Financing high value cars
Discussion
Looking for a bit of help/input from experience here, I've seen similar questions before but either owners seem shy or the knowledge isn't out there.
I'm in the fortunate position of having quite a lot of disposable income these days, and I'd like to get on the sports car/entry level supercar wagon with a view to swapping semi regularly (yearly, lets say). I know almost all people finance these cars and from what I can tell, it can actually be fairly inexpensive with depreciation being quite low if you're smart about what you pick.
I assume that dealer offered financing is flat out crooked unless you're working with super car main dealers, which I think will be out of reach, is that correct?
I think a large balloon payment on a pretty short term basis is the sort of thing I'm after, essentially insured by the value of the car and dishing out £1k a month or something for ownership. Is this even realistic on a car that's 50-70k, 911, AMG GT, LC500 sort of level etc?
Before people get too excited about the most sensible way to buy, I know it is either cash or a low rate bank loan for the majority - I specifically want financing secured against the car so I can borrow elsewhere personally for a house extension. Please don't be concerned about my financial situation - I've sat stable for quite a while before deciding if this is "safe", and it is. I fully appreciate I'm lucky to be able to ask this sort of question, and I even more appreciate any input.
I'm also asking this here for real world experience, I know that any financier that I get on the phone with is unlikely to be crystal about the realities.
I'm in the fortunate position of having quite a lot of disposable income these days, and I'd like to get on the sports car/entry level supercar wagon with a view to swapping semi regularly (yearly, lets say). I know almost all people finance these cars and from what I can tell, it can actually be fairly inexpensive with depreciation being quite low if you're smart about what you pick.
I assume that dealer offered financing is flat out crooked unless you're working with super car main dealers, which I think will be out of reach, is that correct?
I think a large balloon payment on a pretty short term basis is the sort of thing I'm after, essentially insured by the value of the car and dishing out £1k a month or something for ownership. Is this even realistic on a car that's 50-70k, 911, AMG GT, LC500 sort of level etc?
Before people get too excited about the most sensible way to buy, I know it is either cash or a low rate bank loan for the majority - I specifically want financing secured against the car so I can borrow elsewhere personally for a house extension. Please don't be concerned about my financial situation - I've sat stable for quite a while before deciding if this is "safe", and it is. I fully appreciate I'm lucky to be able to ask this sort of question, and I even more appreciate any input.
I'm also asking this here for real world experience, I know that any financier that I get on the phone with is unlikely to be crystal about the realities.
My 10 cents
You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
Djtemeka said:
That is BRUTAL! ^^
Had I held it another 12 months and put it to 10,000 miles the trade value would have been nearer £150k, so add another £50k+12x£2k/month to that total cost of ownership.But when I was a wee boy I always dreamt of buying a new Ferrari. I did that, ran it for a year (did 3,000 miles in the first week), ticked it off the list and lost a tonne of money. Had I bought a 4 year old 458 it likely would have cost me 25% of that. There was no GFV on the Ferrari finance (would have been another £500/month if I wanted a GFV deal).
As you can imagine there were some severe conversations at home with SWMBO.
The V12SM Vantage I bought for £125k cash immediately afterwards, is now 2 years+ later probably at £100k and will never be sold…..
Edited by ReformedPistonhead on Thursday 30th December 13:13
ReformedPistonhead said:
My 10 cents
You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
Exactly the point of view I was looking for, thank you.You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
I have assumed a deposit. I will definitely not buy a new car for a multitude of reasons but mainly that I don't want to be on the harsh end of depreciation and going second hand is by far the easiest way to avoid it.
As for the spread, it's an interesting point. I suppose I have to consider the fact that selling these privately gets pretty difficult at this end of the market so a trade in is highly probable - I guess I can assume your deposit will often evaporate through this factor, working on a 10-15% deposit.
ReformedPistonhead said:
My 10 cents
You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
buying a new car is always a high risk.You will pay a deposit so build that into your reckoning.
You will have to build in the buy-sell spread, if a main dealer then maybe you buy something at £80k which they would buy back off you at £70k the next day. Even if it is something which doesn't depreciate much then you are still losing that spread each time you change.
It is often said on here that you should finance a depreciating asset and own an appreciating one. IMHO that's nonsense unless you are putting it through a company when you may have different considerations.
If you have the capital to buy it outright then this would almost always be cheaper than any finance deal, except for the crazy ones (like the 2 years in a Vantage deal from 2 years ago where your total cost was 50% of the depreciation alone).
With the finance deals the dealer usually gets a commission, sometimes they would split this with you in the form of a discount on the vehicle.
You can always go to one of the Finance houses and try there, depending on your situation you may get a better rate than a main dealer. If you are a HNW or Professional you may be able to get an unregulated deal at a lower rate but these come with much less protection or flexibility so be wary.
My eyes were bigger than my stomach 3 years ago and I bought a new £250k 488 at £2k per month for 2 years with a £50k deposit. Sold it a year later before the market tanked and it cost me the deposit plus 12x £2k so £74k to own a Ferrari for 5,000 miles and 12 months. I won't be doing that again, depreciation is not as predictable as people always think!
A used 458 for £120k 3 years ago..... would sell for £120k today, or £100k (if non covid supply issues/brexit/inflation)
You need to speak to finance broker. Which one depends on how wealthy you are.
The product will depend on the car. Something less than 5 years old and relatively mainstream can probably be procured with a PCP deal from a mainstream lender. Over 5 years and/or a bit more exotic would probably be HP+balloon from a specialist asset financier.
Changing every year is always going to cost you money. If you know what amount you’re comfortable for that to be then it should be fairly simple to structure the finance accordingly.
The product will depend on the car. Something less than 5 years old and relatively mainstream can probably be procured with a PCP deal from a mainstream lender. Over 5 years and/or a bit more exotic would probably be HP+balloon from a specialist asset financier.
Changing every year is always going to cost you money. If you know what amount you’re comfortable for that to be then it should be fairly simple to structure the finance accordingly.
I'm sure you've already looked but I can't see any way of owning a 50k+ car for just a year and keeping costs down to 1k a month other than paying cash and selling it at the end. Bank loan maybe? You could take the loan over a longer term then repay when you sell.
I have no personal experience of this by the way. It's out of my league.
I looked up some local performance car specialists to see what's on offer.
Nearly new Audi TT RS priced at just over 50k
5k deposit
11 payments of 2k
Option to purchase 28k
So that would cost 27k but then the car will most likely be worth more than the buy back figure. Not sure.
Leasing doesn't appear too much better if its short term like that.
I have no personal experience of this by the way. It's out of my league.
I looked up some local performance car specialists to see what's on offer.
Nearly new Audi TT RS priced at just over 50k
5k deposit
11 payments of 2k
Option to purchase 28k
So that would cost 27k but then the car will most likely be worth more than the buy back figure. Not sure.
Leasing doesn't appear too much better if its short term like that.
As I said in the OP, trying to avoid a personal bank loan because it restricts other things that I am doing - I want the financing against the car itself.
Can anyone recommend a specialist finance firm for a over 5 year old car? Earlier AMG GTS is the sort of thing I'm considering.
Maybe the 1 year thing is just too ambitious/throwing money away unnecessarily, that'd be the first thing I'd compromise on. I don't want to be stuck in one of these cars for any more than 2 years though as depreciation risk becomes too unpredictable.
Can anyone recommend a specialist finance firm for a over 5 year old car? Earlier AMG GTS is the sort of thing I'm considering.
Maybe the 1 year thing is just too ambitious/throwing money away unnecessarily, that'd be the first thing I'd compromise on. I don't want to be stuck in one of these cars for any more than 2 years though as depreciation risk becomes too unpredictable.
ReformedPistonhead said:
Djtemeka said:
That is BRUTAL! ^^
Had I held it another 12 months and put it to 10,000 miles the trade value would have been nearer £150k, so add another £50k+12x£2k/month to that total cost of ownership.But when I was a wee boy I always dreamt of buying a new Ferrari. I did that, ran it for a year (did 3,000 miles in the first week), ticked it off the list and lost a tonne of money. Had I bought a 4 year old 458 it likely would have cost me 25% of that. There was no GFV on the Ferrari finance (would have been another £500/month if I wanted a GFV deal).
As you can imagine there were some severe conversations at home with SWMBO.
The V12SM Vantage I bought for £125k cash immediately afterwards, is now 2 years+ later probably at £100k and will never be sold…..
Edited by ReformedPistonhead on Thursday 30th December 13:13
Sobering reading.
Norwood finance.
I might do the same for a nice 993.
some overall figures went something like...... on a £89k purchase.
£20k deposit
£750x48
Final payment if you want to own it of £45k.
circa 6% apr.
So the market falls apart, you're circa £45k in.
Market carries on, you'll end up seeing a return.
I might do the same for a nice 993.
some overall figures went something like...... on a £89k purchase.
£20k deposit
£750x48
Final payment if you want to own it of £45k.
circa 6% apr.
So the market falls apart, you're circa £45k in.
Market carries on, you'll end up seeing a return.
Surely re-mortgaging will be the cheapest option.
Perhaps choose a date where you want to have repaid the additional borrowing by and make overpayments in order to achieve that.
I don’t think there would be much difference in what a bank would lend for your extension by having borrowings secured on a car vs increased mortgage.
Perhaps choose a date where you want to have repaid the additional borrowing by and make overpayments in order to achieve that.
I don’t think there would be much difference in what a bank would lend for your extension by having borrowings secured on a car vs increased mortgage.
ChocolateFrog said:
ReformedPistonhead said:
Djtemeka said:
That is BRUTAL! ^^
Had I held it another 12 months and put it to 10,000 miles the trade value would have been nearer £150k, so add another £50k+12x£2k/month to that total cost of ownership.But when I was a wee boy I always dreamt of buying a new Ferrari. I did that, ran it for a year (did 3,000 miles in the first week), ticked it off the list and lost a tonne of money. Had I bought a 4 year old 458 it likely would have cost me 25% of that. There was no GFV on the Ferrari finance (would have been another £500/month if I wanted a GFV deal).
As you can imagine there were some severe conversations at home with SWMBO.
The V12SM Vantage I bought for £125k cash immediately afterwards, is now 2 years+ later probably at £100k and will never be sold…..
Edited by ReformedPistonhead on Thursday 30th December 13:13
Sobering reading.
I am sure you can find a leggy old one cheaper somewhere, but not likely a 2018 model with <10k miles and a manual gearbox.
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