What's a good rate on supercar finance?

[drainbrain]

TheLordJohn said:

Have you seen how few people actually pay the final value/balloon payment?

I can certainly understand why very few would, but I could also understand why some people with certain cars might well re-finance them.

The 550's just the sort of car a certain type of guy could 'fall in love' with and want to make a longterm keeper. (imho of course).

[jw673]

biondi said:

The figures I provided to the lender were:

car details: £100k, Gallardo LP-550, MY2011, ~15000 miles
deposit: £25k
Repaypemt period: 48 months

The numbers I got back were £855 a month for 48 months, then a final balloon of £55k.

To expand on your quoted figures:

Car: £100,000
Deposit: £25,000
Term: 48 Months
Balloon: £55,000
Credit: £75,000
Rate: ~8.3%APR (~4.05% Flat)
Interest: ~£21,060
Monthly Payment: ~£855

On the same terms, changing it to ~3.05% Flat (~6.2%APR)

Interest: ~£15,860
Monthly Payment: ~£757

On the same terms, changing it to ~2.50% Flat (~5.1%APR)

Interest: ~£13,000
Monthly Payment: ~£688

On the same terms, changing it to ~5.00% Flat (~10.3%APR)

Interest: ~£26,000
Monthly Payment: ~£958

All of the above assumes no fees, which is unlikely. Fees will impact the %APR (dependent on when paid/size of fee/etc).

As can be seen - if you can get down to 6% APR - you're going to be saving at least £5K over the term. Unfortunately I don't have any visibility as to what currently constitutes a "good" (achievable) rate in the secured, ~£100k 2011 used car, HP with balloon market. A couple of years ago I would have said <6%APR was reasonable, and <5%APR good. That being in an era of broker's ~7-8% APR initial quotes for "normal" HP.

If you're quoted Flat rates when trying to obtain ball-park figures on the phone, double it to get a very rough idea on the %APR.

Finally, keep in mind that if it's not a PCP the balloon is not an optional payment. Regardless of the balloon being "good" from a particular broker - if the car's value is underwater at the end of the term you're still going to have to cover the shortfall at some point or, every PHer's favourite!, VT assuming you can (TBC/Structure of loan/Regulated Agreement/Unregulated Agreement/etc).

Brokers to try (I have no affiliation with any of them), in no particular order:

Oracle Finance
Mann Island Finance
Meridian Finance
Charles and Dean Finance
Classic And Sports Finance
Rfoster (PHer)

Best of luck, and ignore the PH whingers ("How much interest?!??!", "I would never do that!","Have you thought about investing it in property/bitcoin/penny stocks/P2P lending/a miserable divorce?", etc).

[biondi]

Best of luck, and ignore the PH whingers ("How much interest?!??!", "I would never do that!","Have you thought about investing it in property/bitcoin/penny stocks/P2P lending/a miserable divorce?", etc).

[/quote]

Thanks - yeah, I've seen a few posts like that so kinda expected a bit of it Your posts have been very informative though and your time appreciated. I'm going to call the lender tomorrow actually and see if there's any movement in that rate, should get a feel for it based on their reaction. Will happily post here for future readers.

Everyone's situation is unique and (at least for me) if I can do this without impacting the family/financial commitments then why not? Are there 'better' places to put my money? Well, that depends on how you define 'better'. Certainly not going to make any money out of this but money's not everything..

M

[simong800]

OP, I have used Mann Island several times and they've generally got me between 4.9 - 5.9% dependent on the vehicle at the time. They have access to the likes of Alphera, Aldermore, Close Brothers etc.

For any ballpark figures the lombard website have a handy tool where you can put in a reg plate and get a quote including the balloon figure for the specific car;

https://carandvanfinance.lombard.co.uk/#/vehicle-r...

Make sure you hit the "include a balloon payment" option so you get a PCP quote, as opposed to an HP quote.

You can then take the balloon figure given, and toy about with different deposits and APR's on this site;

http://www.pcpcal.co.uk

Good luck with it, and as per the helpful poster above ignore the naysayers!

[Budflicker]

Can you not do an equity release on your house on a five year fixed at 1.5% and then pay the balance at the end of the 5 year lock in?

[James_B]

Budflicker said:

Can you not do an equity release on your house on a five year fixed at 1.5% and then pay the balance at the end of the 5 year lock in?

It’ll be much cheaper, but if things go tits up, you lose your house.

It’s virtually impossible to have that happen if you default on an unsecured loan.

[ben5575]

si800 said:

OP, I have used Mann Island several times and they've generally got me between 4.9 - 5.9% dependent on the vehicle at the time. They have access to the likes of Alphera, Aldermore, Close Brothers etc.

For any ballpark figures the lombard website have a handy tool where you can put in a reg plate and get a quote including the balloon figure for the specific car;

https://carandvanfinance.lombard.co.uk/#/vehicle-r...

Make sure you hit the "include a balloon payment" option so you get a PCP quote, as opposed to an HP quote.

You can then take the balloon figure given, and toy about with different deposits and APR's on this site;

http://www.pcpcal.co.uk

Good luck with it, and as per the helpful poster above ignore the naysayers!

Excellent post. I've always relied on having to source the gfv from the garage but that first link allows you to shortcut when considering your options. Thanks you.

[jw673]

si800 said:

https://carandvanfinance.lombard.co.uk/#/vehicle-r...

I haven't gone through the full process within the proposed link, although for clarity:

1) "Available to UK businesses purchasing" "Buying a business vehicle" - these may be Unregulated Agreements and/or involve some sort of financial chicanery (business or HNW lending=potential for gloves off). Work on the basis that any reduction in risk to the lender = lower % APR. If you're happy with potentially forfeiting contract terms (e.g. entering into a business contract) that may protect you in the event everything goes wrong, for a lower % APR, then fine. Note: I appreciate si800 wasn't suggesting using the site for representative %APR figures.
2) HP with a (not optional*) balloon != PCP. In a PCP the funder is taking the risk that you hand the keys back to them at the end of the term and the car is worth less than the GFV - the balloon payment is optional. There is potentially* greater risk, to the funder (re: GFV), to a PCP than HP with a (not optional*) final balloon payment. I assume a funder would charge a higher % when proposing PCP with a GFV vs HP with a balloon (assuming the same values of GFV/balloon). Do not assume a (non-PCP) HP with a balloon's value is the same as a PCP GFV (PCP being HP with an optional balloon payment). I'm working on the basis the OP is not looking for a PCP, as the car is ~6 years old and will be ~10 years old at the end of the term (both of which I would guess, for PCP, restrict the potential pool of funders to a very small number).
3) A PCP GFV (or proposed HP balloon) provided by funder X has no relevance with a (possible) GFV/HP balloon proposed by funder Y. One may operate on 90% of Glass' (other data providers available) predicted book value, another may operate on 80% (I've made the figures up but the point still stands - a "GFV" or balloon for a given car is not a universal value applied across lenders). Other funders may operate on entirely unrelated figures/they've settled on internally (see PH thread re: Ford UK's Mustang GFV "calculation").

*for simplicity I'm excluding VT.

ben5575 said:

I've always relied on having to source the gfv from the garage but that first link allows you to shortcut when considering your options.

Being able to play with figures is useful, and having a GFV potentially anchored in reality is good, although appreciate this may in no way reflect the "deal" offered to you by another funder (of which the monthly payment may be heavily influenced by the proposed balloon/GFV/terms/etc).

OP - if/when you eventually settle on a funder - make sure you fully understand the terms of the contract you're entering into (Regulated/Unregulated/VT/etc). Always understand your (potential) exit(s)... if your life ends up being turned upside down you may not have the option to go homes to Bel Air.

Edited by jw673 on Monday 23 October 10:20

[biondi]

si800 said:

OP, I have used Mann Island several times and they've generally got me between 4.9 - 5.9% dependent on the vehicle at the time. They have access to the likes of Alphera, Aldermore, Close Brothers etc.

Thanks for this, will give them a go!

[wisbech]

Budflicker said:

Can you not do an equity release on your house on a five year fixed at 1.5% and then pay the balance at the end of the 5 year lock in?

Depends- most mortgage lenders want to see at some effort to pretend it is for home improvement. Of course, can always remortgage, but again that’s assuming he can add 75k to the loan without hitting LTV issues.

[NickCQ]

cat with a hat said:

NickCQ said:

£100k is not a supercar.

Piss poor trolling.. I'm surprised anyone took the bait tbh

Someone has to try

[Shaoxter]

I know this is a noob question, but does increasing/decreasing the size of the balloon payment have any effect on the interest you pay? Or does it only affect the monthly repayments?

[jw673]

Shaoxter said:

I know this is a noob question, but does increasing/decreasing the size of the balloon payment have any effect on the interest you pay?

Yes. You continue to pay interest on a (never decreasing) balloon for the full duration of the term. For simplicity think of HP with a balloon (optional/PCP or not) being a loan of two parts - a "normal" repayment loan (incl. interest) for anything above the balloon, combined with an interest-only loan on the balloon. Smaller balloon=less interest to pay (but larger payments as you're paying off more of the loan). See also OFT144.

To observe the impact of balloon changes:

si800 said:

take the balloon figure given, and toy about with different deposits and APR's on this site;

http://www.pcpcal.co.uk

[sidicks]

Shaoxter said:

I know this is a noob question, but does increasing/decreasing the size of the balloon payment have any effect on the interest you pay? Or does it only affect the monthly repayments?

You pay interest on the balloon, so a larger balloon equals smaller monthly payments but a higher overall cost.

[Shaoxter]

jw673 said:

Shaoxter said:

I know this is a noob question, but does increasing/decreasing the size of the balloon payment have any effect on the interest you pay?

Yes. You continue to pay interest on a (never decreasing) balloon for the full duration of the term. For simplicity think of HP with a balloon (optional/PCP or not) being a loan of two parts - a "normal" repayment loan (incl. interest) for anything above the balloon, combined with an interest-only loan on the balloon. Smaller balloon=less interest to pay (but larger payments as you're paying off more of the loan). See also OFT144.

Ah that makes sense, thanks!
I'm part of the "never used car finance, always paid in cash" brigade but some of those numbers you posted earlier got me thinking!

[biondi]

Yeah, it's going to take a bit of research from my side. I do have investments so could pay a sizeable lump using some of this, but the cost of the finance is less than the money I'm making with the investments, so in my rather simple head it doesn't make sense to do that. I'm under no illusion I'm going to be financially worse-off after this but as I said earlier, money isn't everything. I'm 46 and right now I'm healthy, happy and have some money left over each month - so why not, in a few years I might not be able to.
I've spoken to a few brokers and lenders this morning, 8-8.5% seems to be the going rate for something like this, which is a bit dissappointing as I was hoping it would be less. I'll continue to talk to people, it's interesting that most of the brokers tell me I'll most likely end up using the same company (jbr) anyway.There offer has been the best so far but that was unregulated I believe so need to understand the risks of that a bit more.

[jw673]

biondi said:

offer has been the best so far but that was unregulated I believe so need to understand the risks of that a bit more.

Although the two links below are old (laws may have changed since/I'm sure more recent threads can be found) they do demonstrate what sort of a pickle you can end up in when entering into an agreement that is not fully understood (and/or signing business waivers that you shouldn't have):

Unregulated Car Finance HP Agreement - Massive Redemption Figure - Advice needed

What is an unregulated financial agreement I have a dispute

Someone else (paging Rfoster...) could probably expand more on the current potential downfalls of an Unregulated Agreement.

Sample Hire Purchase Regulated Agreement

Sample Hire Purchase Unregulated Agreement from the same funder.

The above I've linked to merely as examples to compare Regulated vs. Unregulated terms from the same funder (Aldermore) for Hire Purchase, do not assume all contracts are the same.

[sidicks]

biondi said:

Yeah, it's going to take a bit of research from my side. I do have investments so could pay a sizeable lump using some of this, but the cost of the finance is less than the money I'm making with the investments, so in my rather simple head it doesn't make sense to do that.
I'm under no illusion I'm going to be financially worse-off after this but as I said earlier, money isn't everything. I'm 46 and right now I'm healthy, happy and have some money left over each month - so why not, in a few years I might not be able to.
I've spoken to a few brokers and lenders this morning, 8-8.5% seems to be the going rate for something like this, which is a bit dissappointing as I was hoping it would be less. I'll continue to talk to people, it's interesting that most of the brokers tell me I'll most likely end up using the same company (jbr) anyway.There offer has been the best so far but that was unregulated I believe so need to understand the risks of that a bit more.

In theory that’s correct, but you should really be comparing the risk-adjusted return on your investments, as presumably anything you’ve bought that has ‘high’ returns is somewhat risky and not guaranteed?!

[leemanning]

Having used a multitude of different lenders in the past, my default now has become Alphera (also known as BMW Financial Services).

They will generally deal around 5% APR when negotiated. They do have certain stipulations as to the age of the vehicle and are adequate, but not the strongest on the balloon payments. My advice is call them directly and see what they can offer on that specific vehicle.

2 things to note is 1) dealer sales only - not private sales and 2) Alphera can't have a relationship with the supplying dealer already otherwise they won't lend.

[trowelhead]

Ryan Dobson at Clydesdale bank worth trying

HP with balloon at 3.8% APR - was cheapest i found financing my GT4...