New 540C vs. Used 570GT

New 540C vs. Used 570GT

Author
Discussion

andrew

9,953 posts

191 months

Sunday 21st October 2018
quotequote all
FrankieBee said:
Cost on say a 570S over three years is circa £60,000.
20k pa year in year out, effectively on depreciation alone ? no thanks laugh

as you say, to each their own

ferdi p

1,519 posts

171 months

Sunday 21st October 2018
quotequote all
Ferruccio said:
Nothing to do with snobbery.
You pay the APR.
Normally the finance company will make a good margin.
So what you are doing, as you say, is just insuring the value of your car in three years time.
Generally insurance companies make money.
So you lose.
A smart, experienced chap told me once never to insure a loss that I could afford.
(Obviously there is a legal requirement to insure driving the car.)
Another 'I know better than you' post...

Ferruccio

1,832 posts

118 months

Sunday 21st October 2018
quotequote all
ferdi p said:
Ferruccio said:
Nothing to do with snobbery.
You pay the APR.
Normally the finance company will make a good margin.
So what you are doing, as you say, is just insuring the value of your car in three years time.
Generally insurance companies make money.
So you lose.
A smart, experienced chap told me once never to insure a loss that I could afford.
(Obviously there is a legal requirement to insure driving the car.)
Another 'I know better than you' post...
I set out the economic case for paying cash.

ferdi p

1,519 posts

171 months

Sunday 21st October 2018
quotequote all
FrankieBee said:
It boggles my mind that some people actually invest their hard earned cash into, usually, a severely depreciating asset! There’s an old adage that if it flys, floats or f**ks you rent it. I apply the same principle to very expensive super cars. I could pay cash for one but I don’t...I’d rather leave the cash invested thank you. I prefer to place a deposit and pay a monthly “rental” for a brand new car over 3 years. Why? Because I know the guaranteed value, I have no worries about if the bottom falls out if this market, I have a full 3 year manufacturers warranty, I can drive it without worrying what I’ll get for it when I part exchange it, I can change for the latest model every 3 years or earlier if the numbers work or at the end hand back the keys and rinse and repeat.

Cost on say a 570S over three years is circa £60,000. If I had bought it I’d have taken that kind of depreciation/hit anyway plus no guarantee what I’d get for the car when I part ex or sell and my cash is still growing in the bank/investments.

Some will say ah but you don’t own it. Truth is I don’t give a monkeys what they think. The car is in my garage and I can drive it wherever and whenever I want. Who cares!

Some of the snobbery/looking down their nose at people who finance (read can’t actually afford) on here from those who have purchased their cars outright is cringeworthy.

Plus the above generally only works on new cars and even better if you can get a good discount. And it’s not a method for those who are looking for a “keeper” either.

Each to their own though
Totally agree...

However... admitting on this forum that you use finance is dangerous so expect loads of 'advice' from people much cleverer than you! smile

w44neg

Original Poster:

66 posts

123 months

Sunday 21st October 2018
quotequote all
No need to argue :-) I don’t care what people think about whether I can afford the car or not; they don’t know my financial situation to know whether I could afford 10 of the things or should be aiming my sights at a Renault Clio :-)

My question initially was simply about the best finance route to go down, as I don’t like throwing large amounts of cash in to a car. It simply doesn’t appeal.

ferdi p

1,519 posts

171 months

Sunday 21st October 2018
quotequote all
Ferruccio said:
I set out the economic case for paying cash.
But he said his cash was working better somewhere else, how can it be more economic to pay cash unless you presume that he's not telling the truth?

He effectively hires his dream motor for 3 years for £1600pcm & his cash is working harder in his business/investments.

I love cars & have had many, when I invested in my business many years ago, banks wouldn't help so I had to use my cash. I financed a Ferrari 360 as I didn't want to go without! I financed many cars over the next few years & loved every one of them. I was fortunate enough to no longer need finance from 2011 but I'd happily use it again if I could get a return on my cash higher than the finance costs!

av185

18,433 posts

126 months

Sunday 21st October 2018
quotequote all
ferdi p said:
if I could get a return on my cash higher than the finance costs!
'If' being the operative word I guess.

Many people taking finance do not though which is when financing a depreciating car can get very expensive.

Tony 1234

3,465 posts

226 months

Sunday 21st October 2018
quotequote all
andrew said:
jonah35 said:
These cars are in freefall
I have one and have been to manchester Mclaren today
I would go new with pcp and a gfv if finance companies still offer it on these

Oracle did financing via Alphera on these and they’re underwater and alphera are losing money on every finance deal they have done as they’re already worth less than their gfv one year into the 3 year deals they were doing

Buying new can cost less than used if you have a good GFV but the lenders now know they made a mistake so may not offer the same deals
absolutely
one of my bank clients will simply no-longer finance anything from woking
yikes wow!

Taffy66

5,964 posts

101 months

Sunday 21st October 2018
quotequote all
I can't see the attraction of owning outright a depreciating asset..I own Porsches, some depreciate and some appreciate and i treat them differently when paying for them..I love McLarens and will buy one at some point in the near future..If i buy a new one it would need to be a super attractive PCP with a GFV at the end as an insurance against out of control depreciation.
Failing that i'd buy a used one and let the first owner or finance company take the massive hit..

RBT0

1,476 posts

118 months

Sunday 21st October 2018
quotequote all
It's a shame we need to take into account depreciation on such great cars before buying them but agree unless there are plenty of money to waste.

Your point about first owner now can be a bit wrong with good discount from list (or cars on stock). Issue is, there is no stop to the fall, and this will lead to even further value drop, just help first buyers to jump in the world of McLaren...

So sad, so true, so buy with head as well not just heart

Taffy66

5,964 posts

101 months

Sunday 21st October 2018
quotequote all
I think the rules on how to pay for an expensive toy changes depending on age and lifestyle priorities..
As a self employed 52 year old high tax rate paying individual, my priorities is to maximise my pension contributions to mitigate paying 40-45% of my hard earned income. Paying for expensive cars has to come secondary to that, sometimes i'll have saved up cash to buy outright and sometimes i need to finance..No shame in that, just sometimes it makes fiscal sense.And on that note from a purely financial POV it makes zero sense to buy any depreciating asset whether you pay outright or finance, both methods will impoverish you..!
For an over 65 year old buyer with all kids hopefully settled in well paying jobs and mortgage free then circumstances change dramatically..With no avenue to pay into a pension pot and the only source of income is drawing on pensions, then it goes without saying paying outright becomes more achievable and sometimes not, depending on the individuals situation..

Taffy66

5,964 posts

101 months

Sunday 21st October 2018
quotequote all
RBT0 said:
It's a shame we need to take into account depreciation on such great cars before buying them but agree unless there are plenty of money to waste.

Your point about first owner now can be a bit wrong with good discount from list (or cars on stock). Issue is, there is no stop to the fall, and this will lead to even further value drop, just help first buyers to jump in the world of McLaren...

So sad, so true, so buy with head as well not just heart
Sorry, i need to add that i fully agree with you that sometimes if you take everything into account, factors such as warranty, trade in, discount and extremely attractive PCP deals it does indeed make much more sense to buy a new one..An extreme example is i bought my GT3 new which is much cheaper than buying used..

RBT0

1,476 posts

118 months

Sunday 21st October 2018
quotequote all
You've just ruined all with your last sentence.

What a pile of bull***x, only few can buy GT3 from new. Not relevant at all!


Taffy66

5,964 posts

101 months

Sunday 21st October 2018
quotequote all
RBT0 said:
You've just ruined all with your last sentence.

What a pile of bull***x, only few can buy GT3 from new. Not relevant at all!
The last sentence was my rather feeble attempt at dry humour..

RBT0

1,476 posts

118 months

Sunday 21st October 2018
quotequote all
lol

Jules360

1,949 posts

201 months

Sunday 21st October 2018
quotequote all
FrankieBee said:
It boggles my mind that some people actually invest their hard earned cash into, usually, a severely depreciating asset! There’s an old adage that if it flys, floats or f**ks you rent it. I apply the same principle to very expensive super cars. I could pay cash for one but I don’t...I’d rather leave the cash invested thank you. I prefer to place a deposit and pay a monthly “rental” for a brand new car over 3 years. Why? Because I know the guaranteed value, I have no worries about if the bottom falls out if this market, I have a full 3 year manufacturers warranty, I can drive it without worrying what I’ll get for it when I part exchange it, I can change for the latest model every 3 years or earlier if the numbers work or at the end hand back the keys and rinse and repeat.

Cost on say a 570S over three years is circa £60,000. If I had bought it I’d have taken that kind of depreciation/hit anyway plus no guarantee what I’d get for the car when I part ex or sell and my cash is still growing in the bank/investments.

Some will say ah but you don’t own it. Truth is I don’t give a monkeys what they think. The car is in my garage and I can drive it wherever and whenever I want. Who cares!

Some of the snobbery/looking down their nose at people who finance (read can’t actually afford) on here from those who have purchased their cars outright is cringeworthy.

Plus the above generally only works on new cars and even better if you can get a good discount. And it’s not a method for those who are looking for a “keeper” either.

Each to their own though
I really don't see the difference. You get a 200k car, keep it for 3 years and it's worth say 130k. The finance company will generally be defensive over a GFV, so let's assume here it's 120k. OK they occasionally get it wrong (see McLaren), but to stay in business they must get it right more than they don't. So hand it back and forgo 10k not to have to sell it. The remaining piece is whether the return on your invested cash net of any tax is better than the APR you are paying on the loan. All swings and roundabouts, but the finance company is making money and as it's a zero sum game, generally the guy taking the finance is losing.

FrankieBee

757 posts

121 months

Sunday 21st October 2018
quotequote all
Jules360 said:
FrankieBee said:
It boggles my mind that some people actually invest their hard earned cash into, usually, a severely depreciating asset! There’s an old adage that if it flys, floats or f**ks you rent it. I apply the same principle to very expensive super cars. I could pay cash for one but I don’t...I’d rather leave the cash invested thank you. I prefer to place a deposit and pay a monthly “rental” for a brand new car over 3 years. Why? Because I know the guaranteed value, I have no worries about if the bottom falls out if this market, I have a full 3 year manufacturers warranty, I can drive it without worrying what I’ll get for it when I part exchange it, I can change for the latest model every 3 years or earlier if the numbers work or at the end hand back the keys and rinse and repeat.

Cost on say a 570S over three years is circa £60,000. If I had bought it I’d have taken that kind of depreciation/hit anyway plus no guarantee what I’d get for the car when I part ex or sell and my cash is still growing in the bank/investments.

Some will say ah but you don’t own it. Truth is I don’t give a monkeys what they think. The car is in my garage and I can drive it wherever and whenever I want. Who cares!

Some of the snobbery/looking down their nose at people who finance (read can’t actually afford) on here from those who have purchased their cars outright is cringeworthy.

Plus the above generally only works on new cars and even better if you can get a good discount. And it’s not a method for those who are looking for a “keeper” either.

Each to their own though
I really don't see the difference. You get a 200k car, keep it for 3 years and it's worth say 130k. The finance company will generally be defensive over a GFV, so let's assume here it's 120k. OK they occasionally get it wrong (see McLaren), but to stay in business they must get it right more than they don't. So hand it back and forgo 10k not to have to sell it. The remaining piece is whether the return on your invested cash net of any tax is better than the APR you are paying on the loan. All swings and roundabouts, but the finance company is making money and as it's a zero sum game, generally the guy taking the finance is losing .
Define losing? Losing in the fact I have absolutely no worry what the value of the car will be when I either hand it back or part ex or that I love to sleep at night with no worry whatsoever what the value of my “investment” in the garage is worth or will be worth when the bottom crashes out of the super car market as it surely will. Maybe I have “lost”’ that I’ve paid more financially for the privilege to have the car (but I made that calculed risk). That is countered by the benefits as I see them.

In the market today the attractive finance deals are maybe not available as some have said. Finance companies have woken up to the depreciation on these cars. I’m not advocating one approach over the other. There ‘s a choice and it depends on how the individual sees the risk.

Whatever route you go down financially and you have one of these cars in your garage there really is no loser. Enjoy your car OP however you fund it.

Ferruccio

1,832 posts

118 months

Sunday 21st October 2018
quotequote all
WDISMYL said:
av185 said:
ferdi p said:
if I could get a return on my cash higher than the finance costs!
'If' being the operative word I guess.

Many people taking finance do not though which is when financing a depreciating car can get very expensive.
People should build a simple spreadsheet. It’s very easy to do. You will find that even with low interest rates on the finance you still need to achieve a multiple of that on your investments to just break even.

People forget in the comparative calculation that the person who buys in cash can use the monthly payments that he would have been spending to invest each month in their business/investments . Over time this makes a huge difference.

The simple fact is buying a car on finance is leveraging a depreciating asset. It is an illusion to think you aren’t putting cash into it. You are and on top of that you are paying interest to do it.

Ultimately it is for the individual to do what they wish. My gripe is simply that in general most people have no idea of the true cost of it. And many of them would never do it if they fully understood the true cost.

Edited by WDISMYL on Sunday 21st October 11:11
People also compare pre and post tax numbers.

Jules360

1,949 posts

201 months

Sunday 21st October 2018
quotequote all
FrankieBee said:
Jules360 said:
FrankieBee said:
It boggles my mind that some people actually invest their hard earned cash into, usually, a severely depreciating asset! There’s an old adage that if it flys, floats or f**ks you rent it. I apply the same principle to very expensive super cars. I could pay cash for one but I don’t...I’d rather leave the cash invested thank you. I prefer to place a deposit and pay a monthly “rental” for a brand new car over 3 years. Why? Because I know the guaranteed value, I have no worries about if the bottom falls out if this market, I have a full 3 year manufacturers warranty, I can drive it without worrying what I’ll get for it when I part exchange it, I can change for the latest model every 3 years or earlier if the numbers work or at the end hand back the keys and rinse and repeat.

Cost on say a 570S over three years is circa £60,000. If I had bought it I’d have taken that kind of depreciation/hit anyway plus no guarantee what I’d get for the car when I part ex or sell and my cash is still growing in the bank/investments.

Some will say ah but you don’t own it. Truth is I don’t give a monkeys what they think. The car is in my garage and I can drive it wherever and whenever I want. Who cares!

Some of the snobbery/looking down their nose at people who finance (read can’t actually afford) on here from those who have purchased their cars outright is cringeworthy.

Plus the above generally only works on new cars and even better if you can get a good discount. And it’s not a method for those who are looking for a “keeper” either.

Each to their own though
I really don't see the difference. You get a 200k car, keep it for 3 years and it's worth say 130k. The finance company will generally be defensive over a GFV, so let's assume here it's 120k. OK they occasionally get it wrong (see McLaren), but to stay in business they must get it right more than they don't. So hand it back and forgo 10k not to have to sell it. The remaining piece is whether the return on your invested cash net of any tax is better than the APR you are paying on the loan. All swings and roundabouts, but the finance company is making money and as it's a zero sum game, generally the guy taking the finance is losing .
Define losing? Losing in the fact I have absolutely no worry what the value of the car will be when I either hand it back or part ex or that I love to sleep at night with no worry whatsoever what the value of my “investment” in the garage is worth or will be worth when the bottom crashes out of the super car market as it surely will. Maybe I have “lost”’ that I’ve paid more financially for the privilege to have the car (but I made that calculed risk). That is countered by the benefits as I see them.

In the market today the attractive finance deals are maybe not available as some have said. Finance companies have woken up to the depreciation on these cars. I’m not advocating one approach over the other. There ‘s a choice and it depends on how the individual sees the risk.

Whatever route you go down financially and you have one of these cars in your garage there really is no loser. Enjoy your car OP however you fund it.
Losing money. As someone else has pointed out, you are effectively buying insurance against the bottom falling out of the second hand market. It generally won't and the finance company will be better off, but occasionally you will come out on top. Same as insuring anything .......


av185

18,433 posts

126 months

Sunday 21st October 2018
quotequote all
FrankieBee said:
I love to sleep at night with no worry whatsoever what the value of my “investment” in the garage is worth or will be worth when the bottom crashes out of the super car market as it surely will.
Why would the bottom crash out of the supercar market?

We are seeing softening of prices across the car market board for the often stated reasons of uncertainty etc etc but a crash is extremely unlikely.

IF, and it is a big IF prices tank, one thing is certain. They will recover as rapidly as they fell as they did during the financial crisis 2008 2009.