How To Fund My McLaren
Discussion
Ok I have been looking at buying a new car for a bout 1-2 months and have. budget of around £80K,
I can stretch this to £100K if need be for the right car but ideally I would like to keep the spend at £75K or so
So the question is how to pay for it
PCP
Lease (not even sure you can lease a used car)
HP
Cash
What do you all do
May I say can we refrain form the "if you can't pay cash for it you should not even dare look at " comments.
Lets have a positive discussion on the best way to finance a car
I can stretch this to £100K if need be for the right car but ideally I would like to keep the spend at £75K or so
So the question is how to pay for it
PCP
Lease (not even sure you can lease a used car)
HP
Cash
What do you all do
May I say can we refrain form the "if you can't pay cash for it you should not even dare look at " comments.
Lets have a positive discussion on the best way to finance a car
Mr Cod said:
You're not going to be able to get PCP on a Mclaren of that vintage (at the 75k level I assume you are talking about a used 12C - a great shout). In the interest environment we're in, with frothy markets (not sure where your "cash" is), I think paying cash makes a lot of sense. Unless you have a business where that 75k is going to do more good. All IMHO of course.
I was thinking of a 2017 570S hopefully maybe between £75 to 80K. They are out there, maybe temporarily gone up slightly but they will come down againdavek_964 said:
It's not wise to buy a depreciating asset in the first place! 
After buying and losing a small fortune (to me anyway ) on anew car that I paid cash for I was advised / taught to never buy a depreciating asset. It has served me well as I usually have managed to get a better deal by using dealer finance, then switching that to my own finance to get a better deal on the finance and then investing the money wisely for a about an average e of 10% return on the the amount I would have originally used to buy the car.The one thing I have always done is make sure I have the cash in the bank to buy the car even if I am financing it , sort of "just in case" mentality and the way I was brought up to only buy what I could afford. Maybe not the way it is done but kind fo suits me.
But with the world now pretty much upside down how is the finance market ? One would assume that with base rate at all time lows then it would be cheap but with future car price uncertainty is the PCP / Lease deals still around and it seems lenders are not passing on the base rate cut to consumers
davek_964 said:
I'm a bit adverse to debt these days, so although I see plenty of posts that say you can invest the money somewhere and earn a zillion percent more than the interest on a loan, I only ever pay cash.
Why do you prefer to pay the cash? Is that you are not convinced the returns are there or just do not like to have a debt ?RT964 said:
You may not be able to get a PCP, however you will be able to get something that still has a deposit, monthly payment and final balloon (although this is not a guaranteed future value). There are many places that do these such as Oracle, JBR Capital, Magnitude Finance, etc. If you go on the Magnitude Finance website, there is a calculator which allows you to plug in the car details and it will give you a guide on what different finance options will look like.
Like you, I could have paid cash when I bought my last car, however I preferred to use finance as I'm in the process of buying another house, and so want to use more cash for that purchase (gotta love stamp duty !!).
Also, depending on how big you want your deposit to be and how long you are intending to keep the car, a 5 year HP deal may be worth exploring ?
Thank you I will go and give it a look. Like you, I could have paid cash when I bought my last car, however I preferred to use finance as I'm in the process of buying another house, and so want to use more cash for that purchase (gotta love stamp duty !!).
Also, depending on how big you want your deposit to be and how long you are intending to keep the car, a 5 year HP deal may be worth exploring ?
I see you and I are in the same boat.when it comes to using our money wisely lol.
I was thinking of buying a lovely waterfront flat that has come down bit in the last few months , it might be a better investment than putting all the cash into a car , so my wife say, lol
Mr Cod said:
You are not going to get any GFV on a a car like you are contemplating (or if you do it will be derisory for an early sports series). Therefore you are likely going to bear the entire amount of any depreciation. The question is whether on top of that you also make a finance company nice and rich. With cash, there's depreciation, with finance there is depreciation and financing costs. With most banks you're not going to earning more than 50bps on a cash balance at the moment, so the opportunity cost of deploying that capital into a vehicle is nearly non-existent.
I think you are spot on and tbh not been fan of PCP, tried it once , didn't like it. I was not intending on putting the money in the bank as that is not going to make money.
My normal route is buy the car on HP at say 3% and invest the same amount as I have borrowed into something that will return approx 10% (and thanks to the clever investment type bods I use for the last 5 years this has been the case ). Then once HP is paid I have a bigger cash amount (original cash plus interest earned over 4 years ) to invest in the next car.
Just wanted t see if this was still the best method in these uncertain times
MAC 720S said:
The world will look very different when you decide to buy next year. I would pose the question when you are ready to buy.
Ready to buy now if the right car / deal comes up. But equally happy to wait for the right car / dealWhat do you mean the world will look different next year ?
speedick said:
Pay cash (£75k), then put £3750 (5%) a year into a bank account titled "Mcwarranty"
You wont pay any interest for finance / pcp etc. Your warranty may or may not be needed, but by year 2 will stand at £7k (a big chunk of repairs if spent with an indie). You should aim to mitigate your first year warranty risks with a good pre buy inspection - most common faults are known and easily spotted.
If your ownership is trouble free (which in my opinion you will have a significant influence upon in the way you use & look after the car) you may even have the first £14k of depreciation covered after say 4 years,
Put another way, your residual plus any unspent savings may well leave you in a much stronger position to fund whatever you might want next. Finance costs plus depreciation would require a much bigger top up.
Very good way of doing it but I if I financed it then the same amount would be invested . Hopefully if I did not need to dip in to that funs I would end up with a healthy budget for the next car. You wont pay any interest for finance / pcp etc. Your warranty may or may not be needed, but by year 2 will stand at £7k (a big chunk of repairs if spent with an indie). You should aim to mitigate your first year warranty risks with a good pre buy inspection - most common faults are known and easily spotted.
If your ownership is trouble free (which in my opinion you will have a significant influence upon in the way you use & look after the car) you may even have the first £14k of depreciation covered after say 4 years,
Put another way, your residual plus any unspent savings may well leave you in a much stronger position to fund whatever you might want next. Finance costs plus depreciation would require a much bigger top up.
LordOfTheManor said:
Let me know where you're getting 10% - I'd like some of that !
A stocks and shares ISA that Invested into.Set up by the nice people at Jonstone Carmichael , Aberdeen. Average return over 5 years was just over 10% annually. Maybe I got lucky but worst so far has been 6%. I will find out what the end was called for you
MAC 720S said:
Sorry, I must have misunderstood. You said in your Porsche post that you were delaying until next year because you have a garage to build.
I’ve been through three significant recessions, none of which will match the pending Depression. Finance will not be easy to get, particularly for a frivolous supercar purchase. There is some pent up demand for cars at the moment, but give it a couple of months, car prices will crash, as will property. There is a lot of free cash being thrown around by the Government, but when that stops, the world will look very different next year. We are in for a very rough ride, the likes of which was last seen during the global Great Depression in the 1930’s - I’m pretty sure of that. That’s what I meant by the world looking very different next year.
You are right I am building a new garage and that will probably lead to the purchase of the car being delayed tlll next year. But f the right car / deal came up I would be happy to move on it. I’ve been through three significant recessions, none of which will match the pending Depression. Finance will not be easy to get, particularly for a frivolous supercar purchase. There is some pent up demand for cars at the moment, but give it a couple of months, car prices will crash, as will property. There is a lot of free cash being thrown around by the Government, but when that stops, the world will look very different next year. We are in for a very rough ride, the likes of which was last seen during the global Great Depression in the 1930’s - I’m pretty sure of that. That’s what I meant by the world looking very different next year.
Problem is getting a test drive as Cars selling fast just now but as you have said I also think that I agree with your future outlook and as such maybe it is a good idea to postpone a new car purchase for at least 3 months . I can see next year being tough on the economy for sure
Thanks for clarifying
davek_964 said:
I just don't like to have debt. I have not had debt for some years, and don't intend to again.
I also prefer to keep my monthly outgoings low. I make sure I have enough left in the bank that I wouldn't suddenly be homeless if the work economy suddenly tanked like it's about to.
Yes that is fair enough and I kind of think along the same lines as you, so I usually have enough stashed away to make sure all the bills can be paid for at least 2 years as you never know what is around the corner. Maybe that is why it has taken me so long to get round to thinking fo buying such a luxury car now instead of maybe 10years ago I also prefer to keep my monthly outgoings low. I make sure I have enough left in the bank that I wouldn't suddenly be homeless if the work economy suddenly tanked like it's about to.
Edited by EvoSid on Tuesday 7th July 23:22
LordOfTheManor said:
People are enjoying the handouts now, but will their jobs be there when they go back ?? 
That is the million dollar question we all want to know the answer to. I am amazed at the number of super cars that are being bought just now and even more surprised to see the price going up by over £10-20K on some cars cars compared to what they were being advertised for just 1-2 months ago
MAC 720S said:
Because of the Virus and BLM demonstrations taking priority within most of the MSM reporting, there’s a lot of economic news going under the radar / not being appreciated, which under normal circumstances, would be front page headlines. Over 15K jobs have been lost over the past couple of weeks alone, and that’s before the Furlough scheme stops and further job loses occur. There’s a real economic and social s
t-storm brewing.
Not sure why job loses not being reported as predominately as they shod be be , but with you on your thinking of the economic crash coming and then add in the oil price in Aberdeen and it looks as if Aberdeen could be hit harder than most . Not a good feeling and probably the worst I have seen for job insecurity since we moved up to Aberdeenshire in 1988 , which was a bad economic situation , but I fear this could be worse as it is global t-storm brewing. Edited by EvoSid on Tuesday 7th July 23:21
LordOfTheManor said:
Most dealers are "so busy" they don't bother to call you back or respond to emails (H R Owen 
)
I remind them that "The busy man is never wise and the wise man is never busy"
Ye shad that so far with 3 dealers. )I remind them that "The busy man is never wise and the wise man is never busy"
I guess they are really busy and will get round to calling a mere mortal like me the they get quiet. I wonder if I will still be looking for a car then ?
RogGT-R said:
Do you have a property with significant equity?
Now, before people jump all over me on the ‘never use a mortgage to buy a car’, of course they are correct unless you use the correct repayment term and go in eyes wide open and do the maths.
I have just done the same exercise for a Ferrari I will be buying shortly. Please note I am not, and am not able to, offer Financial advice and this pertains to my thinking and personal situation only.
Borrow £100K again mortgage (assuming less than 60% loan to value on property which is my situation but maths alters the less equity you have). I have borrowed at 1.59% five year fix on five year term. Saving over dealer finance - min approx £3,000 per annum (£15K over 5 years!)
Do you have the cash in a business but, due to going over higher tax rate or £99,999 per annum, it’s better to spread over 5 * 1 year dividends at lower tax rate and use the (usually significant) saved tax to offset mortgage interest?
I am having the additional borrowing, which is obviously secured against the property NOT the vehicle, on the basis I will have also put £60K deposit into the car on top so less worried about possibility of horrendous negative equity and/or write off with no back to Invoice GAP insurance to top up an insurance claim.
The plan I won’t sell the car during the term (or maybe ever).
IF the car will have a value after 5 years (which one would assume it would) and you pay off the loan in five years you will have funded the depreciation and minimised interest payments. You are always going to lose on a car (unless you are buying a 250GTO) so going into it eyes wide open and ending up less badly off than you might have been paying more interest on the same loan and term it’s an option.
Interesting option as I have a few rental properties that are debt free and could easily be remortgaged (short term) to finance a car. Might look in to that as 1.59% looks very appealing and if it is fixed for 5 years then it is ideal.Now, before people jump all over me on the ‘never use a mortgage to buy a car’, of course they are correct unless you use the correct repayment term and go in eyes wide open and do the maths.
I have just done the same exercise for a Ferrari I will be buying shortly. Please note I am not, and am not able to, offer Financial advice and this pertains to my thinking and personal situation only.
Borrow £100K again mortgage (assuming less than 60% loan to value on property which is my situation but maths alters the less equity you have). I have borrowed at 1.59% five year fix on five year term. Saving over dealer finance - min approx £3,000 per annum (£15K over 5 years!)
Do you have the cash in a business but, due to going over higher tax rate or £99,999 per annum, it’s better to spread over 5 * 1 year dividends at lower tax rate and use the (usually significant) saved tax to offset mortgage interest?
I am having the additional borrowing, which is obviously secured against the property NOT the vehicle, on the basis I will have also put £60K deposit into the car on top so less worried about possibility of horrendous negative equity and/or write off with no back to Invoice GAP insurance to top up an insurance claim.
The plan I won’t sell the car during the term (or maybe ever).
IF the car will have a value after 5 years (which one would assume it would) and you pay off the loan in five years you will have funded the depreciation and minimised interest payments. You are always going to lose on a car (unless you are buying a 250GTO) so going into it eyes wide open and ending up less badly off than you might have been paying more interest on the same loan and term it’s an option.
Edited by RogGT-R on Tuesday 7th July 17:28
Only question is most good deals have mortgage fee in them and that adds to the cost
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