to re budget. I guess you could look on it the same way but with bigger numbers, and then at least you own the car.
I guess it is worth looking at depreciation, i,e, an older minty 911 / E Type / etc will still be worth the same in 3 yrs give or take a few % I imagine, but a GTR / Maser GT / V8V / Newish M3 etc etc may still have £15 - £20k of depreciation to go. That on top of finance is starting to look like a costly buy to me. I’m a lover of older / classic cars so it is not a problem for me , but does need to be considered!
HTH
J4CKO said:
Yes, because that has been proven to be a foolproof way into a nice car over the last few years.....
Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
That only makes a difference if the OP is in any danger of defaulting or going into negative equity on the car. Unless you're going to default, a mortgage is just a loan like any other. I've never really understood why people think of them differently. Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
It doesn't sound from the original post, as if either is very likely in this case.
J4CKO said:
kambites said:
The other option would be to extend your mortgage, assuming you have one. That's often the cheapest way to borrow that kind of sum of money.
Yes, because that has been proven to be a foolproof way into a nice car over the last few years.....Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
What's the value of the house got to do with it?
kambites said:
J4CKO said:
Yes, because that has been proven to be a foolproof way into a nice car over the last few years.....
Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
That only makes a difference if the OP is in any danger of defaulting or going into negative equity on the car. Unless you're going to default, a mortgage is just a loan like any other. I've never really understood why people think of them differently. Then interest rates go up, house prices go down and you have a depreciating asset secured against your home.
It doesn't sound from the original post, as if either is very likely in this case.
Yup, just done some Excel calcs and it is more cash, but yes one does get low monthly payments
InterestRate Years Num Payments Present Value Monthly Total Paid back
4.00% 18 216 25000 -£162.55 -£35,110.68
9.00% 5 60 25000 -£518.96 -£31,137.53
12.90% 5 60 25000 -£567.55 -£34,052.87
Ari said:
Eh? You've got a depreciating asset secured against your home whatever happens to house prices.
What's the value of the house got to do with it?
I think the point was if it goes up you don't get hit so much, but it level or when it goes down you have take cash out and spent it on something that has also depreciated and so your LTV is in the toilet for the next place?What's the value of the house got to do with it?
Tyson1980 said:
In short. How the heck do i go about putting a £20k deposit on a £50k, and sell the thing if i want to at a later date.
Well you get a personal loan to cover the difference. Then upon sale you use the sale money to repay the loan or if the car has been kept long enough, the loan will be paid off by the time of sale. Are you sure you have lots of investments..........
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