600LT v 720S

[Juno]

Purple Man said:

I have driven both on track, quite a few times, the 720s is faster than the 600LT on every track I went on.
At Silverstone the 600LT is lost.
You need the 720s Performance Edition if possible with the roll cage and harness set up. It can be driven hard and there is a good sense of occasion with the rear wing braking.
On the road it is also a no brainer as the more advanced 720s suspension feels good.

Mclaren have cut back production of right hand drive cars to help the market, only time will tell if this is to late to firm up the prices, but at least it should stop any more excessive depreciation. So a late 2019 car should not drop as much as the earlier cars did, but it is probably a 15K a year drop, which would be fair if people stopped comparing it to a Porsche GT3RS, but to get a GT3RS you need to drop 50k on all the standard cars you buy off them. So in reality there is no difference, but it is a great marketing trick by Porsche.

TBH that’s an Urban Myth,my first ever new Porsche is a GT3RS,I’ve only ever bought 2 Porsche’s which were both used GT3’s and I didn’t loose hardly anything on those

I’m very much debating 600LT/675LT and this topic has made my mind up, it’s a no brainer!

[anonymous-user]

scotty1 said:

I’m just in the process of buying a used 600lt. There is a lot of talk about the high volume of cars but I was under the impression there were only 180 hard top 600lts made.. production now stopped. The specs vary accordingly so doesn’t this make them a rare car and potentially good value at 150k ?

Yep, I think the final number was 176 RHD Coupes, but certainly no more than 180.

[Jules360]

Man of gas said:

But that proves my point, it’s not a GFV it’s an optional final payment. It can’t be optimistic as it is determined only by the value of the car, the APR and the amount paid back over the term of the agreement. You want it lower then increase the upfront payment or the monthlies.
I am a doctor but i’m beginning to think i should have gone into finance.

If the GFV is materially higher than the future market value, then the deposit plus monthly payments would not have been sufficient to cover the interest plus loss on final sale price of the car at market levels.

I think you chose the correct career path.

[sone]

Jules360 said:

Man of gas said:

But that proves my point, it’s not a GFV it’s an optional final payment. It can’t be optimistic as it is determined only by the value of the car, the APR and the amount paid back over the term of the agreement. You want it lower then increase the upfront payment or the monthlies.
I am a doctor but i’m beginning to think i should have gone into finance.

If the GFV is materially higher than the future market value, then the deposit plus monthly payments would not have been sufficient to cover the interest plus loss on final sale price of the car at market levels.

I think you chose the correct career path.

I think the option for Mclaren is either discount the cars heavily to sell them or put them on these schemes to get them out of the door! Sort of kicking the can down the road but in the short term looks good on their books.

[Bispal]

Juno said:

I’m very much debating 600LT/675LT and this topic has made my mind up, it’s a no brainer!

So what has your mind concluded? ;-)

[ferdi p]

Jules360 said:

Man of gas said:

But that proves my point, it’s not a GFV it’s an optional final payment. It can’t be optimistic as it is determined only by the value of the car, the APR and the amount paid back over the term of the agreement. You want it lower then increase the upfront payment or the monthlies.
I am a doctor but i’m beginning to think i should have gone into finance.

If the GFV is materially higher than the future market value, then the deposit plus monthly payments would not have been sufficient to cover the interest plus loss on final sale price of the car at market levels.

I think you chose the correct career path.

[Man of gas]

My apologies if I haven’t made myself clear, obviously the finance company are in this to make money so the optional final payment must be set at a level where at the end of the agreement if the consumer walks away(as many do) without purchasing the car then the depreciation and interest is covered otherwise it would be a pretty short sighted business plan!
I still believe that most people don’t really understand the difference between a ‘normal PCP’ and a ‘HP with a balloon’ etc judging by the replies to my post!
As I decided not to go into finance as a career I need to go and inject someone.
👍

[cardigankid]

Juno said:

TBH that’s an Urban Myth,my first ever new Porsche is a GT3RS,I’ve only ever bought 2 Porsche’s which were both used GT3’s and I didn’t loose hardly anything on those

I’m very much debating 600LT/675LT and this topic has made my mind up, it’s a no brainer!

Which OPC do you deal with then?

[ferdi p]

Man of gas said:

My apologies if I haven’t made myself clear, obviously the finance company are in this to make money so the optional final payment must be set at a level where at the end of the agreement if the consumer walks away(as many do) without purchasing the car then the depreciation and interest is covered otherwise it would be a pretty short sighted business plan!
I still believe that most people don’t really understand the difference between a ‘normal PCP’ and a ‘HP with a balloon’ etc judging by the replies to my post!
As I decided not to go into finance as a career I need to go and inject someone.
??

& I genuinely still don't understand how you can't see that some finance companies get it very wrong!

Many years ago I financed a BMW 535d with a PCP, the GFV was 14k, the car was worth 11k max, needless to say I handed the car back & they sold it at a BCA auction for 9.8k before fees!

I think the current GFV's being set by finance companies on new McLarens are overly optimistic, I could be wrong but that's my opinion.

[430SD_LP640]

i normally tend not to comment on the topics related to how I earn a living (so i stay away from Aston Martin/Ferrari share price discussion - fun to watch though) but i am so surprised lots of people do not understand how PCP works - or put in a different way, people think financing companies are run by charities. so I am trying to help some who don't work in the industry understand.

I put the conclusion first. GFV (or the so called balloon payment in the end of PCP) does NOT have a direct relationship of the future value of the underlying asset. GFV is used to tweak the monthly interest payment, which is a (small) part of monthly TOTAL payment. You are implicitly paying an estimated depreciation every month, which tends to have large margin to protect the vendor's interest. The point people tend not to understand is the difference between ANNUALISED INTEREST RATE and APR. this is what drives the implied depreciation (it has very little to do with GFV).

just use a random example to show how to play this game. Assuming the list price of a car, not a specific brand, £220K, you pay £10K deposit, 48 months term, GFV £132K (financing companies tend to show consumers GFV as 60% of list price for 4 years but later you see it really does not matter), monthly payment £2500. this would translate to 6.06% APR (which is average of APR in the market by the way but again the absolute value of APR does not matter either, later you will see). Let's say this is offered by financing company A.

for the same car, financing company B offers below, £220K list price, 10K deposit, 48months, GFV £160K, monthly payment £1984. This would translate to 6.06% APR too.

Can you confidently say company B knows nothing about the car market the future price of this car will be much lower than 160K. it is too aggressive in GFV so it will lose money for sure. Well, it depends. The answer to the question is what annualised depreciation has been built in? Then one need to figure out what is the annualised interest rate company A and company B offer. if company A offers 4% annulised interest rate and company B offers 1.03% annualised interest rate (i know this is very aggressive but just want to show the math), both offers BAKE IN THE EXACTLY SAME IMPLICIT ANNUAL DEPRECITION DURING 48-MONTH TERM. To be accurate, offer A assumes monthly depreciation of £1800 or £21600 per year, offer B assumes monthly depreciation £1803.75 or £21645 per year despite vastly different GFV.

The only thing that drives the implicit depreciation is the differential of interest rate and APR. as I mentioned above, GFV is effectively just a number that makes customers feel better (and calculate the credit available)!

now you may wonder why someone offers 4% interest rate to consumers and someone offers 1% (ok it is a bit extreme but 2.5% is not unrealistic). Negative rate drives banks, especially banks with large funding exposure in EURO, to seek yield. Large banks have extremely low funding cost plus auto loans can be repackaged into ABS and resell to other investors to offload (at least partial offload) credit risk. So they can offer very attractive interest rate. I belive Lambo and Mclaren work with large UK and EU banks whose funding cost is extremely low and getting lower. last several months you see funding rate/yield collapsing in certain markets.

Lastly, Mclaren is not the one who "subsidises" PCP deals. Mclaren dealers actually make money by referring customers to financing companies! Mclaren has a bond trading in the market if you care about its financial health (that's the reason why it has to disclose quarterly results). currently it is trading at 96% of PAR value - i would not worry about its heath!

Edited by 430SD_LP640 on Saturday 22 February 02:02

[ferdi p]

Thank you, very informative...

I'm no mathematician but I'll show you how I work it out:

A. Buy 75k car with... 10k deposit, 24x1000 + 50k GFV = 84k ... or hand it back & the car cost 34k to own over the 2yr period.

B. Buy 75k car with cash, car worth 36k after 2yrs & so costing 39k to own over the same 2yr period.

Of course this is a very simplistic way of looking at it but many will be working it out this way. They will use current depreciation levels to estimate the future value.

I'm absolutely sure both McLaren & the finance company are making money just like DFS are ever time they sell a sofa with 0% interest over 50 years!

I'm also genuinely convinced that some of the new car finance deals being offered by McLaren will work out cheaper than buying with cash.

[Matty3]

Thanks for explaining that - very informative

[Graveworm]

ferdi p said:

Thank you, very informative...

I'm no mathematician but I'll show you how I work it out:

A. Buy 75k car with... 10k deposit, 24x1000 + 50k GFV = 84k ... or hand it back & the car cost 34k to own over the 2yr period.

B. Buy 75k car with cash, car worth 36k after 2yrs & so costing 39k to own over the same 2yr period.

Of course this is a very simplistic way of looking at it but many will be working it out this way. They will use current depreciation levels to estimate the future value.

I'm absolutely sure both McLaren & the finance company are making money just like DFS are ever time they sell a sofa with 0% interest over 50 years!

I'm also genuinely convinced that some of the new car finance deals being offered by McLaren will work out cheaper than buying with cash.

But very seldom cheaper than buying on finance then clearing it immediately.

[Carl_Manchester]

IMI A said:

MAC 720S said:

ferdi p said:

IMI A said:

Ridiculous VFM. Paid more for a brand new 2018 991.2 turbo s which puts things into perspective.

https://www.pistonheads.com/classifieds/used-cars/...

Sold immediately!

If priced correctly they fly off the shelves!

It was sold before it was even advertised.

Very nice deal. I’m sure there may b more

Well slap my arse and call me shirley. the car so new there was no dust on it, i can't imagine the car being that much of a disappointment !

[Jules360]

430SD_LP640 said:

i normally tend not to comment on the topics related to how I earn a living (so i stay away from Aston Martin/Ferrari share price discussion - fun to watch though) but i am so surprised lots of people do not understand how PCP works - or put in a different way, people think financing companies are run by charities. so I am trying to help some who don't work in the industry understand.

I put the conclusion first. GFV (or the so called balloon payment in the end of PCP) does NOT have a direct relationship of the future value of the underlying asset. GFV is used to tweak the monthly interest payment, which is a (small) part of monthly TOTAL payment. You are implicitly paying an estimated depreciation every month, which tends to have large margin to protect the vendor's interest. The point people tend not to understand is the difference between ANNUALISED INTEREST RATE and APR. this is what drives the implied depreciation (it has very little to do with GFV).

just use a random example to show how to play this game. Assuming the list price of a car, not a specific brand, £220K, you pay £10K deposit, 48 months term, GFV £132K (financing companies tend to show consumers GFV as 60% of list price for 4 years but later you see it really does not matter), monthly payment £2500. this would translate to 6.06% APR (which is average of APR in the market by the way but again the absolute value of APR does not matter either, later you will see). Let's say this is offered by financing company A.

for the same car, financing company B offers below, £220K list price, 10K deposit, 48months, GFV £160K, monthly payment £1984. This would translate to 6.06% APR too.

Can you confidently say company B knows nothing about the car market the future price of this car will be much lower than 160K. it is too aggressive in GFV so it will lose money for sure. Well, it depends. The answer to the question is what annualised depreciation has been built in? Then one need to figure out what is the annualised interest rate company A and company B offer. if company A offers 4% annulised interest rate and company B offers 1.03% annualised interest rate (i know this is very aggressive but just want to show the math), both offers BAKE IN THE EXACTLY SAME IMPLICIT ANNUAL DEPRECITION DURING 48-MONTH TERM. To be accurate, offer A assumes monthly depreciation of £1800 or £21600 per year, offer B assumes monthly depreciation £1803.75 or £21645 per year despite vastly different GFV.

The only thing that drives the implicit depreciation is the differential of interest rate and APR. as I mentioned above, GFV is effectively just a number that makes customers feel better (and calculate the credit available)!

now you may wonder why someone offers 4% interest rate to consumers and someone offers 1% (ok it is a bit extreme but 2.5% is not unrealistic). Negative rate drives banks, especially banks with large funding exposure in EURO, to seek yield. Large banks have extremely low funding cost plus auto loans can be repackaged into ABS and resell to other investors to offload (at least partial offload) credit risk. So they can offer very attractive interest rate. I belive Lambo and Mclaren work with large UK and EU banks whose funding cost is extremely low and getting lower. last several months you see funding rate/yield collapsing in certain markets.

Lastly, Mclaren is not the one who "subsidises" PCP deals. Mclaren dealers actually make money by referring customers to financing companies! Mclaren has a bond trading in the market if you care about its financial health (that's the reason why it has to disclose quarterly results). currently it is trading at 96% of PAR value - i would not worry about its heath!

Edited by 430SD_LP640 on Saturday 22 February 02:02

Are you not reverse engineering this, assuming that the GFVs are correct in both cases and so implying a different interest rate is being offered ?

In simple term, lets assume after 4 years the value of the car turns out to be 132k and both want to buy the car.

if you went with company A, the you would have paid 10k deposit, 120k in monthly payments and then buy the car for 132k = 262k.

If you chose company B, then you paid the 10k deposit, 95k in monthly payments and can then buy a similar car for 132k. Total cost 237k.

Or looked at from the other side of the fence, if the car is returned and the finance company has to sell it for 232k, company A is obviously better off.

Unless I have misunderstood you somewhere.

[BlackR8]

Graveworm said:

ferdi p said:

Thank you, very informative...

I'm no mathematician but I'll show you how I work it out:

A. Buy 75k car with... 10k deposit, 24x1000 + 50k GFV = 84k ... or hand it back & the car cost 34k to own over the 2yr period.

B. Buy 75k car with cash, car worth 36k after 2yrs & so costing 39k to own over the same 2yr period.

Of course this is a very simplistic way of looking at it but many will be working it out this way. They will use current depreciation levels to estimate the future value.

I'm absolutely sure both McLaren & the finance company are making money just like DFS are ever time they sell a sofa with 0% interest over 50 years!

I'm also genuinely convinced that some of the new car finance deals being offered by McLaren will work out cheaper than buying with cash.

But very seldom cheaper than buying on finance then clearing it immediately.

Is there not a penalty or the like if you get finance and then clear it immediately so as not to incur any interest or charges?
I have never financed a vehicle and as a result always feel disadvantaged when negotiating for a car. Dealers often say they can do much better deals if I take finance but there is very little they can do if the car is bought outright.

[Graveworm]

BlackR8 said:

Graveworm said:

ferdi p said:

Thank you, very informative...

I'm no mathematician but I'll show you how I work it out:

A. Buy 75k car with... 10k deposit, 24x1000 + 50k GFV = 84k ... or hand it back & the car cost 34k to own over the 2yr period.

B. Buy 75k car with cash, car worth 36k after 2yrs & so costing 39k to own over the same 2yr period.

Of course this is a very simplistic way of looking at it but many will be working it out this way. They will use current depreciation levels to estimate the future value.

I'm absolutely sure both McLaren & the finance company are making money just like DFS are ever time they sell a sofa with 0% interest over 50 years!

I'm also genuinely convinced that some of the new car finance deals being offered by McLaren will work out cheaper than buying with cash.

But very seldom cheaper than buying on finance then clearing it immediately.

Is there not a penalty or the like if you get finance and then clear it immediately so as not to incur any interest or charges?
I have never financed a vehicle and as a result always feel disadvantaged when negotiating for a car. Dealers often say they can do much better deals if I take finance but there is very little they can do if the car is bought outright.

Yes, there can be but it's capped. That's why, it's best to compare every permutation. For example the last car I bought the best deal was after sorting the pricey was to finance the minimum amount (3K) to trigger the deposit contribution of 2K then clear it. There was no penalty.

If they do apply a penalty then its best to initially go for the lowest amount over the longest period as the max they can charge is 2 months interest.

If you have less than 12 months left on your plan, providers can charge up to 28 days’ interest. If you have more than a year to go, providers can add an extra 30 days or one calendar month.

[Graveworm]

BlackR8 said:

Graveworm said:

ferdi p said:

Thank you, very informative...

I'm no mathematician but I'll show you how I work it out:

A. Buy 75k car with... 10k deposit, 24x1000 + 50k GFV = 84k ... or hand it back & the car cost 34k to own over the 2yr period.

B. Buy 75k car with cash, car worth 36k after 2yrs & so costing 39k to own over the same 2yr period.

Of course this is a very simplistic way of looking at it but many will be working it out this way. They will use current depreciation levels to estimate the future value.

I'm absolutely sure both McLaren & the finance company are making money just like DFS are ever time they sell a sofa with 0% interest over 50 years!

I'm also genuinely convinced that some of the new car finance deals being offered by McLaren will work out cheaper than buying with cash.

But very seldom cheaper than buying on finance then clearing it immediately.

Is there not a penalty or the like if you get finance and then clear it immediately so as not to incur any interest or charges?
I have never financed a vehicle and as a result always feel disadvantaged when negotiating for a car. Dealers often say they can do much better deals if I take finance but there is very little they can do if the car is bought outright.

Yes, there can be but it's capped. That's why, it's best to compare every permutation. For example the last car I bought the best deal was after sorting the cash price, was to finance the minimum amount (3K) to trigger the deposit contribution of 2K then clear it. There was no penalty.

If they do apply a penalty then its best to initially go for the lowest amount over a year as the max they can charge is 1 months interest. But its doubled over that.

If you have less than 12 months left on your plan, providers can charge up to 28 days’ interest. If you have more than a year to go, providers can add an extra 30 days

[BlackR8]

Graveworm said:

Yes, there can be but it's capped. That's why, it's best to compare every permutation. For example the last car I bought the best deal was after sorting the cash price, was to finance the minimum amount (3K) to trigger the deposit contribution of 2K then clear it. There was no penalty.

If they do apply a penalty then its best to initially go for the lowest amount over a year as the max they can charge is 1 months interest. But its doubled over that.

If you have less than 12 months left on your plan, providers can charge up to 28 days’ interest. If you have more than a year to go, providers can add an extra 30 days

Very useful to know thanks.

[ferdi p]

Graveworm said:

Yes, there can be but it's capped. That's why, it's best to compare every permutation. For example the last car I bought the best deal was after sorting the cash price, was to finance the minimum amount (3K) to trigger the deposit contribution of 2K then clear it. There was no penalty.

If they do apply a penalty then its best to initially go for the lowest amount over a year as the max they can charge is 1 months interest. But its doubled over that.

If you have less than 12 months left on your plan, providers can charge up to 28 days’ interest. If you have more than a year to go, providers can add an extra 30 days

Yep, absolutely right to explore all permutations.

I did exactly what you said when I bought an i8 a few years back. Got a 5k deposit contribution then paid it off 2 months later with no penalties!