Financing 600LT or 720s
Discussion
macdeb said:
If you buy cash (of which you can), you know where you stand surely rather than if's, but's, and maybe? 
I bought my 650S outright in in 2017 owned for approx 18 months. Struggled to get a bid from any McLaren dealers (even the one I bought it from!) - most declined to offer anything/too much stock. Maybe I was unlucky. But I eventually rang around every McLaren dealership in the country and eventually got a single bid from Manchester.I actually regret buying outright and i'd definitely been better off on a PCP with a defined entry/exit, i'd have known exactly how much the car would cost me over x time, my maximum cost is deposit + monthly rentals rather than relying on the market to buy my car (and anything could be happening in the world).
Jules360 said:
So his advice was "If you can borrow money cheaper than you can lend / invest it, borrow " ?
Not exactly a genius is he ?
ETA - If he really was smart, he would advise that you don't buy the depreciating asset at all, but instead borrow as much as you can and put it in the higher returning asset.
Some of you guys have very little idea. Jules, you are right. Of course he advised I don’t buy the car but his advice is tailored around the “but if you are going to then.....” Not exactly a genius is he ?
ETA - If he really was smart, he would advise that you don't buy the depreciating asset at all, but instead borrow as much as you can and put it in the higher returning asset.
Edited by Jules360 on Thursday 28th January 10:47
DeuceDeuce said:
Mr Cod said:
I'm sure its a variation of "if you can make your money work hard for you, somehow, let it do its thing rather than tie it up in a depreciating asset". And if you can reliably generate more than finance costs (admittedly, quite an ask - the "reliably" bit), then the sensible wealthy man will always use finance.
Maybe that’s it and I don’t want this thread to get into that argument, I’m just curious what their wealth manager actually recommended they do. No authorised & regulated, financial professional would specifically ‘recommend’ borrowing when something could be paid for with existing funds. That’s the equivalent of them recommending you borrow to fund a ‘risk based’ investment.
Assuming the poster is using ‘wealth manager’ to describe their investment manager or point of contact for their investments, then it’s in their wealth managers interest to lend to their client against the value of their investments as they get to keep the % fee for the management of investment and a new fee & margin for the new loan facility.
I’m sure that the paperwork related to this ‘advice’ from the wealth manager will document that it was the client’s idea to do this and not a recommendation from the wealth manager. That’s not to say the wealth manager won’t talk to you in a way that suggests it’s a good idea. It’s just that what you think was said and what is documented can be quite different.
I once saw a well known Swiss bank persuade a well known and very successful businessman who was about to buy two properties, each for c.£10m, for cash, one in the U.K. one abroad, to instead borrow 60% of this from them.
They invested it for him.
They lost him half the money.
They then asked him to sell the properties to repay them as the investments were the security on the loan and he’d breached their LTV covenant.
Edited by Ferruccio on Thursday 28th January 16:24
Of course, if you are not keeping the car indefinitely, it doesn’t make sense to pay cash.
On the couple of occasions that I have financed, I have regretted it, because I tend to “appreciate” the car the longer I have it and it makes little sense to me to go for the next increment when I could put the money into my NGO instead.
So I end up with cars I know well and am expert at driving
But even when financing, my rule would be - if you can’t afford to buy it outright - you shouldn’t finance either.
On the couple of occasions that I have financed, I have regretted it, because I tend to “appreciate” the car the longer I have it and it makes little sense to me to go for the next increment when I could put the money into my NGO instead.
So I end up with cars I know well and am expert at driving
But even when financing, my rule would be - if you can’t afford to buy it outright - you shouldn’t finance either.
Pay by whatever means is the most suitable to yourself; £100k in the bank and monthly payment or buy outright.
However, you have come to the wrong place for advice though, because on pistonheads, nobody, and I mean nobody, pays for their supercars with finance....its always bought outright.
On a footnote, back in November and after 20 months of fantastic ownership, I sold my 650 spider for £5500 less than I purchased it for; buy the best possible spec and it pays back in spades when the time comes to sell.
However, you have come to the wrong place for advice though, because on pistonheads, nobody, and I mean nobody, pays for their supercars with finance....its always bought outright.
On a footnote, back in November and after 20 months of fantastic ownership, I sold my 650 spider for £5500 less than I purchased it for; buy the best possible spec and it pays back in spades when the time comes to sell.
Drl22 said:
Some of you guys have very little idea. Jules, you are right. Of course he advised I don’t buy the car but his advice is tailored around the “but if you are going to then.....”
Could you just clearly explain what I’m missing here. His advice was what exactly? What were the terms of the finance he suggested you accept and what was the projected or maybe (ahem) guaranteed, returns you would expect? I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
DeuceDeuce said:
Drl22 said:
Some of you guys have very little idea. Jules, you are right. Of course he advised I don’t buy the car but his advice is tailored around the “but if you are going to then.....”
Could you just clearly explain what I’m missing here. His advice was what exactly? What were the terms of the finance he suggested you accept and what was the projected or maybe (ahem) guaranteed, returns you would expect? I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
DeuceDeuce said:
Could you just clearly explain what I’m missing here. His advice was what exactly? What were the terms of the finance he suggested you accept and what was the projected or maybe (ahem) guaranteed, returns you would expect?
I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
Spot on.I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
DeuceDeuce said:
Could you just clearly explain what I’m missing here. His advice was what exactly? What were the terms of the finance he suggested you accept and what was the projected or maybe (ahem) guaranteed, returns you would expect?
I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
The car will definitely depreciate, that’s a fact. This year, instead of lumping my money into a car, I used some of the money to put two deposits into buy to let houses. This is a small yield per year but basically free money as someone else pays for the mortgages. Plus it’s not taxed as a dividend so there’s a saving there, the tax on the same money for a dividend to “cash” the car would have been monstrous. Then investment ISA’s 25% growth this year, which is not normal but I’ll take it. Then made a larger contribution to my pension than I would have if I bought the car cash. Again tax savings. Then VCT’s. I’m surprised I have to explain this to you if you are indeed a wealth manager. I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
Drl22 said:
The car will definitely depreciate, that’s a fact. This year, instead of lumping my money into a car, I used some of the money to put two deposits into buy to let houses. This is a small yield per year but basically free money as someone else pays for the mortgages. Plus it’s not taxed as a dividend so there’s a saving there, the tax on the same money for a dividend to “cash” the car would have been monstrous. Then investment ISA’s 25% growth this year, which is not normal but I’ll take it. Then made a larger contribution to my pension than I would have if I bought the car cash. Again tax savings. Then VCT’s. I’m surprised I have to explain this to you if you are indeed a wealth manager.
Comparing apples-with-apples. 3 years finance on a car versus 3 year investments - instead of using cash to purchase. The argument people are putting up is flawed because you'll be extremely lucky to make money on investments over 3 years - minimum 5 - 10 years.This thread has turned into classic PH b
ks. [quote=MAC 720S]
Comparing apples-with-apples. 3 years finance on a car versus 3 year investments - instead of using cash to purchase. The argument people are putting up is flawed because you'll be extremely lucky to make money on investments over 3 years - minimum 5 - 10 years.
This thread has turned into classic PH bks. [/quote/]
It’s not willy waving, you guys asked why I said don’t cash it and I explained. I saved the money for the finance costs instantly with the tax savings on the extra pension contribution. When you say it’s bks, is just another way of saying you didn’t understand what I said.
Comparing apples-with-apples. 3 years finance on a car versus 3 year investments - instead of using cash to purchase. The argument people are putting up is flawed because you'll be extremely lucky to make money on investments over 3 years - minimum 5 - 10 years.
This thread has turned into classic PH b
ks. [/quote/]It’s not willy waving, you guys asked why I said don’t cash it and I explained. I saved the money for the finance costs instantly with the tax savings on the extra pension contribution. When you say it’s b
ks, is just another way of saying you didn’t understand what I said.Drl22 said:
The car will definitely depreciate, that’s a fact. This year, instead of lumping my money into a car, I used some of the money to put two deposits into buy to let houses. This is a small yield per year but basically free money as someone else pays for the mortgages. Plus it’s not taxed as a dividend so there’s a saving there, the tax on the same money for a dividend to “cash” the car would have been monstrous. Then investment ISA’s 25% growth this year, which is not normal but I’ll take it. Then made a larger contribution to my pension than I would have if I bought the car cash. Again tax savings. Then VCT’s. I’m surprised I have to explain this to you if you are indeed a wealth manager.
If the value of the BTL properties falls, say, >10% you quickly lose a significant percentage of your deposit.You have to allow for void periods when you will be paying the mortgage, CT etc.
If you bought them in a company, you get the money out either as divs or salary.
If you bought in your own name, you can’t set off the interest and you pay income tax on the rent less costs ex interest.
If the car finance is 6% (paid out of post tax income) no professional investment manager will assume that they’ll beat that.
Look at the assumptions made against your pension pot?
Edited by Ferruccio on Thursday 28th January 21:47
Ferruccio said:
If the value of the BTL properties falls, say, >10% you quickly lose a significant percentage of your deposit.
You have to allow for void periods when you will be paying the mortgage, CT etc.
If you bought them in a company, you get the money out either as divs or salary.
If you bought in your own name, you can’t set off the interest and you pay income tax on the rent less costs ex interest.
If the car finance is 6%, no professional investment manager will assume that they’ll beat that.
Look at the assumptions made against your pension pot?
Thanks for the advice. I’ll be okay. The part you mentioned about BTL is one aspect of a portfolio, which is the main point, my cash is not sat in one place, let alone just all in a car. I’ve financed three cars previously and by all measures I’ve out performed if I’d paid cash. Listen or don’t listen I don’t care, you do as you please with your cash. You have to allow for void periods when you will be paying the mortgage, CT etc.
If you bought them in a company, you get the money out either as divs or salary.
If you bought in your own name, you can’t set off the interest and you pay income tax on the rent less costs ex interest.
If the car finance is 6%, no professional investment manager will assume that they’ll beat that.
Look at the assumptions made against your pension pot?
Edited by Drl22 on Thursday 28th January 21:31
Edited by Drl22 on Thursday 28th January 21:32
ttexige said:
Gfv is really good on a 650s with Santander. My 650s is costing me £650 a month with a 10% deposit. It was £1500 a month on the 570s. I couldn’t believe the price for a 650s so snapped the deal up. Mclaren finance was not a very good deal when I asked although this was October last year.
I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
Does that include the extended warranty?I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
Drl22 said:
The car will definitely depreciate, that’s a fact. This year, instead of lumping my money into a car, I used some of the money to put two deposits into buy to let houses. This is a small yield per year but basically free money as someone else pays for the mortgages. Plus it’s not taxed as a dividend so there’s a saving there, the tax on the same money for a dividend to “cash” the car would have been monstrous. Then investment ISA’s 25% growth this year, which is not normal but I’ll take it. Then made a larger contribution to my pension than I would have if I bought the car cash. Again tax savings. Then VCT’s. I’m surprised I have to explain this to you if you are indeed a wealth manager.
I agree with your thought process, but life is shorter than we think, and none of what you have done is actually any fun. Don’t be the richest man in the graveyard. If anything this past year should have taught us is to LIVE and have FUN....TP321 said:
I agree with your thought process, but life is shorter than we think, and none of what you have done is actually any fun. Don’t be the richest man in the graveyard. If anything this past year should have taught us is to LIVE and have FUN....
I did, I still bought the car but on finance. It’s lots of fun. 
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