dombo said:
squelch said:
jazzy2000 said:
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
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
haggling during the buying process is part of the fun :thumb: