Advice on financing 997 PDK Turbo / Turbo S from OPC
Discussion
Adam B said:
I found you post posed an interesting question, but quite surprised at that high cost given you are buying at 4-5 years and selling at 6-7 years, did you always buy and sell to dealers (which might explain it as a lot would be dealer margin on both sides of trade)?
This exactly what happened - all cars bought and sold through dealers.I would like to think that I did not pay for both the selling margin and the trade price in a single transaction, but clearly did.
That said, where else can one buy cars?
Auctions are expensive as you can't buy at trade prices; once you price in risk and the cost of 'prepping' your own car at 'buyer' auctions then you're back up to retail price.
Private purchases are too risky (for me). Traders only mitigate this risk by absorbing the cost of an occasional lemon through the volume they do make money on (or worse still, patch the car and send it back into the trade semi repaired).
If I could tap into a healthy supply of used performance sports / supercars AT TRADE PRICES then I would be considering a career change. Not being able to source these cars at trade prices is the single reason I have not already got into the car trade.
The manufacturers have created this situation to support the volume sales of their cars and are effectively controlling the price of a car for over two thirds of its life.
- First level of manipulation is the price of the new car
- Second level of manipulation is putting ultra low mileage cars bought and used briefly by head office employees on their friends and family schemes to fill up forecourts with those cars.
- Then the trade ins and approved used sales start after the 2, 3 year etc. finance / leases come up for renewal.
- Repeat previous steps until the car is near the end of the criteria it needs to meet to get an approved used warranty and / or has near 100k mileage and / or is a couple of versions old then arguably only then does it enter the 'open' market where the consumer gets to influence price as well as just having the choice of switching between brands.
I wonder when a performance manufacturer might start offering 'bin ends' or develop some other value proposition that pushes the level at which they play to an even lower price?
All this (assuming it is even faintly true) is what's suggesting I should play the game and get a PCP and not try to beat it!
Edited by sasha320 on Thursday 20th July 15:12
cay said:
You don't get your deposit back.
If the car is worth more than 40K you could sell / trade it and get the difference.
If it's worth the same or less the deposit is gone.
Thanks for answering my question. If the car is worth more than 40K you could sell / trade it and get the difference.
If it's worth the same or less the deposit is gone.
Its proper bonkers in my book. I just cant get my head round it but I know it obviously works for some people.
Its just crazy to think that some people can pay over £30k in monthlies over 3 years and have nothing to show for it.
I would rather spend £30k on a used car.........at least you still have the car at the end of the payments!
v8ksn said:
Thanks for answering my question.
Its proper bonkers in my book. I just cant get my head round it but I know it obviously works for some people.
Its just crazy to think that some people can pay over £30k in monthlies over 3 years and have nothing to show for it.
I would rather spend £30k on a used car.........at least you still have the car at the end of the payments!
That's the point! You have to keep that used car you've got at the end of the loan for a long long time.Its proper bonkers in my book. I just cant get my head round it but I know it obviously works for some people.
Its just crazy to think that some people can pay over £30k in monthlies over 3 years and have nothing to show for it.
I would rather spend £30k on a used car.........at least you still have the car at the end of the payments!
Even then you have to find £30k again to start the cycle down the track.
Because if you want to change cars for something newer but comparable, sooner or later, you'll find the trade price is peanuts (relatively) and the car you wish to buy will be unaffordable (relatively) because your competing buyers are all using finance to create strong demand.
This delta between trade and retail price means that changing is simply too expensive (even down the road) unless you're on a PCP where you don't feel it but you do pay for it (arguably you also have a brand new car to play with too, which is exactly how everyone justifies their PCP!)
And now me too!
sasha320 said:
That's the point! You have to keep that used car you've got at the end of the loan for a long long time.
Even then you have to find £30k again to start the cycle down the track.
Because if you want to change cars for something newer but comparable, sooner or later, you'll find the trade price is peanuts (relatively) and the car you wish to buy will be unaffordable (relatively) because your competing buyers are all using finance to create strong demand.
This delta between trade and retail price means that changing is simply too expensive (even down the road) unless you're on a PCP where you don't feel it but you do pay for it (arguably you also have a brand new car to play with too, which is exactly how everyone justifies their PCP!)
And now me too!
I can understand the appeal for the buyer as they have a set monthly figure and get a new car but really its 'dead' money isnt it? Even then you have to find £30k again to start the cycle down the track.
Because if you want to change cars for something newer but comparable, sooner or later, you'll find the trade price is peanuts (relatively) and the car you wish to buy will be unaffordable (relatively) because your competing buyers are all using finance to create strong demand.
This delta between trade and retail price means that changing is simply too expensive (even down the road) unless you're on a PCP where you don't feel it but you do pay for it (arguably you also have a brand new car to play with too, which is exactly how everyone justifies their PCP!)
And now me too!
4 years ago I had a £60k budget to buy a toy, I settled on a 997.1 S and spent £30k to buy it. I drove it for a year and then sold it for £27k and bought a 997.1 GT3 which I still have. This is my car bought and paid for with no payments outstanding on it.
I could have gone into an OPC and given them my £30k deposit and taken out an agreement to buy a 911 and financed the difference but if I had done that I would have nothing to show for it. My £60k would be gone and I would be catching the bus!
I dont mean to come across as rude or self important and I am not a rich man by any means but I just dont understand this finance/ PCP stuff.
Maybe I should have studied harder at school
Maybe I would think differently if I had multiple streams of income.
v8ksn said:
cay said:
You don't get your deposit back.
If the car is worth more than 40K you could sell / trade it and get the difference.
If it's worth the same or less the deposit is gone.
Thanks for answering my question. If the car is worth more than 40K you could sell / trade it and get the difference.
If it's worth the same or less the deposit is gone.
Its proper bonkers in my book. I just cant get my head round it but I know it obviously works for some people.
Its just crazy to think that some people can pay over £30k in monthlies over 3 years and have nothing to show for it.
I would rather spend £30k on a used car.........at least you still have the car at the end of the payments!
As mentioned if you want a new car every few years PCP probably isn't that much more expensive.
You are effectively paying the depreciation to hire the car ( plus some profit to the PCP / lease company ).
I chose to pay for my car with a 4 year low interest loan, now payed off and I still have the car 2 years later.
Yes I drive an older car but I have no payments and the depreciation curve has almost levelled.
Maintenance costs are higher but I really don't want to be on the £500+pm for life bandwagon, even though I could easily afford it.
You are effectively paying the depreciation to hire the car ( plus some profit to the PCP / lease company ).
I chose to pay for my car with a 4 year low interest loan, now payed off and I still have the car 2 years later.
Yes I drive an older car but I have no payments and the depreciation curve has almost levelled.
Maintenance costs are higher but I really don't want to be on the £500+pm for life bandwagon, even though I could easily afford it.
I think the main thing is to sit down and work out exactly how much of your PCP deal will be depreciation, and how much will be interest. In particular the amount of interest on the balloon that you will be paying. There are calculators on the web to help you do this.
You can then weigh it up against other way of financing your car and pick what is best for you.
You can then weigh it up against other way of financing your car and pick what is best for you.
cay said:
but I really don't want to be on the £500+pm for life bandwagon, even though I could easily afford it.
I guess this is one of the points I'm trying to make, my experience over 15.5 years suggests that we are all on a £x00 pm bandwagon for life - you're just choosing to run a car for longer with bigger gaps between the capital outlay.Obviously having bigger gaps between the capital outlays, has a depressing effect on the monthly cost bandwagon BUT the cars cannot run forever because the car industry doesn't allow for economic maintenance near the end of life.
OMG is that more manufacturer sponsored market fixing at the lower price of the market?
Make original parts expensive enough that once a car nears substantive maintenance the car becomes an economic write-off!
I guess one could do something vehicle replacement modelling that explores costs throughout the lifecycle, I wonder what the most economic retention period would be for the class of car I've been getting in and out of?
Anyway, Cay I'm not arguing against you and I appreciate your input, I just wonder whether we are all on a £500 bandwagon one way or another over the ultra long-term? (Assuming the class of car we run is more of less constant)
To the guy who started the thread...
Finance is a personal thing and there are too many variables involved. Then add in human factors, like what is acceptable to you or your mindset. Your best to pick a value and do the maths and pro/cons of each finance type for that value, then see what your most comfortable with.
Either way your paying more than an outright cash purchase, but it's at what interest is acceptable to you. Always work on the basis that money is disposable and you won't get anything back, that's worst case - unless the agreement is outright purchase in the end, which you then have an asset.
As an example I haven't seen discussed... I can afford to buy cash, but if I pay myself more to achieve this surplus to create savings, which I can, I'll pay a lot more tax drawing it out from my company. Where as if I PCP sensibly and use my disposable monthly income without paying myself more, the net effect is I'm saving money against the extra tax I'd pay (e.g £10k interest over 3 years versus £50k extra tax in 3 years, very approx).
Also sensible financing means other spare monies, which otherwise would be tied up, can be spent enjoying life before your dead. And we can't really predict when that will happen.
Finance is a personal thing and there are too many variables involved. Then add in human factors, like what is acceptable to you or your mindset. Your best to pick a value and do the maths and pro/cons of each finance type for that value, then see what your most comfortable with.
Either way your paying more than an outright cash purchase, but it's at what interest is acceptable to you. Always work on the basis that money is disposable and you won't get anything back, that's worst case - unless the agreement is outright purchase in the end, which you then have an asset.
As an example I haven't seen discussed... I can afford to buy cash, but if I pay myself more to achieve this surplus to create savings, which I can, I'll pay a lot more tax drawing it out from my company. Where as if I PCP sensibly and use my disposable monthly income without paying myself more, the net effect is I'm saving money against the extra tax I'd pay (e.g £10k interest over 3 years versus £50k extra tax in 3 years, very approx).
Also sensible financing means other spare monies, which otherwise would be tied up, can be spent enjoying life before your dead. And we can't really predict when that will happen.
Facinating thread!
Looking back I'm in the £250-300k gone after 20 years of buying 3 year old performance cars and then trading 2 years later (with a few exceptions). Thing is just don't get on with finance as I have tried it a couple of times on the basis of keeping my cash for other things, but I soon get frustrated with seeing interest costs when I know I could pay the loan off and I then settle them after a few months. I now don't bother having learnt that debt doesn't suit me!
equally I get that if you want the latest greatest fastest then PCP etc. can make a lot of sense.
The smartest way to buy new as has already been given above is something I recently helped my father in law with. He bought a golf GTI mk7 had the cash but got a good additional discount and free servicing by taking interest free finance for a year. He then paid it off early, after keeping the money Ina 1 year bond at approx 1.5% which was free money on top of his discount.
Not sure where these easy to obtain 5% accounts are btw!
Looking back I'm in the £250-300k gone after 20 years of buying 3 year old performance cars and then trading 2 years later (with a few exceptions). Thing is just don't get on with finance as I have tried it a couple of times on the basis of keeping my cash for other things, but I soon get frustrated with seeing interest costs when I know I could pay the loan off and I then settle them after a few months. I now don't bother having learnt that debt doesn't suit me!
equally I get that if you want the latest greatest fastest then PCP etc. can make a lot of sense.
The smartest way to buy new as has already been given above is something I recently helped my father in law with. He bought a golf GTI mk7 had the cash but got a good additional discount and free servicing by taking interest free finance for a year. He then paid it off early, after keeping the money Ina 1 year bond at approx 1.5% which was free money on top of his discount.
Not sure where these easy to obtain 5% accounts are btw!
Some surprising (to me) comments on here - some people really don't get the basics of finance so should really get some proper advice before signing a PCP (from a friend not the financier)
no offence to those who posted but its not rocket science, for example:
buy a £100k car
pay £30k deposit, finance remaining £70k
pay £40k of monthly PCP payments over 3 years with a balloon of £40k
total cost is 30 + 40 +40 so 110 - you are paying 10 for the PCP over cash
do you get deposit back? Why would you expect that? it is the amount you paid upfront to reduce what you owe
do you pay interest on balloon/GFV? you borrowed £70k, why would you pay interest on £40k not £70k?
scary stuff!
Still PCP is not the devils work, and paying monthlies and giving car back is a perfectly valid strategy if you understand the cost - you just need to consider spending £100k and taking the depreciation hit and the opportunity cost vs the interest cost plus the loss on true market value vs prudent GFV when you hand keys back (they always pitch the GFV at less than the expected MV to buffer their risk)
It also means a driver can finance a car when they only have £30k not £100k of capital but can afford the finance and maintenance. This is often characterised on here as part of the UK frivolous debt problem. Again if you are sensible and understand risks / don't over-borrow / have a contingency fund / can afford maintenance, it can be a justified approach.
no offence to those who posted but its not rocket science, for example:
buy a £100k car
pay £30k deposit, finance remaining £70k
pay £40k of monthly PCP payments over 3 years with a balloon of £40k
total cost is 30 + 40 +40 so 110 - you are paying 10 for the PCP over cash
do you get deposit back? Why would you expect that? it is the amount you paid upfront to reduce what you owe
do you pay interest on balloon/GFV? you borrowed £70k, why would you pay interest on £40k not £70k?
scary stuff!
Still PCP is not the devils work, and paying monthlies and giving car back is a perfectly valid strategy if you understand the cost - you just need to consider spending £100k and taking the depreciation hit and the opportunity cost vs the interest cost plus the loss on true market value vs prudent GFV when you hand keys back (they always pitch the GFV at less than the expected MV to buffer their risk)
It also means a driver can finance a car when they only have £30k not £100k of capital but can afford the finance and maintenance. This is often characterised on here as part of the UK frivolous debt problem. Again if you are sensible and understand risks / don't over-borrow / have a contingency fund / can afford maintenance, it can be a justified approach.
Edited by Adam B on Friday 21st July 11:08
^^^ Governor of Bank of England thinks the car lending/finance market is on the verge of a catastrophe. Another indicator is that credit card defaults are back up to 2008/2009 levels. Its not going to be pretty for a few years post Brexit. The worrying thing is that Brexit hasn't even occurred yet..still not bad if you're liquid.
Desert Dragon said:
^^^ Governor of Bank of England thinks the car lending/finance market is on the verge of a catastrophe. Another indicator is that credit card defaults are back up to 2008/2009 levels. Its not going to be pretty for a few years post Brexit. The worrying thing is that Brexit hasn't even occurred yet..still not bad if you're liquid.
totally agree, nothing wrong with sensible borrowing though (shame it seems only 20% is)Thanks to all for their input.
The conclusions that I have come to are
- Performance cars have a shorter economic life than mainstream cars, so running them for longer when they are without a warranty does present a higher risk than usual around write off and repairs. You also have less time to enjoy the flatter end of the depreciation curve.
- Your extra costs over depreciation to fund your cars comes through either dealer margins when buying with cash or interest rates etc when buying on finance - you are always paying something beyond depreciation.
I guess the most costly way to own a car is through PCP, followed more closely than I thought, by self funding (through cash or cheap bank loans) and then finally running a performance car medium to long term.
The overall point is that the total gap between the 3 approaches (PCP, self funding or long term ownership) is much less than I thought however with the PCP option you are getting into brand new cars every 2 years.
Looking back on my car history, would I have preferred to pay an extra couple of hundred quid a month for a brand new car every two years OR have been running cars that were 4 to 6 years old and changing every two years OR keeping one car for much longer and running it into the ground before buying another every say 6 years?
I think the economics over a decade suggest all three approaches are closer in overall cost than we might have thought and if you are able to take advantage of manufacturer backed promotions like the famed S8 lease or the M5 interest free loans, it might just make PCP / the new car approach more competitive OVER THE LONGER TERM as you enjoy a newer arguably better car for the same cost.
Btw it is clear that the gap widens across the 3 approaches if you consider thme in the context of a single car.
The conclusions that I have come to are
- Performance cars have a shorter economic life than mainstream cars, so running them for longer when they are without a warranty does present a higher risk than usual around write off and repairs. You also have less time to enjoy the flatter end of the depreciation curve.
- Your extra costs over depreciation to fund your cars comes through either dealer margins when buying with cash or interest rates etc when buying on finance - you are always paying something beyond depreciation.
I guess the most costly way to own a car is through PCP, followed more closely than I thought, by self funding (through cash or cheap bank loans) and then finally running a performance car medium to long term.
The overall point is that the total gap between the 3 approaches (PCP, self funding or long term ownership) is much less than I thought however with the PCP option you are getting into brand new cars every 2 years.
Looking back on my car history, would I have preferred to pay an extra couple of hundred quid a month for a brand new car every two years OR have been running cars that were 4 to 6 years old and changing every two years OR keeping one car for much longer and running it into the ground before buying another every say 6 years?
I think the economics over a decade suggest all three approaches are closer in overall cost than we might have thought and if you are able to take advantage of manufacturer backed promotions like the famed S8 lease or the M5 interest free loans, it might just make PCP / the new car approach more competitive OVER THE LONGER TERM as you enjoy a newer arguably better car for the same cost.
Btw it is clear that the gap widens across the 3 approaches if you consider thme in the context of a single car.
sasha320 said:
Thanks to all for their input.
Btw it is clear that the gap widens across the 3 approaches if you consider thme in the context of a single car.
One other point of view is that there are a fair number of people on PH (I have met quite a few) who will generally not admit it on the forums but have taken eye wateringly expensive PCP deals just to get into the car of their dreams - me included !Btw it is clear that the gap widens across the 3 approaches if you consider thme in the context of a single car.
There are always lots of talk about placing cash into 5% funds and what-have-you and people buying dozens of Porsches with cash but many people on here simply don't have the money to buy said car and through the miracle of car finance, the door opens.
My first Porsche was done on a 12.5% APR deal (gulp!) on 3-Year PCP, I had no history with Porsche and all my previous cars were bought with cash. The silver lining was every single pound of the interest (£8000ish) was sent back to me by Porsche finance after I gave the car back due to a legal error on my contract !
I also got a far better PCP deal with my 2nd Porsche - a 997 Turbo PDK (I put £6k down) as I had good payment history and the basics of a relationship with Porsche. With the Turbo, at the end of this 2nd PCP agreement I ended up getting over £20k back due to the crazyness of the used car market, the used market price had inflated the cars price way beyond expectations.
I suppose the moral of my story with PCP is that although it is the devils work, I actually did alright out of my two deals in the end and I have so many happy memories of driving the cars that will be with me forever. Memories I would not have had if car finance was not available.
In addition to that am looking at the used prices for 991 Turbos' and brand new prices for the 781 boxster and I actually saved even more money by getting into the cars when I did, for reasons not just related to the cost, the cars themselves have changed and not for the better.
If you have your heart set on the 997 Turbo, I would say do it, buy a really nice example so it can be flipped or sold easy and get a finance quote from a specialist like Oracle. Put as small a deposit as you can get away with and keep the rest of the cash in the bank. If you get into trouble with the repayments just flip or sell the car for something cheaper. You can sell your Turbo to a specialist in less than 48 hours. The car market will pop and crash at some stage in the near future but who knows when.
One things for sure, used 991.2 Turbo's won't be any cheaper than a 997.2 Turbo was at 3 years old, 1 year old 991.2 Turbo's are selling for over new £128k list price? That is nuts.
Carl_Manchester said:
One things for sure, used 991.2 Turbo's won't be any cheaper than a 997.2 Turbo was at 3 years old, 1 year old 991.2 Turbo's are selling for over new £128k list price? That is nuts.
I noted this too being newer into the Porsche market. 991.2 prices are high and availability is low. I wonder whether this is reduced production to offset porsches worry of car appeal when going turbo charged.Gassing Station | 911/Carrera GT | Top of Page | What's New | My Stuff