Advice on financing 997 PDK Turbo / Turbo S from OPC

[sasha320]

I was hoping for some advice on the financing of a purchase of a 997 Coupe PDK Turbo or Turbo S.

The 997 Turbo S is my real-world 'grail' car and so I am pretty excited to be in the market for one!

The problem is that good non-cabrio ones are quite rare, furthermore I'm looking to source one from an OPC. To complicate matters slightly more I'm looking to PCP finance a pre-owned car.

In terms of spec. / colour etc. I'm clear on what I want and what I can modify / change after the purchase if needed. The only constraint in this area is if I go down the route of a PDK Turbo I'll want the PTV, Chrono pack and dynamic cornering lights.

So the 3 variables are:

- Locate a car (this is luck of the draw I suppose but apparently in March a few roll in as owners go for a new plate car)

- Understand whether it meets my spec. (Can't control this, let's see what comes up)

- Do a good deal on the finance (this is my blind spot).

What are the key things to understand about the finance? Obviously as it is OPC the finance will be (a little?) dearer? Also the PCP may not support an older car? I aim to put down £30k deposit. What might the GFV be? I believe the variables are 1) purchase price, 2) interest rate, 3) term, 4) GFV and 5) excess mileage etc return costs. Obviously toggling all of these will produce the overall deal - but which ones are more negotiable than the others?

Any thoughts really welcome and appreciated!

Thanks

[sasha320]

Great posts thank you. The first post is really illuminating on the structure of the finance and is exactly the sort of information I was looking for.

To deal with the affordability on the nose, in terms of affording the cash purchase price and maintenance costs I can comfortably do both and given the above posts may well do.

What I thought a PCP would do for me is give me a cheap 'loan' on a smallish 'gap' amount between the deposit and the GFV. And then in a couple of year's time When I'd be typically be back in the market anyway I could buy the car outright.

What I didn't factor in (and the beauty of this forum is finding out) is that the finance is on the entire purchase price minus the deposit. Feels obvious now it has been set out in black and white!

Edited by sasha320 on Tuesday 21st February 12:20

[sasha320]

Durzel said:

Further to the above, that is just affording the car. What about maintenance?

Would be a crying shame to own a car like that and feel like you can't enjoy it to its fullest because of the commensurate running costs.

I think direct maintenance costs are a non-issue; the bigger issue (which falls under the definition of running costs I suppose) is the cost relating to enjoying the car to the fullest by putting lots of miles on it and seeing its value plummet.

[sasha320]

It does feel like a little fraudulent actually, I believe PCP's are marketed in a way to make you believe you are financing the 'gap' between deposit and GFV.

Once you think about it, the provider of the capital tied up in the residual value of the car will want interest until they get their capital back.

So in reality all PCP is, is a break clause after the initial term and an opportunity through magical presentation of numbers to charge high interest rates.

Why exactly, as you say, would you not take a personal loan instead?

[sasha320]

It does feel like a little fraudulent actually, I believe PCP's are marketed in a way to make you believe you are financing the 'gap' between deposit and GFV.

Once you think about it, the provider of the capital tied up in the residual value of the car will want interest until they get their capital back.

So in reality all PCP is, is a break clause after the initial term and an opportunity through magical presentation of numbers to charge high interest rates.

Why exactly, as you say, would I not take a personal loan instead? Or just buy outright?

Edited by sasha320 on Tuesday 21st February 12:47

[sasha320]

Thanks to all contributors; where I have got to is...

1. Forget PCP.

2. If finance is needed, take an HP type loan and hunt for the best rate.

So the question now is how / where to get the best rate? Some suggestions have been made which I will explore. However there also seems to be a suggestion that the rate for a given amount will depend on the profile of the customer and what loans they have 'access' to - is this right?

As an aside, the gap between a potential OPC HP rate and the best market rate appears to be smaller than previously thought.

The good news is, with the right (low) rate and the logic set out in the first responder's post on an HP loan, I am back where I hoped to be which was to have a cheap 'loan' bridge the gap from now until 2 year's time when the next block of car cash arrives (which would be used to pay off the remaining loan rather than pay the GFV).

The suggestion was maybe £2k - £4k interest over 24 months which is nearly equivalent to the product arrangement fee for a mortgage to extract equity from a mortgage free property.

[sasha320]

Just looked in my banking app and they are offering 3.9% APR for £25k.

I'm assuming less for £50k? Even so that's a c£4k charge for 2 year's finance, which hands down beats PCP.

[sasha320]

Cheib said:

Most of the low rate deals have penalties if you pay off early which Porsche/VW Finance doesn't and you should be able to get some kind of discount for taking Porsche finance from an OPC.

Once you factor those in the Porsche finance isn't too bad.

This is a good point, if I manage to get a further £1k or more knocked off the purchase price through financing it with Porsche Finance, then this combined with swerving any early repayment penalties, might make the OPC rate cheaper overall for me.

As an aside, where does OPC finance stand with securing the loan? Is it against the car itself or some other security or unsecured?

Next stop, find the car and get a discussion rolling.

Thanks to all for their help.

[sasha320]

Porsche911R said:

...and the hoops you have to jump through with mile limits and warranty etc.

Are there mile limits on HP?

Keeping the warranty and FPSH, as well as fully comp insurance with gap/invoice insurance makes sense to mitigate a total loss / early disposal.

[sasha320]

Twinfan said:

But the high street lenders only lend around £25k, not £50k!

Actually, the Lloyds product is

- A great fixed rate of 4.6% APR Representative when you borrow between £7,500 and £60,000.

- Borrow between £3,000 and £60,000.

- Repayment term from 1 to 4 years.

- No early repayment fees.

- Majority of dealers covered.

- Return the car or pay a lump sum to own the car at the end of your term.

Only available to Lloyds current account holders :0(

[sasha320]

Gerber1 said:

Us Porsche owners didnt get where we are today by buying cars on finance, finance is for the little people.

All mass produced, regularly used cars are for little people whether financed or not.

The 'big' people giggle at all of us climbing into anything other than Zondas, Gulfstreams and Sunseekers.

The 'big' people laugh especially hard at the little people who call out other little people!

[sasha320]

Twinfan said:

Cheers, I didn't see that when I was looking earlier. Halifax do something similar as they're part of the same group if that helps?

Thanks, Halifax has same rules, current account for 3 months :0(

Shame though, looks like a cracking product though.

[sasha320]

Here's a new (to me) perspective.

I have spent £331k (cash, no finance) on cars in the last 15.5 years.

I have changed cars on average every 2 years and have been buying cars that are 500bhp (or equiv bhp/tonne) and cost ~£90k when new.

I have been picking them up when they were 4 to 5 years old. In some cases I've had to spend a little on third party Warranties or had the tail end of the manufacturer's new car warranty or manufacturer's approved used warranty.

I have £40k equity in the car that I currently own. If I deduct that equity from the total outlay over the 15.5 years I have spent £1,600 per month on depreciation, dealer margins and warranty cover.

I exclude maintenance, consumables and insurance and I would like to think that I have bought reasonably sensibly and never been ripped off. That said, let's not imagine that all of the £1,600 was on pure depreciation of metal!

Anyway, going forward I believe that I can get in and out of BRAND NEW £90k cars every two years for exactly the same cost, by using PCP.

A £90k car on a PCP is circa £1,000 per month which when used on a 12 + 24 PCP deal equates to the £1,600 per month I have been spending over the 15.5 years.

Assuming my buying behaviour over the last 15.5 years were to continue, then I would be no worse off in terms of cash outlay if I went down the PCP route for the next say 15 years, except I would get the same or similar cars that I have previously owned, this time brand new with a warranty and potentially with lower maintenance and consumables costs (as only minor servicing is needed in the 24 months).

Clearly the biggest 'variable' is whether I have enjoyed value for money over the 15.5 years with my traditional buying approach, but assuming I cannot move to accessing better cars for the same money or the same cars for less money then I might switch to PCP for the next 15.5 years.

Thoughts welcome!

Edited by sasha320 on Wednesday 19th July 07:33

[sasha320]

Desert Dragon said:

The other side of the coin is the guy that bought something like a 996 turbo S cab for £100,000. Another 50k on servicing, insurance over 15 years. So out lay of £150,000. He can still sell his car for 50k even if he's covered 100,000 miles if he wants to but whats the point it will do another 100,000 miles without breaking sweat. Not sure why more people don't do this and the car only gets cooler as its gets older in my book.

On the PCP I imagine it depends on the car. Yes on a GT4 or GT3, maybe certain SUVs too not so sure on the Macans etc as never looked at one?

This is the other side of the coin, I agree that certain cars get cooler the older they get but equally you also miss out on the advancement of features. E.g., I would miss adaptive cruise control and lane keeping assist if I didn't get to try them because I had locked myself (no pun) into a cooler older car.

As you say horses for courses.

That said, if someone told me I'd soend £300k over 15 years I might have been tempted to get a Mclaren F1 back then and run it as a daily!

[sasha320]

Adam B said:

I found you post posed an interesting question, but quite surprised at that high cost given you are buying at 4-5 years and selling at 6-7 years, did you always buy and sell to dealers (which might explain it as a lot would be dealer margin on both sides of trade)?

This exactly what happened - all cars bought and sold through dealers.

I would like to think that I did not pay for both the selling margin and the trade price in a single transaction, but clearly did.

That said, where else can one buy cars?

Auctions are expensive as you can't buy at trade prices; once you price in risk and the cost of 'prepping' your own car at 'buyer' auctions then you're back up to retail price.

Private purchases are too risky (for me). Traders only mitigate this risk by absorbing the cost of an occasional lemon through the volume they do make money on (or worse still, patch the car and send it back into the trade semi repaired).

If I could tap into a healthy supply of used performance sports / supercars AT TRADE PRICES then I would be considering a career change. Not being able to source these cars at trade prices is the single reason I have not already got into the car trade.

The manufacturers have created this situation to support the volume sales of their cars and are effectively controlling the price of a car for over two thirds of its life.

- First level of manipulation is the price of the new car
- Second level of manipulation is putting ultra low mileage cars bought and used briefly by head office employees on their friends and family schemes to fill up forecourts with those cars.
- Then the trade ins and approved used sales start after the 2, 3 year etc. finance / leases come up for renewal.

- Repeat previous steps until the car is near the end of the criteria it needs to meet to get an approved used warranty and / or has near 100k mileage and / or is a couple of versions old then arguably only then does it enter the 'open' market where the consumer gets to influence price as well as just having the choice of switching between brands.

I wonder when a performance manufacturer might start offering 'bin ends' or develop some other value proposition that pushes the level at which they play to an even lower price?

All this (assuming it is even faintly true) is what's suggesting I should play the game and get a PCP and not try to beat it!

Edited by sasha320 on Thursday 20th July 15:12

[sasha320]

v8ksn said:

Thanks for answering my question.

Its proper bonkers in my book. I just cant get my head round it but I know it obviously works for some people.

Its just crazy to think that some people can pay over £30k in monthlies over 3 years and have nothing to show for it.

I would rather spend £30k on a used car.........at least you still have the car at the end of the payments!

That's the point! You have to keep that used car you've got at the end of the loan for a long long time.

Even then you have to find £30k again to start the cycle down the track.

Because if you want to change cars for something newer but comparable, sooner or later, you'll find the trade price is peanuts (relatively) and the car you wish to buy will be unaffordable (relatively) because your competing buyers are all using finance to create strong demand.

This delta between trade and retail price means that changing is simply too expensive (even down the road) unless you're on a PCP where you don't feel it but you do pay for it (arguably you also have a brand new car to play with too, which is exactly how everyone justifies their PCP!)

And now me too!

[sasha320]

cay said:

but I really don't want to be on the £500+pm for life bandwagon, even though I could easily afford it.

I guess this is one of the points I'm trying to make, my experience over 15.5 years suggests that we are all on a £x00 pm bandwagon for life - you're just choosing to run a car for longer with bigger gaps between the capital outlay.

Obviously having bigger gaps between the capital outlays, has a depressing effect on the monthly cost bandwagon BUT the cars cannot run forever because the car industry doesn't allow for economic maintenance near the end of life.

OMG is that more manufacturer sponsored market fixing at the lower price of the market?

Make original parts expensive enough that once a car nears substantive maintenance the car becomes an economic write-off!

I guess one could do something vehicle replacement modelling that explores costs throughout the lifecycle, I wonder what the most economic retention period would be for the class of car I've been getting in and out of?

Anyway, Cay I'm not arguing against you and I appreciate your input, I just wonder whether we are all on a £500 bandwagon one way or another over the ultra long-term? (Assuming the class of car we run is more of less constant)

[sasha320]

Thanks to all for their input.

The conclusions that I have come to are

- Performance cars have a shorter economic life than mainstream cars, so running them for longer when they are without a warranty does present a higher risk than usual around write off and repairs. You also have less time to enjoy the flatter end of the depreciation curve.

- Your extra costs over depreciation to fund your cars comes through either dealer margins when buying with cash or interest rates etc when buying on finance - you are always paying something beyond depreciation.

I guess the most costly way to own a car is through PCP, followed more closely than I thought, by self funding (through cash or cheap bank loans) and then finally running a performance car medium to long term.

The overall point is that the total gap between the 3 approaches (PCP, self funding or long term ownership) is much less than I thought however with the PCP option you are getting into brand new cars every 2 years.

Looking back on my car history, would I have preferred to pay an extra couple of hundred quid a month for a brand new car every two years OR have been running cars that were 4 to 6 years old and changing every two years OR keeping one car for much longer and running it into the ground before buying another every say 6 years?

I think the economics over a decade suggest all three approaches are closer in overall cost than we might have thought and if you are able to take advantage of manufacturer backed promotions like the famed S8 lease or the M5 interest free loans, it might just make PCP / the new car approach more competitive OVER THE LONGER TERM as you enjoy a newer arguably better car for the same cost.


Btw it is clear that the gap widens across the 3 approaches if you consider thme in the context of a single car.