Porsche Finance Options

[barry_j]

I've received all the info on the 997tt along with a note to contact the guy for a range of finance options. I've always paid cash for my cars on the following basis:
a) pay cash for the car; earn no interest as I've spent the cash.
b) finance the car; earn approx 4% interest on my unspent cash, pay approx 7% interest on borrowed amount.
...so by financing the car, I am approx 3% worse off.

Then, I often see people on this forum who refer to themselves as financially savvy saying that they are better off financing a car. Given that I work in the City, I would hope that I am reasonably aware so am I missing a trick or are these people simply in need of the liquidity and willing to pay the the 3% or so for it?

Edited by barry_j on Tuesday 22 August 12:49

[barry_j]

triple7 said:

If you have £100k cash lying around and won't miss it, buy the car outright. But for many people that isn't the case and the financing of today has allowed a huge amount of people to get into cars they never would have thought they could.

Agreed but my point is this; Some people are saying that they are actually better off by financing and I just don't understand how this can be the case. So, if I've got the choice of financing the car or paying in cash, I'd like to know which option makes me better off. I'm not concerned about liquidity.

[Barry_J]

JEBLondon said:

For a lot of people financing is not purely down to 'economics' but down to 'convenience'.

So, as the other guys have already said, getting a car on finance doesn't make you better off. Its simply gives you the liquidity that you dont have.

JEBLondon said:

One question? You work in the city and can't make more than 4% on your cash..!!??

Of course I can make more than 4% but that is not without its risks. Again as the guys above have already stated we are talking risk-free returns after tax. Libor is currently about 5% so after tax that is 3%. If you want to earn more than that then you need to take more risk!!!

JEBLondon said:

As an interesting observation, the smart people would've financed their cars at ~7% and stuck the rest into Porsche shares, currently up YTD ~30%... That's what I did!!

LMFAO!!! Charles, I'm on my way, Taxi!!

Edited by Barry_J on Tuesday 22 August 14:20

[Barry_J]

JEBLondon said:

Ok, replace "most professional money managers" with "I would shoot myself without at least a double digit return this year..."..!!

Gilts + 200bps?? You won't be making much of a bonus with that strategy my friend...

JEB, Are you on Bloomberg? If so, could you PM me so that I have your Bloomberg details...

[Barry_J]

JEBLondon said:

Barry_J said:

JEBLondon said:

Ok, replace "most professional money managers" with "I would shoot myself without at least a double digit return this year..."..!!

Gilts + 200bps?? You won't be making much of a bonus with that strategy my friend...

JEB, Are you on Bloomberg? If so, could you PM me so that I have your Bloomberg details...

???

Doing your job, surely you would know what Bloomberg is?

[Barry_J]

JEBLondon said:

As for me, we run four very specialised/focused (in terms of industry/geography) funds that not only invest in quoted instruments but also in unquoted opportunities. We're small, private and to date doing ok for ourselves.

Are you front or back office? Just some of your responses make me question?

[Barry_J]

fieldl said:

I'd rather not have that amount of money tied up in a depreciating asset.

Quite a few people have said this but I dont understand what the difference is. Sorry if I'm being stupid but surely there's an opportunity cost of tying up the money regardless of whether the asset appreciates or depreciates?

[Barry_J]

nem351s said:

Ouch! Questioning his job is a bit harsh mate.

True but my question wasn't really about his job. What I was getting at (between the lines) was whether he was genuine or not and whether to take his responses seriously or not. Comments like this don't help:

JEBLondon said:

One question? You work in the city and can't make more than 4% on your cash..!!?? As an interesting observation, the smart people would've financed their cars at ~7% and stuck the rest into Porsche shares, currently up YTD ~30%... That's what I did!!

JEBLondon said:

Gilts + 200bps?? You won't be making much of a bonus with that strategy my friend...

I asked a genuine question and got some genuine answers but I felt that other answers came straight out of the troll handbook but I may be wrong. As Adam B rightly points out, being in the front office is just a tag and doesn't make you any better qualified to answer the question.