Best way to fund a dream car purchase
Discussion
I'm positive that this kind of topic has come up before, however have searched to see if there is something relevant and recent, without luck.
Using the below car as a theoretical window shopping dream car purchase for a definite keeper that I'd intend to pay off completely and keep forever.
As a home owner with 20 years+ of work and mortgage left to go, however useful equity and solid credit rating, what's the normal way of going about acquiring something like this?
https://www.pistonheads.com/buy/listing/10067438
Not looking for a lecture on ensuring that there's sufficient for maintenance and emergencies in this example. More about how people go about funding something like this.
Using the below car as a theoretical window shopping dream car purchase for a definite keeper that I'd intend to pay off completely and keep forever.
As a home owner with 20 years+ of work and mortgage left to go, however useful equity and solid credit rating, what's the normal way of going about acquiring something like this?
https://www.pistonheads.com/buy/listing/10067438
Not looking for a lecture on ensuring that there's sufficient for maintenance and emergencies in this example. More about how people go about funding something like this.
- Is it £10k down, then finance for several years, and then save up or bank loan for whatever balloon payment is left?
- I'm sure for some it's a payment down, then finance for a period, and then hand it back to cover the balloon.
- Do people re-mortgage to release equity for some or all of the value of something like this? Sure I could, however don't want to.
I would never re-mortgage to buy a car. No car is worth it in my view.
how have we financed cars - normally saved up and paid outright or if on new finance and then paid off 2 weeks or yes have taken out a car loan but to pay all off over 2 years.
Its nice to think that a car will be a forever car but in my reality it starts off as that but then after a few years you want to change.
how have we financed cars - normally saved up and paid outright or if on new finance and then paid off 2 weeks or yes have taken out a car loan but to pay all off over 2 years.
Its nice to think that a car will be a forever car but in my reality it starts off as that but then after a few years you want to change.
I am sure everyone is different but 13 years ago I remortgaged my house to invest in a BTL property.
After buying the BTL house, I had £35k (about £50k in today money) left over so treated myself to my dream car.
Instead of paying off the £35k over the last 13 years, I decided to invest in further BTLs and, thanks to the government and BOE interventions, it has worked out OK for me. The average interest rate for the £35k loan has been about 2.5-3.0% so I am pretty happy with that.
After buying the BTL house, I had £35k (about £50k in today money) left over so treated myself to my dream car.
Instead of paying off the £35k over the last 13 years, I decided to invest in further BTLs and, thanks to the government and BOE interventions, it has worked out OK for me. The average interest rate for the £35k loan has been about 2.5-3.0% so I am pretty happy with that.
mat205125 said:
I'm positive that this kind of topic has come up before, however have searched to see if there is something relevant and recent, without luck.
Using the below car as a theoretical window shopping dream car purchase for a definite keeper that I'd intend to pay off completely and keep forever.
As a home owner with 20 years+ of work and mortgage left to go, however useful equity and solid credit rating, what's the normal way of going about acquiring something like this?
https://www.pistonheads.com/buy/listing/10067438
Not looking for a lecture on ensuring that there's sufficient for maintenance and emergencies in this example. More about how people go about funding something like this.
Using the below car as a theoretical window shopping dream car purchase for a definite keeper that I'd intend to pay off completely and keep forever.
As a home owner with 20 years+ of work and mortgage left to go, however useful equity and solid credit rating, what's the normal way of going about acquiring something like this?
https://www.pistonheads.com/buy/listing/10067438
Not looking for a lecture on ensuring that there's sufficient for maintenance and emergencies in this example. More about how people go about funding something like this.
- Is it £10k down, then finance for several years, and then save up or bank loan for whatever balloon payment is left?
- I'm sure for some it's a payment down, then finance for a period, and then hand it back to cover the balloon.
- Do people re-mortgage to release equity for some or all of the value of something like this? Sure I could, however don't want to.
My advice, do your own PPI check on any GT3.
Also, an useful thread to be aware of below, especially end of Page 11 to 12 (not saying it's the same car, but you should do your DD)
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Also, an useful thread to be aware of below, especially end of Page 11 to 12 (not saying it's the same car, but you should do your DD)
https://www.pistonheads.com/gassing/topic.asp?h=0&...
chip* said:
My advice, do your own PPI check on any GT3.
Also, an useful thread to be aware of below, especially end of Page 11 to 12 (not saying it's the same car, but you should do your DD)
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Hope that sometime in the future, my shopping intentions can be serious enough Also, an useful thread to be aware of below, especially end of Page 11 to 12 (not saying it's the same car, but you should do your DD)
https://www.pistonheads.com/gassing/topic.asp?h=0&...
In an ideal world you would save up and pay cash but for most people this isn’t possible.
Many people would finance (HPI or PCP or whatever it’s called) but this is often the most expensive method to fund a car.
Slightly cheaper is a loan although personal loans usually get expensive over £25k so potentially not an option.
Cheapest option (after saving up and paying cash) is to remortgage. BUT this comes with a few downsides;
- Mortgage company unlikely to lend you the money - they will ask what it’s for and if you say a car may turn you down. If you lie then it’s mortgage fraud.
- If they do lend you the money then you ideally need to overpay to the tune of what you would pay on a loan or PCP as otherwise you will end up paying interest on the car for the 20+ years you own the mortgage.
If you could get a mortgage company to lend you then this is what I would do. Many people wouldn’t want to risk their home to fund their car but ultimately this one is a bit different - the car will likely hold its value so if you get into difficulty you can always sell the asset (budget for a £15-20k loss worst case scenario). But there’s no hiding that secured lending is the cheapest. This would be my route.
Many people would finance (HPI or PCP or whatever it’s called) but this is often the most expensive method to fund a car.
Slightly cheaper is a loan although personal loans usually get expensive over £25k so potentially not an option.
Cheapest option (after saving up and paying cash) is to remortgage. BUT this comes with a few downsides;
- Mortgage company unlikely to lend you the money - they will ask what it’s for and if you say a car may turn you down. If you lie then it’s mortgage fraud.
- If they do lend you the money then you ideally need to overpay to the tune of what you would pay on a loan or PCP as otherwise you will end up paying interest on the car for the 20+ years you own the mortgage.
If you could get a mortgage company to lend you then this is what I would do. Many people wouldn’t want to risk their home to fund their car but ultimately this one is a bit different - the car will likely hold its value so if you get into difficulty you can always sell the asset (budget for a £15-20k loss worst case scenario). But there’s no hiding that secured lending is the cheapest. This would be my route.
Edited by JapanRed on Monday 27th July 12:47
Well, it would seem you are choosing a modern classic and so you can argue that the depreciation is minimal?
Different to a £70K brand new car IMO and 'if' you real relatively confident of nil depreciation and/or easy resale then you can go, deposit of an amount that would allow you to sell the next week with no further loss and then the cheapest way of financing the rest?
If it's a keeper then do what you can to shorten the term and minimise the interest paid?
Only you can really say if it's sensible to take on now or at all, and arguably there may be a bubble in the car market so it could suffer depreciation which doesn't matter as such but reduces your options/increases your risk?
Different to a £70K brand new car IMO and 'if' you real relatively confident of nil depreciation and/or easy resale then you can go, deposit of an amount that would allow you to sell the next week with no further loss and then the cheapest way of financing the rest?
If it's a keeper then do what you can to shorten the term and minimise the interest paid?
Only you can really say if it's sensible to take on now or at all, and arguably there may be a bubble in the car market so it could suffer depreciation which doesn't matter as such but reduces your options/increases your risk?
JapanRed said:
If you could get a mortgage company to lend you then this is what I would do. Many people wouldn’t want to risk their home to fund their car but ultimately this one is a bit different - the car will likely hold its value so if you get into difficulty you can always sell the asset (budget for a £15-20k loss worst case scenario). But there’s no hiding that secured lending is the cheapest. This would be my route.
I've recently remortgaged a client who wanted to buy a Speciale.....£275k at 1.19% on Interest Only = £272pm.......he can overpay up to 10% per year as he sees fit........car remains finance free so he can sell it easier if he wants.......no chunky deposit out of his savings......no 6% APR's.......Edited by JapanRed on Monday 27th July 12:47
Sarnie said:
I've recently remortgaged a client who wanted to buy a Speciale.....£275k at 1.19% on Interest Only = £272pm.......he can overpay up to 10% per year as he sees fit........car remains finance free so he can sell it easier if he wants.......no chunky deposit out of his savings......no 6% APR's.......
Yup, it can work well if it fits a profile that makes sense overall. Back in the day I used half my house mortgage to buy a Lotus Esprit. Kept that car for nearly 10 years and never regretted it for one moment! I'd pay the deposit with an Amex Platinum if I could. If you haven't had an Amex card in the last two years you would pick up 30,000 reward points if you spend a certain amount within four months (think it's currently £4000). You can then convert the points to knock money off the bill at a current rate of £4.50 per 1000 points so that's £135 clawed back. It's a charge card though so you have to pay it off each month. But if you time it right you can take out the card (fee = £575) pay your deposit, get the points, knock them off your bill then cancel the card and reclaim the £575 back. Although it's a charge card and not a credit card I've never had, or heard, anyone having problems with Amex not treating it as a credit card for charge backs should you need it.
Sarnie said:
JapanRed said:
If you could get a mortgage company to lend you then this is what I would do. Many people wouldn’t want to risk their home to fund their car but ultimately this one is a bit different - the car will likely hold its value so if you get into difficulty you can always sell the asset (budget for a £15-20k loss worst case scenario). But there’s no hiding that secured lending is the cheapest. This would be my route.
I've recently remortgaged a client who wanted to buy a Speciale.....£275k at 1.19% on Interest Only = £272pm.......he can overpay up to 10% per year as he sees fit........car remains finance free so he can sell it easier if he wants.......no chunky deposit out of his savings......no 6% APR's.......Edited by JapanRed on Monday 27th July 12:47
I’d potentially want to do something similar in future.
JapanRed said:
Wow that’s very interesting. Did he have to declare that it was to fund a car? Is this the exception to the rule or is it commonplace?
I’d potentially want to do something similar in future.
A car purchase is an acceptable reason for capital raising with a lot of lenders........I’d potentially want to do something similar in future.
Scootersp said:
It works if you pay it off.....
25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
To be fair, I would never lend anyone £275k (if I was lucky to have such an amount to lend) for 25 years in return for £80k of interest. My £275k would have devalued by half in that time so I would be getting back less (in real term) than I am giving out. 25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
It's only the crazy economic situation that is allowing the bank to consider lending at such cheap rate!
Scootersp said:
It works if you pay it off.....
25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
I don't think Sarnie said interest is fixed for 25 years! 25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
In response to the original question, FWIW I try to buy things that will fall in value for cash, and borrow money to buy things that I expect to increase in value.
Scootersp said:
It works if you pay it off.....
25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
No one is suggesting having it for 25 years.........if he keeps it for two years it's just over £3k in interest per year.......25years of that mortgage interest is over 80K at those low rates and you've not paid off the capital, unless I've got something wrong?
Edited by Sarnie on Monday 27th July 17:19
Sarnie said:
JapanRed said:
Wow that’s very interesting. Did he have to declare that it was to fund a car? Is this the exception to the rule or is it commonplace?
I’d potentially want to do something similar in future.
A car purchase is an acceptable reason for capital raising with a lot of lenders........I’d potentially want to do something similar in future.
JapanRed said:
Sarnie said:
JapanRed said:
Wow that’s very interesting. Did he have to declare that it was to fund a car? Is this the exception to the rule or is it commonplace?
I’d potentially want to do something similar in future.
A car purchase is an acceptable reason for capital raising with a lot of lenders........I’d potentially want to do something similar in future.
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