458 thoughts....

[garystoybox]

blueSL said:

Just so that I understand - I’ve never financed a car - you’re paying £50k plus £24k to use the car for 4 years. If, at the end of those 4 years, you decide to walk away, you don’t get your deposit back so it’s cost you £74k in total. If you keep the car, it’s cost you £169k and you have whatever the car is worth at that time, unlikely to be hugely less than the current £145k, say £135k, so it’s cost you £34k in total. If you bought the car for cash, it would have cost you £10k. Is that correct or am I missing something?

There’ll be no option to walk away at the end of the term as its lease purchase. You are committed to paying the outstanding balance in full (eith cash or refinancing) with no option to ‘hand back’.

[Taffy66]

mike746 said:

ill take it mate.

Just seen this. PM me your details and will take it from there.

[Durzel]

garystoybox said:

blueSL said:

Just so that I understand - I’ve never financed a car - you’re paying £50k plus £24k to use the car for 4 years. If, at the end of those 4 years, you decide to walk away, you don’t get your deposit back so it’s cost you £74k in total. If you keep the car, it’s cost you £169k and you have whatever the car is worth at that time, unlikely to be hugely less than the current £145k, say £135k, so it’s cost you £34k in total. If you bought the car for cash, it would have cost you £10k. Is that correct or am I missing something?

There’ll be no option to walk away at the end of the term as its lease purchase. You are committed to paying the outstanding balance in full (eith cash or refinancing) with no option to ‘hand back’.

I’m confused, but I’ve never financed a car either.

You surely can’t be forced to purchase? If you can’t afford or don’t want to pay the balloon (e.g. because the residual value is less) then you just don’t elect to do so and the car goes back, no? PCP means you can ultimately purchase the car but are not obliged to.

Is it really the case that you get none of your £50k deposit back? I was going to say that ~£500 a month to rent (assuming no intent to ultimately buy) a 458 sounds great if you can afford to lock the £50k away for the term (and have it to begin with), but not if you don’t get most if not all of that back…

[Chrism355]

As I understand it
The options are pay the balloon in full either cash or refinance and keep the car
PX the car against another, you receive the difference between dealer PX value and balloon as deposit on next car
Hand back car, dealer dispose of car and will return balance after balloon settled and any costs incurred in prep.

[fridaypassion]

It can work well if the car appreciates I'm hoping the 458 will go up. The 458 is a pretty safe car to have a lease deal on as at least they aren't depreciating. A similar deal on something like a 488 could have you paying 20k to get out of it or having to top up with cash to refinance.

But you you park 50k and its a rental for 2/3 years. At the end of you px or sell with 50k down you'll always have equity in it. If you had bought a new 720 McLaren/F8 for example you will have lost everything you put into it after 3 years. People would normally in that situation put a lower deposit in and gave a much bigger monthly but I'm not really keen on having a load of outgoings. Stems from being poor when I was young always like to keep sensible!

[swanseaboydan]

It’s called ‘Pistonheads’ for a reason, if this is how you get into the car of your dreams - go for it !

[Gibbo205]

MisterBigglesworth said:

For those interested In the finance figures

144950 cash price
50,000 deposit
94,950 balloon
£497 a month x 48 months interest only.@ 6.4 percent.

Arranged by Mike at Charlea & Dean and underwritten by Aldermore. Approved within 1 working day of being sent, papers signed off within a week of first call.

My car was a very similar finance deal, I went with Ferrari finance however which was 6.8 percent or slightly less I also did it over like 30 months and my monthly was about the same.

I did it this way because I invested my money and made good returns pulling money out each year and as such two years later my invested money made a good return, allowing me to make the call and pay the car off and own it outright, not best decision for tax reasons but I just wanted the car paid off.

Dealing with Ferrari finance was very easy and paying it off was just as easy, also Ferrari in general have been fantastic lots of invites to events and trips out fully covered by the dealership (Dick Lovett) and I'd certainly buy a car from them again. My only minor upset is that my car a 2014 developed oxidisation on the drivers rear arch, which Dick Lovett refused to help with but as I've had the car over two and half years now I was trying my luck, the car is now with their bodyshop to get this shorted, they quoted £1600 to repair which seemed very good to me anyway, on the basis they of course do a good job. Its then going back to DL for a new windscreen (under insurance) due to it cracking from a stone chip, which is around £3600 bill from Ferrari but insurnance agreed to cover it less £100 excess.

Edited by Gibbo205 on Monday 27th September 10:56

[MisterBigglesworth]

fridaypassion said:

It can work well if the car appreciates I'm hoping the 458 will go up. The 458 is a pretty safe car to have a lease deal on as at least they aren't depreciating. A similar deal on something like a 488 could have you paying 20k to get out of it or having to top up with cash to refinance.

But you you park 50k and its a rental for 2/3 years. At the end of you px or sell with 50k down you'll always have equity in it. If you had bought a new 720 McLaren/F8 for example you will have lost everything you put into it after 3 years. People would normally in that situation put a lower deposit in and gave a much bigger monthly but I'm not really keen on having a load of outgoings. Stems from being poor when I was young always like to keep sensible!

My thinking also.

The missing component in this is tax.

I’m a company director and get the bulk of my earnings as dividends and investment capital gains so I can elect how much to pay myself and when to stay under higher rate tax thresholds, for me to draw 145k out of my company over my usual living costs would trigger an additional 64k tax liability this year making the actual cost to buy cash 209K

By putting in 50k I can defer the 95k capital cost over 4 financial years drawing less than 25k a year saving me a total of 20k in tax after deducting the interest cost.

The bonus is I can then keep the 95k invested for 48 months which will generate a capital gain in excess of the interest and any depreciation so by the time I come to settle I will actually be ahead financially of where I would be if I paid cash up front.

There is no point paying down the balance as the interest saved would be less than the equivalent return i’d get using the money for investing, and keeping the payment down to 497 a month means I can cover the debt servicing from money I already paid tax on so don’t need to draw additional dividends to cover it.

This deal was highly optimised for my specific situation - I have no need to finance and no need to sell the car to settle the balloon, and it has been bought as a long term hold which is why I got a 458 not a 488.

People assume everyone finances just because they can’t afford it, for upper rate tax payers debt is just a tax planning instrument when the interest on the debt is less than the tax liability crystallised to access your cash it makes sense to use debt - especially when your capital is outperforming the interest charged to borrow.

Appreciate this sort of financial alchemy is difficult to understand for those on PAYE where it’s not relevant.

Due to age I have very low fixed outgoings < 36k p.a which keeps me in a low tax bracket whilst my income continues to accrue towards retirement sheltered under corporation tax rates at 19 percent so I can draw it down on retirement as a capital gain rather than paying 50 percent plus tax and N.I as it is generated when I have no need for the cash.

Add in the compound effect of leaving the tax saved to continue to be re-invested and it adds up to a much better financial outcome than if I drew a big salary and paid cash for everything.

People who think they are superior paying cash likely are PAYE employees not business owners or heavily investment driven so don’t understand the fully legal tax planning that HNW’s use to maintain their wealth.

I left school at 15 with nothing, I didn’t get to live in Belgravia & buy a Ferrari by being reckless with money - the 458 is the only debt I have which is more than offset by my liquid net worth, and I would not finance a heavily depreciating asset like a car but feel the 458 spider is a safe long term bet based on historical Ferrari price performance vs inflation - try buying a 355 for 35k today, or a 512TR for 45k...

[MisterBigglesworth]

Gibbo205 said:

MisterBigglesworth said:

For those interested In the finance figures

144950 cash price
50,000 deposit
94,950 balloon
£497 a month x 48 months interest only.@ 6.4 percent.

Arranged by Mike at Charlea & Dean and underwritten by Aldermore. Approved within 1 working day of being sent, papers signed off within a week of first call.

My car was a very similar finance deal, I went with Ferrari finance however which was 6.8 percent or slightly less I also did it over like 30 months and my monthly was about the same.

I did it this way because I invested my money, as such just shy of two years later my invested money made a huge return, allowing me to make the call and pay the car off and own it outright,.

Dealing with Ferrari finance was very easy and paying it off was just as easy, also Ferrari in general have been fantastic lots of invites to events and trips out fully covered by the dealership (Dick Lovett) and I'd certainly buy a car from them again. My only minor upset is that my car a 2014 developed oxidisation on the drivers rear arch, which Dick Lovett refused to help with but as I've had the car over two and half years now I was trying my luck, the car is now with their bodyshop to get this shorted, they quoted £1600 to repair which seemed very good to me anyway, on the basis they of course do a good job. Its then going back to DL for a new windscreen (under insurance) due to it cracking from a stone chip, which is around £3600 bill from Ferrari but insurnance agreed to cover it less £100 excess.

Yeah Mike said that 48 months was the sweet spot for the interest rate - doing it on 24 months as I originally planned put a higher interest rate on it as the cost to the lender to book the funds is the same but they make less total interest so need to recover the admin costs over a shorter amortisation. My loan is regulated sonthe cost to settle early worked out less than the extra interest on the shorter term. Mike is a very smart broker and worked out the best option given my plans.

Agree as above on the investments front - to put this in perspective I have 150k staked in crypto that was up to 262k by Thursday and is still 50 percent off its high. When it fully recovers to its previous price then i’ll generate a 375k capital gain so leaving the money parked returns a total of 525k vs a interest cost of 24k...

So straight choice - pay cash to have PH forum moral superiority or leverage the asset and get 500k towards a LaFerrari

[Gibbo205]

MisterBigglesworth said:

Yeah Mike said that 48 months was the sweet spot for the interest rate - doing it on 24 months as I originally planned put a higher interest rate on it as the cost to the lender to book the funds is the same but they make less total interest so need to recover the admin costs over a shorter amortisation. My loan is regulated sonthe cost to settle early worked out less than the extra interest on the shorter term. Mike is a very smart broker and worked out the best option given my plans.

Agree as above on the investments front - to put this in perspective I have 150k staked in crypto that was up to 262k by Thursday and is still 50 percent off its high. When it fully recovers to its previous price then i’ll generate a 375k capital gain so leaving the money parked returns a total of 525k vs a interest cost of 24k...

So straight choice - pay cash to have PH forum moral superiority or leverage the asset and get 500k towards a LaFerrari

Yep exactly, I invested my money but when the returns were solid I took my profits, should I have held, yes and no because I'd have made like another 200k for holding, but I was not greedy and took my money, paid my taxes and settled all debts. I still have money invested doing well but at same time I don't like been greedy and taking risk, not saying you are by the way just for me what I had invested it was very comfortable to start taking profits and pulling out as raw cash or putting in the pension pot for tax reasons.

What you are doing is very sensible as generally in the current markets it is quite easy to make a lot more money compared to interest rates, but of course it can always go belly up so hence I played it safe too.

Enjoy the 458 they are epic cars, having driven the 488 and F8 they don't even come close to fun factor at legal speeds, only the 812 does.

[TB303]

MisterBigglesworth said:

Yeah Mike said that 48 months was the sweet spot for the interest rate - doing it on 24 months as I originally planned put a higher interest rate on it as the cost to the lender to book the funds is the same but they make less total interest so need to recover the admin costs over a shorter amortisation. My loan is regulated sonthe cost to settle early worked out less than the extra interest on the shorter term. Mike is a very smart broker and worked out the best option given my plans.

Agree as above on the investments front - to put this in perspective I have 150k staked in crypto that was up to 262k by Thursday and is still 50 percent off its high. When it fully recovers to its previous price then i’ll generate a 375k capital gain so leaving the money parked returns a total of 525k vs a interest cost of 24k...

So straight choice - pay cash to have PH forum moral superiority or leverage the asset and get 500k towards a LaFerrari

Congrats on the car and well done for posting the numbers - it’s helpful to some of us.

Some may hate finance and troll those sorts of threads, yet while I’ve always paid cash for my cars I’d probably rather finance it next time to stay flexible cash wise. I think it depends on circumstances and opportunities available to the individual, but sometimes finance makes a lot of sense as it did for you.

What exactly is the penalty if you wanted to pay it off early?

Edited by TB303 on Monday 27th September 12:00

[Gibbo205]

TB303 said:

Congrats on the car and well done for posting the numbers - it’s helpful to some of us.

Some may hate finance and troll those sorts of threads, yet while I’ve always paid cash for my cars I’d probably rather finance it next time to stay flexible cash wise. I think it depends on circumstances and opportunities available to the individual, but sometimes finance makes a lot of sense as it did for you.

Is there a penalty if you wanted to pay it off early?

Regulated agreements have no penalty or at most its like a month worth of interest!

ALWAYS ALWAYS GO REGULATED, none regulated agreements can sometimes front load the interest so if you pay off early you still have to pay all the interest whereas a regulated agreement its normally just an admin fee and at most three months of interest. When I paid of my Ferrari agreement I think the charge was like £150 maximum to do so so it was just the final balloon plus £150 but don't hold me to exact numbers as I paid it off a few months ago.

The interest only payment options with a large deposit can work very well, it worked out well for me and will work out well for MrBiggles in this thread as his cash can make a lot more money than the interest generates. Cash is always king so never give it away willingly when there are such competitive finance rates available and on appreciation cars interest only is a great option.

I considered buying a Speciale when I paid of my 458, I really should of done so because I could of got into one at 230-260k, now same car would be worth 290-310k retail, so I would of paid 6 months at £500 interest only option costing me £3000 in interest but if I had sold the car I could of made 30-50k profit which outweighs the 3k in interest. But I loved my 458 to much and never expected the Speciale pricing to explode how it has done and judging by how special the Speciale is, well they could do the F40 think and in ten years plus also be at similar values, who knows......

[MisterBigglesworth]

TB303 said:

MisterBigglesworth said:

Yeah Mike said that 48 months was the sweet spot for the interest rate - doing it on 24 months as I originally planned put a higher interest rate on it as the cost to the lender to book the funds is the same but they make less total interest so need to recover the admin costs over a shorter amortisation. My loan is regulated sonthe cost to settle early worked out less than the extra interest on the shorter term. Mike is a very smart broker and worked out the best option given my plans.

Agree as above on the investments front - to put this in perspective I have 150k staked in crypto that was up to 262k by Thursday and is still 50 percent off its high. When it fully recovers to its previous price then i’ll generate a 375k capital gain so leaving the money parked returns a total of 525k vs a interest cost of 24k...

So straight choice - pay cash to have PH forum moral superiority or leverage the asset and get 500k towards a LaFerrari

Congrats on the car and well done for posting the numbers - it’s helpful to some of us.

Some may hate finance and troll those sorts of threads, yet while I’ve always paid cash for my cars I’d probably rather finance it next time to stay flexible cash wise. I think it depends on circumstances and opportunities available to the individual, but sometimes finance makes a lot of sense as it did for you.

What exactly is the penalty if you wanted to pay it off early?

Edited by TB303 on Monday 27th September 12:00

Thank you.

My agreement is regulated, early repayment is stipulated as being no more than 1% of the balance or 0.5% of the balance in the final 12 months,

So in my case the first 3 years exit penalty is around 949 GBP then 479 final year - which is within the 56 days typical interest limit of the regs,

Pretty fair deal as they need to cover the cost of booking out the funds again on a new lend - agree with Gibbo - i’ve Had unregulated quotes where the penalty to early settle was more than 12k on a 110k lend.

[TB303]

MisterBigglesworth said:

Thank you.

My agreement is regulated, early repayment is stipulated as being no more than 1% of the balance or 0.5% of the balance in the final 12 months,

So in my case the first 3 years exit penalty is around 949 GBP then 479 final year - which is within the 56 days typical interest limit of the regs,

Pretty fair deal as they need to cover the cost of booking out the funds again on a new lend - agree with Gibbo - i’ve Had unregulated quotes where the penalty to early settle was more than 12k on a 110k lend.

Thanks for the reply. That’s very reasonable.

[fridaypassion]

There are all sorts of reasons people finance the cars and the "PH" look down your nose attitude to finance I'm afraid is from people that would probably not be in the market for these types of cars. I could afford to pay off my car today if I really needed to but my money is better off in my business. The other thing people forget is that these days you so actually need to prove decent earnings to get the finance its not self cert any more. Over on the vloggers thread people can't get their head around the likes of Shmee getting all these financed cars but he must be doing very well. Some of the underwriters I deal with are really very strict.

[Spleen]

MisterBigglesworth said:

My thinking also.

The missing component in this is tax.

I’m a company director and get the bulk of my earnings as dividends and investment capital gains so I can elect how much to pay myself and when to stay under higher rate tax thresholds, for me to draw 145k out of my company over my usual living costs would trigger an additional 64k tax liability this year making the actual cost to buy cash 209K

By putting in 50k I can defer the 95k capital cost over 4 financial years drawing less than 25k a year saving me a total of 20k in tax after deducting the interest cost.

The bonus is I can then keep the 95k invested for 48 months which will generate a capital gain in excess of the interest and any depreciation so by the time I come to settle I will actually be ahead financially of where I would be if I paid cash up front.

There is no point paying down the balance as the interest saved would be less than the equivalent return i’d get using the money for investing, and keeping the payment down to 497 a month means I can cover the debt servicing from money I already paid tax on so don’t need to draw additional dividends to cover it.

This deal was highly optimised for my specific situation - I have no need to finance and no need to sell the car to settle the balloon, and it has been bought as a long term hold which is why I got a 458 not a 488.

People assume everyone finances just because they can’t afford it, for upper rate tax payers debt is just a tax planning instrument when the interest on the debt is less than the tax liability crystallised to access your cash it makes sense to use debt - especially when your capital is outperforming the interest charged to borrow.

Appreciate this sort of financial alchemy is difficult to understand for those on PAYE where it’s not relevant.

Due to age I have very low fixed outgoings < 36k p.a which keeps me in a low tax bracket whilst my income continues to accrue towards retirement sheltered under corporation tax rates at 19 percent so I can draw it down on retirement as a capital gain rather than paying 50 percent plus tax and N.I as it is generated when I have no need for the cash.

Add in the compound effect of leaving the tax saved to continue to be re-invested and it adds up to a much better financial outcome than if I drew a big salary and paid cash for everything.

People who think they are superior paying cash likely are PAYE employees not business owners or heavily investment driven so don’t understand the fully legal tax planning that HNW’s use to maintain their wealth.

I left school at 15 with nothing, I didn’t get to live in Belgravia & buy a Ferrari by being reckless with money - the 458 is the only debt I have which is more than offset by my liquid net worth, and I would not finance a heavily depreciating asset like a car but feel the 458 spider is a safe long term bet based on historical Ferrari price performance vs inflation - try buying a 355 for 35k today, or a 512TR for 45k...

I didn't understand any of that.

[andyr]

Of course the other option is to take the money out of house equity. I just borrowed at 0.94% for 5 years. About 7k interest over the 5 years.

[blueSL]

I assume the negative comments are directed at me for saying that I have never bought a car on finance. I don’t regard myself as in any way superior, we all have our own particular circumstances. If anyone is able to achieve a return which net of tax offsets the interest they are paying, good for them! Me, I’m retired and like an easy unstressed life so my F8 Spider was paid for in cash and my 812 GTS will be as well.

[TB303]

blueSL said:

I assume the negative comments are directed at me for saying that I have never bought a car on finance. I don’t regard myself as in any way superior, we all have our own particular circumstances. If anyone is able to achieve a return which net of tax offsets the interest they are paying, good for them! Me, I’m retired and like an easy unstressed life so my F8 Spider was paid for in cash and my 812 GTS will be as well.

Mine certainly weren’t directed at you and agree with what you’ve said about personal circumstances. Traditionally my brain is wired to only finance assets I’m sure (enough…!) would appreciate and not depreciate. We are in different times with Ferraris lately, and who knows when that will change eh….

I think it’s just a rule of thumb that on PH someone comes along with a bit of a lecture when finance is brought up!

F8 spider and an 812 GTS? What a pair!

[blueSL]

TB303 said:

Mine certainly weren’t directed at you and agree with what you’ve said about personal circumstances. Traditionally my brain is wired to only finance assets I’m sure (enough…!) would appreciate and not depreciate. We are in different times with Ferraris lately, and who knows when that will change eh….

I think it’s just a rule of thumb that on PH someone comes along with a bit of a lecture when finance is brought up!

F8 spider and an 812 GTS? What a pair!

Thank you!