How To Fund My McLaren
Discussion
TCruise said:
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.
Well written and even i understandThis 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.
Good points made.
I've asked these questions before...
It got very detailed.
Have a read here: https://www.pistonheads.com/gassing/topic.asp?h=0&...
I bought cash.
I've asked these questions before...
It got very detailed.
Have a read here: https://www.pistonheads.com/gassing/topic.asp?h=0&...
I bought cash.
EvoSid said:
If that works for you cool. But can I ask did you just buy your house outright instead of financing it ?
Yes, except that I maxed out on the bit that the bank was happy to lend to me at 1.5% (about 20% of the total).As others have said, if you can beat the PCP rate, then by all means - finance. And yes stocks can be over 10% - my US portfolio is well over 20% (a lot of FAANG and T) - but can you guarantee that for the next 3-5 years?
And don't forget that you will be paying tax on your gains.
The only thing worse than buying a depreciating asset is financing it as well. Your money is definitely better spent on that waterfront property - or philanthropy. But if you are going to recognize your supercar is not going to be an “asset”, buy it with cash.
If you don’t have the (liquid) cash - don’t buy it.
Edited by 12pack on Wednesday 8th July 13:41
EvoSid said:
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 ?
What I'm saying is that you would lose out on potential investment returns if you pay cash. There is a risk that investment returns would have been higher than APR you are paying, and so it would have been better financially to PCP. Therefore a mark against paying cashbut 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 ?
Xfe said:
EvoSid said:
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 ?
What I'm saying is that you would lose out on potential investment returns if you pay cash. There is a risk that investment returns would have been higher than APR you are paying, and so it would have been better financially to PCP. Therefore a mark against paying cashbut 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 ?
1) 90% of cars bought are with finance.
2) I expect at least 50% of those 90% don’t have offsetting investments or the cash.
3) And close to 90% of those 50% think that using finance means they are not “putting their cash” in a depreciating asset. (Somehow the monthly payments magically don’t count). Dealers perpetuate this myth either because they don’t understand the maths or more likely it helps close the deal.
The pros of the explosion of finance In the market:
It has allowed the market to expand enormously in terms of supply and choice from the manufactures because so many more people can now afford to purchase these cars.
The downside of finance:
Because people judge affordability simply by looking at the monthly payments it has allowed manufacturers to massively raise the list price of new cars.
2) I expect at least 50% of those 90% don’t have offsetting investments or the cash.
3) And close to 90% of those 50% think that using finance means they are not “putting their cash” in a depreciating asset. (Somehow the monthly payments magically don’t count). Dealers perpetuate this myth either because they don’t understand the maths or more likely it helps close the deal.
The pros of the explosion of finance In the market:
It has allowed the market to expand enormously in terms of supply and choice from the manufactures because so many more people can now afford to purchase these cars.
The downside of finance:
Because people judge affordability simply by looking at the monthly payments it has allowed manufacturers to massively raise the list price of new cars.
^^^^ 
Especially the last line. May impress the neighbours for a short time, but doesn't impress me one bit. Buy what you can realistically afford and live with it. I'm sure many on PCP deals are maxed out on monthly outgoings and with the current crisis are cacking a bit, I know a couple. Anyway, good luck with whatever is decided 
ETA, I never got the, 'just hand it back and walk away' thing.
Especially the last line. May impress the neighbours for a short time, but doesn't impress me one bit. Buy what you can realistically afford and live with it. I'm sure many on PCP deals are maxed out on monthly outgoings and with the current crisis are cacking a bit, I know a couple. Anyway, good luck with whatever is decided ETA, I never got the, 'just hand it back and walk away' thing.
It is remarkable that every single time there is a thread like this on pistonheads, especially on expensive cars, nobody, and i mean nobody seems to finance their cars...
Amazing fact.
Especially when around here there are at least 6 McLarens now ranging from £800k to £80k and almost each one of them are on a finance deal or similar, and with maybe an exception or 2, the 'owners' could of easily bought outright.
As i posted before, you 'buy' in the way you are most comfortable doing.
Amazing fact.
Especially when around here there are at least 6 McLarens now ranging from £800k to £80k and almost each one of them are on a finance deal or similar, and with maybe an exception or 2, the 'owners' could of easily bought outright.
As i posted before, you 'buy' in the way you are most comfortable doing.
Reply to 650spider
Absolutely. It’s a free market. And clearly the market has spoken. 90% use finance.
But it should be perfectly acceptable to point out the pros and cons to people like the OP Who asked?
My two gripes with the availability of finance are as stated before - it has raised the price of new cars to very high levels and that most people on finance genuinely believe they have avoided “putting their cash” in a depreciating asset.
That just makes my head hurt.
Absolutely. It’s a free market. And clearly the market has spoken. 90% use finance.
But it should be perfectly acceptable to point out the pros and cons to people like the OP Who asked?
My two gripes with the availability of finance are as stated before - it has raised the price of new cars to very high levels and that most people on finance genuinely believe they have avoided “putting their cash” in a depreciating asset.
That just makes my head hurt.
650spider said:
It is remarkable that every single time there is a thread like this on pistonheads, especially on expensive cars, nobody, and i mean nobody seems to finance their cars...
Amazing fact.
Especially when around here there are at least 6 McLarens now ranging from £800k to £80k and almost each one of them are on a finance deal or similar, and with maybe an exception or 2, the 'owners' could of easily bought outright.
As i posted before, you 'buy' in the way you are most comfortable doing.
From my scalextric when I was 12 to my 720s at 50, I've only ever paid cash! Never had a loan, credit card or mortgage, I was offered 0% finance on a sofa once but paid cash as I'm no idiot Amazing fact.
Especially when around here there are at least 6 McLarens now ranging from £800k to £80k and almost each one of them are on a finance deal or similar, and with maybe an exception or 2, the 'owners' could of easily bought outright.
As i posted before, you 'buy' in the way you are most comfortable doing.
OldAndTired said:
1) 90% of cars bought are with finance.
2) I expect at least 50% of those 90% don’t have offsetting investments or the cash.
3) And close to 90% of those 50% think that using finance means they are not “putting their cash” in a depreciating asset. (Somehow the monthly payments magically don’t count). Dealers perpetuate this myth either because they don’t understand the maths or more likely it helps close the deal.
The pros of the explosion of finance In the market:
It has allowed the market to expand enormously in terms of supply and choice from the manufactures because so many more people can now afford to purchase these cars.
The downside of finance:
Because people judge affordability simply by looking at the monthly payments it has allowed manufacturers to massively raise the list price of new cars.
That’s a nice analysis.2) I expect at least 50% of those 90% don’t have offsetting investments or the cash.
3) And close to 90% of those 50% think that using finance means they are not “putting their cash” in a depreciating asset. (Somehow the monthly payments magically don’t count). Dealers perpetuate this myth either because they don’t understand the maths or more likely it helps close the deal.
The pros of the explosion of finance In the market:
It has allowed the market to expand enormously in terms of supply and choice from the manufactures because so many more people can now afford to purchase these cars.
The downside of finance:
Because people judge affordability simply by looking at the monthly payments it has allowed manufacturers to massively raise the list price of new cars.
Ultimately cash or finance depends on how much cash you have available to tie up on a car. Overall cash is always cheaper, if you have it avail. Ok, unless dodgy deals with McL where overall you pay less than their depreciation for a number of year....but only if you bring car back after 2 yrs....
Can we close this topic here please, it’s just teadius and the answer it’s either maths based - above - or if not it’s personal and emotional - then no point in asking, every single f
king person will have different opinion.Let’s suggest the OP chap to test drive a car and make a decision then.
Done deal.
Edited by RBT0 on Wednesday 8th July 18:47
ferdi p said:
From my scalextric when I was 12 to my 720s at 50, I've only ever paid cash! Never had a loan, credit card or mortgage, I was offered 0% finance on a sofa once but paid cash as I'm no idiot
That's ok if you can do it, But some people will go through life never having anything,choices makes it possible for everyone to have everything as well, I guess
LordOfTheManor said:
ferdi p said:
From my scalextric when I was 12 to my 720s at 50, I've only ever paid cash! Never had a loan, credit card or mortgage, I was offered 0% finance on a sofa once but paid cash as I'm no idiot
That's ok if you can do it, But some people will go through life never having anything,choices makes it possible for everyone to have everything as well, I guess
About half have had a series of really lousy breaks.
The other half have basically gone out and bought a bunch of stuff they don’t need and can’t afford.
Ferruccio said:
Two sorts of people at our local food bank.
About half have had a series of really lousy breaks.
The other half have basically gone out and bought a bunch of stuff they don’t need and can’t afford.
Is this a guess or did you actually ask them all when they were entering / leaving?About half have had a series of really lousy breaks.
The other half have basically gone out and bought a bunch of stuff they don’t need and can’t afford.
Xfe said:
What I'm saying is that you would lose out on potential investment returns if you pay cash. There is a risk that investment returns would have been higher than APR you are paying, and so it would have been better financially to PCP. Therefore a mark against paying cash
Yes I see hat you mean and I agree with you12pack said:
Yes, except that I maxed out on the bit that the bank was happy to lend to me at 1.5% (about 20% of the total).
As others have said, if you can beat the PCP rate, then by all means - finance. And yes stocks can be over 10% - my US portfolio is well over 20% (a lot of FAANG and T) - but can you guarantee that for the next 3-5 years?
And don't forget that you will be paying tax on your gains.
The only thing worse than buying a depreciating asset is financing it as well. Your money is definitely better spent on that waterfront property - or philanthropy. But if you are going to recognize your supercar is not going to be an “asset”, buy it with cash.
If you don’t have the (liquid) cash - don’t buy it.
I cant guarantee any investment would be 10% or over. Over the last 15 years my modest portfolio of investing has returned approx 6% on average per year. This is how I am now able to afford the Mclaren as I cashed in as I wanted to buy a nice car.As others have said, if you can beat the PCP rate, then by all means - finance. And yes stocks can be over 10% - my US portfolio is well over 20% (a lot of FAANG and T) - but can you guarantee that for the next 3-5 years?
And don't forget that you will be paying tax on your gains.
The only thing worse than buying a depreciating asset is financing it as well. Your money is definitely better spent on that waterfront property - or philanthropy. But if you are going to recognize your supercar is not going to be an “asset”, buy it with cash.
If you don’t have the (liquid) cash - don’t buy it.
Edited by 12pack on Wednesday 8th July 13:41
If youngest in a stocks and shares ISA you do not need to pay capital gains tax.
Yes cash is king for cheapest but you can either put the cash in the car or in an investment . As long as you can afford the repayments and you do not lose all the money you should be alright. The one investment I made myself resulted in a small loos of £1000. Since then I just pay an "expert" and maybe I have been lucky but I have not lost any money but had a good return on it.
I have the liquid cash in my back account but it is deciding what to do with it that is the question .
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