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jazzy2000
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Joined: 10 Nov 2015
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PostPosted: Mon Nov 27, 2017 9:55 pm    Post subject: Buying a 100k+car Reply with quote

Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.
 
  
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badlands
Montreal


Joined: 05 Feb 2015
Posts: 502
Location: London


PostPosted: Mon Nov 27, 2017 10:15 pm    Post subject: Reply with quote

since when is a Porsche dealer a trusted financial advisor Wink

have not bought from OPC but have seen posts from bunch of people with enough cash to buy this kind of model outright saying they still take the dealer finance if they're looking to build a long-term relationship with said dealer & eventually try get allocated a (new) GT3 or similar. they then often pay off the whole thing pretty quickly because the rates are generally appalling...dealer doesn't care by that point.

think you'd have to do well on stock market once fees & tax are taken into account to reliably make more than the interest you'd pay on typical opc finance. granted, am no financial advisor either!
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squelch
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Joined: 05 Jun 2016
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PostPosted: Mon Nov 27, 2017 10:22 pm    Post subject: Re: Buying a 100k+car Reply with quote

jazzy2000 wrote:
They always suggest that i invest my cash to earn more than the interest they charge.


Hilarious! Did any of them actually tell you exactly where you could invest your cash to achieve such a return...? No? They will earn commission on finance deals remember.

You shouldn't really finance a depreciating asset (which is generally the category under which most cars fall) and via a pcp you will not actually own the asset without paying the balloon payment (so you're effectively renting the car for the term) so for me cash would be the way.

Even with very low interest rates, unless you have more lucrative uses for the funds then the opportunity cost is unlikely to be greater than the interest you'll pay.

PCP's are rumoured to be the next PPI compensation payouts too so that's indicative of how bad they really are.

Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!
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Last edited by squelch on Mon Nov 27, 2017 10:39 pm; edited 1 time in total
 
  
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mikeluke
Barcelona


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PostPosted: Mon Nov 27, 2017 10:25 pm    Post subject: Reply with quote

I can't see any condition where finance at 5.5-6% per annum is a good idea.....
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dombo
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PostPosted: Tue Nov 28, 2017 8:01 am    Post subject: Re: Buying a 100k+car Reply with quote

squelch wrote:
jazzy2000 wrote:
They always suggest that i invest my cash to earn more than the interest they charge.




Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!


The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.
 
  
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badlands
Montreal


Joined: 05 Feb 2015
Posts: 502
Location: London


PostPosted: Tue Nov 28, 2017 9:08 am    Post subject: Re: Buying a 100k+car Reply with quote

dombo wrote:
squelch wrote:
jazzy2000 wrote:
They always suggest that i invest my cash to earn more than the interest they charge.




Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!


The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.


very true. fine if you have the discipline to pay off the extra borrowed on the mortgage over say a 5 year period, I personally couldn't stick to it.
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G2
Österreich


Joined: 26 Oct 2015
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PostPosted: Tue Nov 28, 2017 10:01 am    Post subject: Re: Buying a 100k+car Reply with quote

dombo wrote:
squelch wrote:
jazzy2000 wrote:
They always suggest that i invest my cash to earn more than the interest they charge.




Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!


The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.


Crossover point in this example is that the "cheaper 2% mortgage" is actually more expensive (total interest) if you have more than 8years left on the mortgage. It gets to circa 22k at 21years vs 8k finance

OP - the real answer is it's different for everyone. Purely down to appetite for risk (gambling on investment knowledge/ability), your other uses for the money and allowances available (as wide ranging as a car allowance from work or pension tax relief at 40 or 45%), or they may be buying through their companies to leverage commercial allowances etc.

The gt3 example is an interesting edge case due to the flippers market. as a Simplistic example, buy 1 car with cash and make something like £70k when you spin it Putting 100k at risk. Use the same 100k for multiple cars as deposits with finance and make 65k per car (rough allowance for finance cost) But with a much higher risk profile. In financial terms bubbles are short term.

PCP finance is a very specific financial product that has huge benefits for commercial use, but it was not developed for car finance. It can fit for cars in the right circumstances, but other finance routes will likely be better suited to most cases.

I am not an independent finanancial advisor, this is just my personal view. However the OPC finance and sales guys are the least independent people in the whole transaction Smile PCP feels like it pays the most commission as it's the hardest to sell as the "flexibility" comes at a higher cost

Ps I did ask an IFA friend about buying cars. His response at a bar was "what? buy an expensive, usually depreciating asset that comes with maintenance bills running costs and that you will want to buy all kinds of shiny upgrades for that might not make money on. Why do you want to buy this?"....my response "cos i wants it and it's my new precious!"

Just remember that nobody should pay the first or second interest rate offered by an OPC on a new or used car Smile haggling during the buying process is part of the fun Thumb
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jonttt
Zolder


Joined: 20 Aug 2012
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PostPosted: Tue Nov 28, 2017 5:50 pm    Post subject: Reply with quote

Not necessarily porsche specific but I know plenty of high people who buy on finance to getting better discounts / manufacturer contributions and then simply pay off the finance in full after one month. I did this with my last Range Rover and saved £5k extra in my pocket for very little extra effort. The dealer was happy as he got his commission on the finance and I got a cheaper car than I would have without doing the finance.

If I was going to finance for the term I would never use the dealer finance unless you value convenience over cost as you can get much better terms via 3rd parties and some of the high street banks.

Ps I would never add a car to a mortgage, again I know people who did that but now regret it ie car now gone but they are still paying for it, in the end it will cost them a lot more than they could really afford, they should have just got a cheaper car Rolling Eyes
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sideways
Trainee


Joined: 17 Oct 2016
Posts: 74
Location: Surrey


PostPosted: Wed Nov 29, 2017 10:12 am    Post subject: Reply with quote

Whilst there are going to be a fair few high net worth individuals on the forum, for some a 991 is within reach on a monthly basis but not outright.

Whilst prudence *should* take the lead, we often get taken over by the heart rather than the head!!

I'm not sure without depleting a lot of my rainy day fund I could afford a 991 outright, but i can afford a deposit and monthly fee. I expect to get some/most of my deposit back because i put a reasonable deposit down and got finance at 3.7%.

I might never get to experience a 991 again if life circumstances change so I feel it was right to live in the moment and enjoy this amazing car. I wouldn't have done it if i could not afford the deposit and monthly though.

I also like to change my car every 2 year, as i get bored quickly, so car cost has come down to a monthly+deposit value to me.

Each to their own and i definitely would not accept these 5-6+% deals. Quite ridiculous!

Just my ten pence worth! Very Happy
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wasz
Magny-Cours


Joined: 28 Dec 2012
Posts: 2620


1999 Porsche 996 Carrera 2

PostPosted: Wed Nov 29, 2017 11:12 am    Post subject: Reply with quote

jonttt wrote:
Not necessarily porsche specific but I know plenty of high people who buy on finance to getting better discounts / manufacturer contributions and then simply pay off the finance in full after one month. I did this with my last Range Rover and saved £5k extra in my pocket for very little extra effort. The dealer was happy as he got his commission on the finance and I got a cheaper car than I would have without doing the finance.


Take the finance and the incentives and then pay it all off the next day.

I did with a used golf and got £500 off, 2x free services and extra warranty.

Thank the EU for letting us change our minds about crippling financial products.
 
  
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rabbitstew
Hockenheim


Joined: 21 Aug 2015
Posts: 637



PostPosted: Wed Nov 29, 2017 11:46 am    Post subject: Re: Buying a 100k+car Reply with quote

jazzy2000 wrote:
Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.


I had to smile as when I bought my bmw, the sales person gave me the exact same spiel. He was quite insistent that I would be much better off financially by taking their PCP scheme rather than pay cash. In the end I paid cash.

I always pay cash for my cars, as when you workout the yearly cost of ownership, if its on finance then immediately you have those interest payments.

However when we bought the wifes Ford Edge last year, Ford were offering such a good cash incentive, plus 0% that it made sense to take up their PCP offering.
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Bikeracer1098
Suzuka


Joined: 28 Mar 2015
Posts: 1003
Location: Camberley, Surrey


PostPosted: Thu Nov 30, 2017 12:56 pm    Post subject: Re: Buying a 100k+car Reply with quote

G2 wrote:
dombo wrote:
squelch wrote:
jazzy2000 wrote:
They always suggest that i invest my cash to earn more than the interest they charge.




Obviously there are exceptions to everything and it totally depends on your personal circumstances - for example, no point financing a car at 4% when you can pull £100k out of your house at less than 2%!!


The problem with that however is you are borrowing long term, and secured against your home, to buy what is essentially a short term, and possibly depreciating, asset.


Crossover point in this example is that the "cheaper 2% mortgage" is actually more expensive (total interest) if you have more than 8years left on the mortgage. It gets to circa 22k at 21years vs 8k finance

OP - the real answer is it's different for everyone. Purely down to appetite for risk (gambling on investment knowledge/ability), your other uses for the money and allowances available (as wide ranging as a car allowance from work or pension tax relief at 40 or 45%), or they may be buying through their companies to leverage commercial allowances etc.

The gt3 example is an interesting edge case due to the flippers market. as a Simplistic example, buy 1 car with cash and make something like £70k when you spin it Putting 100k at risk. Use the same 100k for multiple cars as deposits with finance and make 65k per car (rough allowance for finance cost) But with a much higher risk profile. In financial terms bubbles are short term.

PCP finance is a very specific financial product that has huge benefits for commercial use, but it was not developed for car finance. It can fit for cars in the right circumstances, but other finance routes will likely be better suited to most cases.

I am not an independent finanancial advisor, this is just my personal view. However the OPC finance and sales guys are the least independent people in the whole transaction Smile PCP feels like it pays the most commission as it's the hardest to sell as the "flexibility" comes at a higher cost

Ps I did ask an IFA friend about buying cars. His response at a bar was "what? buy an expensive, usually depreciating asset that comes with maintenance bills running costs and that you will want to buy all kinds of shiny upgrades for that might not make money on. Why do you want to buy this?"....my response "cos i wants it and it's my new precious!"

Just remember that nobody should pay the first or second interest rate offered by an OPC on a new or used car Smile haggling during the buying process is part of the fun Thumb


How does a 2% mortgage ever become more expensive than a 6% loan?

Simple mathematics - 6% is costing 3 times more than 2% (assuming the same capital repayment on a monthly basis, comparing apples with apples rather than comparing apples with oranges etc)

Especially as most mortgages providers are flexible with regards to overpayments.

With regards to pension tax relief it is possible to effectively get 60% tax relief on the portion of salary between £100k - £120 rather than 40%
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Last edited by Bikeracer1098 on Thu Nov 30, 2017 1:15 pm; edited 1 time in total
 
  
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Bikeracer1098
Suzuka


Joined: 28 Mar 2015
Posts: 1003
Location: Camberley, Surrey


PostPosted: Thu Nov 30, 2017 1:00 pm    Post subject: Re: Buying a 100k+car Reply with quote

jazzy2000 wrote:
Wondering how most people buy a Turbo S, GT3/GT2.

Every dealer I go to suggest I save my cash and go for the PCP deal. They always suggest that i invest my cash to earn more than the interest they charge. I am skeptical and wonder what you guys go for and recommend.


What interest rate are the OPC offering you?
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HSC911
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Joined: 23 Jul 2014
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Location: Bedford


PostPosted: Thu Nov 30, 2017 1:00 pm    Post subject: Re: Buying a 100k+car Reply with quote

Bikeracer1098 wrote:
How does a 2% mortgage ever become more expensive than a 6% loan?


My understanding of that:

IF you pay the borrowed (car) amount over 20 odd years and NOT pay it within the same time frame as the 6% loan Dont know

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Bikeracer1098
Suzuka


Joined: 28 Mar 2015
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PostPosted: Thu Nov 30, 2017 1:16 pm    Post subject: Re: Buying a 100k+car Reply with quote

HSC911 wrote:
Bikeracer1098 wrote:
How does a 2% mortgage ever become more expensive than a 6% loan?


My understanding of that:

IF you pay the borrowed (car) amount over 20 odd years and NOT pay it within the same time frame as the 6% loan Dont know

Thumb


Exactly, simple mathematics, no science behind it 👍

Why I think he was doing was comparing paying the capital back within 4 years rather than 25years which is like comparing apples with oranges. Also will be paying the 6% interest on the ballon payment for 4 years etc. So the loam is actually never fully payed unless the lump sum (ballon payment) is paid at the end of the term. On a £150k car the ballon payment will probably be £100k
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HSC911
Zolder


Joined: 23 Jul 2014
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PostPosted: Thu Nov 30, 2017 1:33 pm    Post subject: Re: Buying a 100k+car Reply with quote

Bikeracer1098 wrote:
On a £150k car the ballon payment will probably be £100k


Surprised F**k me, really Confused

This is why I have a 996 and not a 991 Sad

I'm just a poor boy, nobody loves me...


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squelch
Spa-Francorchamps


Joined: 05 Jun 2016
Posts: 330
Location: Bucks


PostPosted: Thu Nov 30, 2017 2:57 pm    Post subject: Re: Buying a 100k+car Reply with quote

Bikeracer1098 wrote:
HSC911 wrote:
Bikeracer1098 wrote:
How does a 2% mortgage ever become more expensive than a 6% loan?


My understanding of that:

IF you pay the borrowed (car) amount over 20 odd years and NOT pay it within the same time frame as the 6% loan Dont know

Thumb


Exactly, simple mathematics, no science behind it 👍

Why I think he was doing was comparing paying the capital back within 4 years rather than 25years which is like comparing apples with oranges. Also will be paying the 6% interest on the ballon payment for 4 years etc. So the loam is actually never fully payed unless the lump sum (ballon payment) is paid at the end of the term. On a £150k car the ballon payment will probably be £100k


I should've clarified when I mentioned drawing on a mortgage as a cheaper way, that you'd need to make the relevant overpayments to clear the extra borrowing in the same timescale as the dealer's finance. If you're able to do that and pay the same monthly payments that you would've been paying at the higher dealer rate (on top of your original mortgage amount obviously - which you can afford otherwise you wouldn't have been considering OPC finance in the first place, hopefully), then you would also chip away at your overall mortgage balance too - bonus! The usual caveat would be that your home would be at risk if you failed to make the payments - but I'd like to think we're all responsible enough with our finances not to risk that for the sake of some shiny new metal!!

Horses for courses, really. PCP's do work for some people - eg receiving a healthy car allowance and happy to "rent" a new car every few years and not worried about not owning it at any point (without "buying" it with the balloon). As a way to owning your new pride and joy? I'm not so sure.

It helps to have a good finance man on side too (and I'm not sure the car salesman falls into that category).
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Kryton
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Joined: 05 Mar 2005
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PostPosted: Thu Nov 30, 2017 3:25 pm    Post subject: Reply with quote

Would not purchase a car if I had to use finance, possibly an age thing Dont know
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squelch
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Joined: 05 Jun 2016
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PostPosted: Thu Nov 30, 2017 3:37 pm    Post subject: Reply with quote

Kryton wrote:
Would not purchase a car if I had to use finance, possibly an age thing Dont know


Likewise - although when I bought the 997 it was a toss-up between buying that and paying off the mortgage. The GTS won the toss and is now sat in a garage that the bank still owns Floor
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dombo
Silverstone


Joined: 15 Mar 2015
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PostPosted: Thu Nov 30, 2017 3:37 pm    Post subject: Reply with quote

Kryton wrote:
Would not purchase a car if I had to use finance, possibly an age thing Dont know


Same. I'd only buy one (with cash) if I could afford to buy it twice.
Mos' def an age thing, yo (added in a poor attempt to hide his age)
 
  
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