How To Fund My McLaren

How To Fund My McLaren

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EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
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LordOfTheManor said:
Let me know where you're getting 10% - I'd like some of that !
A stocks and shares ISA that Invested into.Set up by the nice people at Jonstone Carmichael , Aberdeen. Average return over 5 years was just over 10% annually. Maybe I got lucky but worst so far has been 6%.
I will find out what the end was called for you

anonymous-user

53 months

Tuesday 7th July 2020
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EvoSid said:
Ready to buy now if the right car / deal comes up. But equally happy to wait for the right car / deal
What do you mean the world will look different next year ?
Sorry, I must have misunderstood. You said in your Porsche post that you were delaying until next year because you have a garage to build.

I’ve been through three significant recessions, none of which will match the pending Depression. Finance will not be easy to get, particularly for a frivolous supercar purchase. There is some pent up demand for cars at the moment, but give it a couple of months, car prices will crash, as will property. There is a lot of free cash being thrown around by the Government, but when that stops, the world will look very different next year. We are in for a very rough ride, the likes of which was last seen during the global Great Depression in the 1930’s - I’m pretty sure of that. That’s what I meant by the world looking very different next year.

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
MAC 720S said:
Sorry, I must have misunderstood. You said in your Porsche post that you were delaying until next year because you have a garage to build.

I’ve been through three significant recessions, none of which will match the pending Depression. Finance will not be easy to get, particularly for a frivolous supercar purchase. There is some pent up demand for cars at the moment, but give it a couple of months, car prices will crash, as will property. There is a lot of free cash being thrown around by the Government, but when that stops, the world will look very different next year. We are in for a very rough ride, the likes of which was last seen during the global Great Depression in the 1930’s - I’m pretty sure of that. That’s what I meant by the world looking very different next year.
You are right I am building a new garage and that will probably lead to the purchase of the car being delayed tlll next year. But f the right car / deal came up I would be happy to move on it.
Problem is getting a test drive as Cars selling fast just now but as you have said I also think that I agree with your future outlook and as such maybe it is a good idea to postpone a new car purchase for at least 3 months . I can see next year being tough on the economy for sure
Thanks for clarifying

LordOfTheManor

1,267 posts

110 months

Tuesday 7th July 2020
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People are enjoying the handouts now, but will their jobs be there when they go back ?? yikes

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
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davek_964 said:
I just don't like to have debt. I have not had debt for some years, and don't intend to again.

I also prefer to keep my monthly outgoings low. I make sure I have enough left in the bank that I wouldn't suddenly be homeless if the work economy suddenly tanked like it's about to.
Yes that is fair enough and I kind of think along the same lines as you, so I usually have enough stashed away to make sure all the bills can be paid for at least 2 years as you never know what is around the corner. Maybe that is why it has taken me so long to get round to thinking fo buying such a luxury car now instead of maybe 10years ago

Edited by EvoSid on Tuesday 7th July 23:22

anonymous-user

53 months

Tuesday 7th July 2020
quotequote all
LordOfTheManor said:
People are enjoying the handouts now, but will their jobs be there when they go back ?? yikes
Because of the Virus and BLM demonstrations taking priority within most of the MSM reporting, there’s a lot of economic news going under the radar / not being appreciated, which under normal circumstances, would be front page headlines. Over 15K jobs have been lost over the past couple of weeks alone, and that’s before the Furlough scheme stops and further job loses occur. There’s a real economic and social st-storm brewing.

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
LordOfTheManor said:
Let me know where you're getting 10% - I'd like some of that !
Ok the fund was called JCW Srategy 7 - Aegon . It had achieve 50.96% over a 5 year period.


Edited by EvoSid on Tuesday 7th July 23:23

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
LordOfTheManor said:
People are enjoying the handouts now, but will their jobs be there when they go back ?? yikes
That is the million dollar question we all want to know the answer to.
I am amazed at the number of super cars that are being bought just now and even more surprised to see the price going up by over £10-20K on some cars cars compared to what they were being advertised for just 1-2 months ago

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
MAC 720S said:
Because of the Virus and BLM demonstrations taking priority within most of the MSM reporting, there’s a lot of economic news going under the radar / not being appreciated, which under normal circumstances, would be front page headlines. Over 15K jobs have been lost over the past couple of weeks alone, and that’s before the Furlough scheme stops and further job loses occur. There’s a real economic and social st-storm brewing.
Not sure why job loses not being reported as predominately as they shod be be , but with you on your thinking of the economic crash coming and then add in the oil price in Aberdeen and it looks as if Aberdeen could be hit harder than most . Not a good feeling and probably the worst I have seen for job insecurity since we moved up to Aberdeenshire in 1988 , which was a bad economic situation , but I fear this could be worse as it is global


Edited by EvoSid on Tuesday 7th July 23:21

LordOfTheManor

1,267 posts

110 months

Tuesday 7th July 2020
quotequote all
Most dealers are "so busy" they don't bother to call you back or respond to emails (H R Owen banghead)


I remind them that "The busy man is never wise and the wise man is never busy" wobble

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
LordOfTheManor said:
Most dealers are "so busy" they don't bother to call you back or respond to emails (H R Owen banghead)


I remind them that "The busy man is never wise and the wise man is never busy" wobble
Ye shad that so far with 3 dealers.
I guess they are really busy and will get round to calling a mere mortal like me the they get quiet. I wonder if I will still be looking for a car then ?

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
RogGT-R said:
Do you have a property with significant equity?

Now, before people jump all over me on the ‘never use a mortgage to buy a car’, of course they are correct unless you use the correct repayment term and go in eyes wide open and do the maths.

I have just done the same exercise for a Ferrari I will be buying shortly. Please note I am not, and am not able to, offer Financial advice and this pertains to my thinking and personal situation only.

Borrow £100K again mortgage (assuming less than 60% loan to value on property which is my situation but maths alters the less equity you have). I have borrowed at 1.59% five year fix on five year term. Saving over dealer finance - min approx £3,000 per annum (£15K over 5 years!)
Do you have the cash in a business but, due to going over higher tax rate or £99,999 per annum, it’s better to spread over 5 * 1 year dividends at lower tax rate and use the (usually significant) saved tax to offset mortgage interest?
I am having the additional borrowing, which is obviously secured against the property NOT the vehicle, on the basis I will have also put £60K deposit into the car on top so less worried about possibility of horrendous negative equity and/or write off with no back to Invoice GAP insurance to top up an insurance claim.
The plan I won’t sell the car during the term (or maybe ever).

IF the car will have a value after 5 years (which one would assume it would) and you pay off the loan in five years you will have funded the depreciation and minimised interest payments. You are always going to lose on a car (unless you are buying a 250GTO) so going into it eyes wide open and ending up less badly off than you might have been paying more interest on the same loan and term it’s an option.



Edited by RogGT-R on Tuesday 7th July 17:28
Interesting option as I have a few rental properties that are debt free and could easily be remortgaged (short term) to finance a car. Might look in to that as 1.59% looks very appealing and if it is fixed for 5 years then it is ideal.
Only question is most good deals have mortgage fee in them and that adds to the cost

LordOfTheManor

1,267 posts

110 months

Tuesday 7th July 2020
quotequote all
the management are as bad as the staff - go spend your money with independents I say

deggles

614 posts

201 months

Tuesday 7th July 2020
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I think this thread has reached ‘peak Pistonheads’ laugh

Shouty thread title
Cash vs PCP
“Opportunity cost”
10% investment returns
McLaren depreciation

Just needs some stair domination and frozen pork products for a full house.

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
Xfe said:
A few thoughts below. Please feel free to add/comment if I've missed anything. There is not necessarily one best option - it depends on your circumstances and risk tolerance.

Cash:
+ lowest cost as no interest (0% APR deals aside)
+ instant access, no credit check or finance application required
+ clearer picture of the immediate cost/affordability and impact on your finances, for those who aren't the hottest on budgeting
- reduces your liquidity and flexibility in case you want to use cash for something else while you still have the car
- dependent on selling car to release cash
- possible that your investment returns could have been higher than APR on a PCP, although this won't matter if you are risk averse

PCP:
+ better in terms of liquidity, i.e. you will hold on to any cash savings for use elsewhere. Fixed monthly payments with a guaranteed payoff/value at the end, so easy to meet each month
+ can walk away at the end without hassle of selling
+ can voluntarily terminate mid-term if desperate
- guaranteed value is almost always favourable to manufacturer/lender; you are still paying depreciation in addition to interest
- some may not realise/calculate the true cost over X years as it's slightly more opaque/complex than cash
- usually high APR
- credit check/finance application required

HP: similar to PCP, except you are paying off the whole amount across the term as no lump sum/guaranteed value.

In my opinion, a mortgage facility is (most of the time) the best way to finance a car if possible:
+ low APR as secured against property
+ flexible repayments/can be interest only
+ hold on to your cash
+ if you have significant equity in your property there is little risk
- you're in a tough spot if house prices crash, you lose your source of income and you don't have much equity
- no guaranteed value

NB: I'm sure people know this, but for the benefit of anyone that doesn't: you should pay attention to APR, not the interest rate. The interest rate only pertains to the actual loan/product you are being offered, excluding admin fees and other costs. APR is a single figure that represents the total effective cost of the finance to you, taking into account any admin fees etc. APR is therefore far more useful and a more viable way to compare finance products.

By the way, anyone who questions why you would pay cash for a depreciating asset when you can finance it, as if that eliminates depreciation, should not be listened to.
Thanks , good summary
but why is this a negative in the cash analysis
- possible that your investment returns could have been higher than APR on a PCP, although this won't matter if you are risk averse
Surely that should a plus as if your investment is higher than the APR then you are getting a car cheaper than paying cash ?

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
deggles said:
I think this thread has reached ‘peak Pistonheads’ laugh

Shouty thread title
Cash vs PCP
“Opportunity cost”
10% investment returns
McLaren depreciation

Just needs some stair domination and frozen pork products for a full house.
lol

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
MAC 720S said:
The world will look very different when you decide to buy next year. I would pose the question when you are ready to buy.
I think the ways things are going with
Cars going up
Job insecurity (not mine but in general)
Poor oil price
Economic crash
Possible accès t cheap finance
I can really see me having to wait till next year to buy a nice car. Shame as I just cleared the garage out and could juts about squeeze in a nice new car along with my Beetle and Evo until the new garage is built

EvoSid

Original Poster:

1,100 posts

62 months

Tuesday 7th July 2020
quotequote all
macdeb said:
Cash, then it is 'yours' and not rented. I'd personally never PCP a car.
If that works for you cool. But can I ask did you just buy your house outright instead of financing it ?

TCruise

564 posts

90 months

Wednesday 8th July 2020
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I'm yet to understand the "just hand it back" mantra

This isn't a brand new car.

Handing it back too early, will not be possible and likely to result in a penalty.

The finance house would very likely chase you for this by using bailiffs. Similar to not paying Credit Card fees.

If you "hand it back" towards the end of the term, you end up with nothing. You've effectively rented a car, despite investing in maintenance for its future value.

When financing a second hand super car, using a house owner analogy, You're the landlord, paying all the costs, without the benefit of actual ownership of the asset if you hand it back.

I do not think PCP works if you aren't buying new, or very nearly new, on a more normal car, that will likely plummet in price, that in 3 years you want to change and get another me car.

As for 10% returns. If you've bought the right car, I'd rather take the risk of a 10% yearly loss on an old supercar. Rather than a high risk portfolio that could make 10% a year, or lose the entire amount.

If you are genuinely happy with handing it back after ~3 years, with nothing to show for it. Go for something newer and benefit from a complete guarantee and even free servicing.

Ferruccio

1,832 posts

118 months

Wednesday 8th July 2020
quotequote all
deggles said:
I think this thread has reached ‘peak Pistonheads’ laugh

Shouty thread title
Cash vs PCP
“Opportunity cost”
10% investment returns
McLaren depreciation

Just needs some stair domination and frozen pork products for a full house.
Reminds me of the potential greatest ever Sun headline:

“Sex change vicar in Royal corgi mercy dash!”

which’d tick every box.