Finance question.

[FezzaDezza]

Just looking for a quick bit of advice here as I'm looking to change the F348 out in April time for something in the £60k-£80k region (F430, Gallardo or 360CS if the prices drop a bit)

I've always paid cash for my cars in the past however with the base rate at 1.5% and likely heading lower I'm thinking there must be some juicy finance deals out their since I can make better use of a cash lumpsum rather than having it parked in my garage.
My question is however what sort of level on an £80k car would get me the best finance rates? Is there much benefit in putting £40k or £60k down cash over just £20k ?

Any advice or recent examples greatly appreciated though I understand things may change a bit between now and April.

Cheers

Des

[levron73]

Des

Can't get you any specific examples but from what I have seen looking at the possiblitiy of financing a Discovery 3 the base rate is certainly no reflection of the dealer finance rate.

For example Land Rover started at 12.9% APR and the lowest that they would go to was 10.9%. They are also getting every residual value underwritten by a finance company so on a £25,000 low mileage Disco 3 they were offering a GFV of £6,500 after three years with 10k miles per year. Gone are the days of playing with a residual figure and APR to get an attractive monthly figure that comes close to counteracting a cash purchase!

If, however you can find soemthing let me know!!!

[FezzaDezza]

Thanks for that, 10.9% isn't exactly tempting and I'm aware the even though the base rate has been falling LIBOR hasn't come down that much, I suspect its started to fall a bit recently however.

Will keep and eye on the situation over the next couple of months and see if there are any decent deals to be had. Saying that, the cars I'm considering could have lost another £10k by then!

[achilles8]

Libor is actually at 2.5% now, but I presume that car loans are not funded by libor by banks. I would expect car loans to be available at 1% or so above fixed rate mortage rates, so 10% does appear a rip off!

[matc]

achilles8 said:

Libor is actually at 2.5% now, but I presume that car loans are not funded by libor by banks. I would expect car loans to be available at 1% or so above fixed rate mortage rates, so 10% does appear a rip off!

10% is the APR not the Flat Rate; the flat rate as a rule is roughly half, so the deal offered above, would be at about 5.25%, which considering it is a PCP (guaranteed residual value) this is a fairly sensible rate; and fairly typical of what is being offered by manufacturers in the market at the moment.

As a side note, with the new regulated agreements, you don't neccesarily need a guaranteed balloon, as you can hand the car back half way through the agreement by terminating the contract regardless of it's set-up i.e pcp, HP etc. So you could just get a HP balloon agreement, although due to the issues I just stated a lot more people are early terminating, so the finance companies have lowered the RV's a lot, and although the interest rate will be lower, the monthly payment may be slightly higher - in which case, if you are planning on handing the car back anyway, the monthly payments are obviously more important than the interest rate.

OP - I think the question you need to answer is, would your money work better for you elsewhere? I would imagine you could probably borrow money at about 3.5-4% at the moment, so if you can get a greater return than that, after tax, then it may be worth looking at funding it.

[FezzaDezza]

matc said:

achilles8 said:

Libor is actually at 2.5% now, but I presume that car loans are not funded by libor by banks. I would expect car loans to be available at 1% or so above fixed rate mortage rates, so 10% does appear a rip off!

10% is the APR not the Flat Rate; the flat rate as a rule is roughly half, so the deal offered above, would be at about 5.25%, which considering it is a PCP (guaranteed residual value) this is a fairly sensible rate; and fairly typical of what is being offered by manufacturers in the market at the moment.

As a side note, with the new regulated agreements, you don't neccesarily need a guaranteed balloon, as you can hand the car back half way through the agreement by terminating the contract regardless of it's set-up i.e pcp, HP etc. So you could just get a HP balloon agreement, although due to the issues I just stated a lot more people are early terminating, so the finance companies have lowered the RV's a lot, and although the interest rate will be lower, the monthly payment may be slightly higher - in which case, if you are planning on handing the car back anyway, the monthly payments are obviously more important than the interest rate.

OP - I think the question you need to answer is, would your money work better for you elsewhere? I would imagine you could probably borrow money at about 3.5-4% at the moment, so if you can get a greater return than that, after tax, then it may be worth looking at funding it.

Thanks for that Matc, indeed a suitable loan for the balance may be the way forward but I'm not sure given the current climate that banks etc are too keen to dish out cash for loans on sports cars!!

With regards the return on my lumpsum, for the last 2 years its been circa 100% trading FTSE futures given current market volatility but I'd never count on such a return under normal circumstances! 20-30% would be more typical and fortunately since its spread betting its tax free.