'supercar finance'??
Discussion
bloke i was speaking to yesterday reckons that it is possible to take out specially structured finance plans for supercars and the like, where you might only pay interest only (or have a giant balloon), providing you select a car for where used values are very bouyant. Is this real?!
Yes, or it certainly was pre-pandemic but the market is buoyant so can't see why they wouldn't do it again. You always need a big deposit for interest only but consider something like a Porsche Carrera GT, values are only going one way. Stick a balloon onto the agreement an it works perfectly for the speculators
I looked at purchasing something which could probably be classed as being in that territory. Had I gone for it I would have used my Cayman R (owned outright) as deposit and financed the rest, about £55k. I was thinking HP but their finance chap gave me a range of options. A number were as you suggest and at least one was effectively paying only interest on the loan. I was given about 5 scenarios, but one I recall would have had me in the car for about £300/month. Granted, my deposit was not insignificant, but the finance guy basically said the finance company didn't see the car losing much value and thought it could increase so they would offer these packages. I remember being amazed that I could drive a car of that value for so little.
this is fairly encouraging 
I thought I was just being spun a yarn!
From what he was saying, I think, was you might need of the order of £30k deposit and then maybe £1k a month and then the world opens up. Rather than trying to find something appreciating (fairly rare) it looks like just something which wouldn't lose too much. Sort of 911 GT3 etc territory. The caveat being I think not brand new, which is completely fine.
Exciting stuff i think.
I thought I was just being spun a yarn! From what he was saying, I think, was you might need of the order of £30k deposit and then maybe £1k a month and then the world opens up. Rather than trying to find something appreciating (fairly rare) it looks like just something which wouldn't lose too much. Sort of 911 GT3 etc territory. The caveat being I think not brand new, which is completely fine.
Exciting stuff i think.
a few years ago now I looked at buying a ferrari 430 in a similar way, the chap at graypaul basically said to look at it like renting the car for 3-6 months at about £1200 a month and then give back to them to sell to the next guy for similar money and get my deposit back. They had a year old FF at the time that had been through 4 owners and they had sold it each time.
I couldn't have rented one for the weekend for less money than the £1200 a month.
I couldn't have rented one for the weekend for less money than the £1200 a month.
This interview/wrap video between Yianni and Babz they talk about a similar finance arrangement at once point, I'm not sure on timestamp as I'm at work so I cant watch the video to to tell you the relevant timings at the moment but its only a 15 min video!
https://www.youtube.com/watch?v=41AUr7YEEcc
https://www.youtube.com/watch?v=41AUr7YEEcc
There was this deal on brand new Astons £1k down and £1k a month.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
And the Mclaren deal on 600 LT
£5k and £1250 a month.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
And the Mclaren deal on 600 LT
£5k and £1250 a month.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Blown2CV said:
bloke i was speaking to yesterday reckons that it is possible to take out specially structured finance plans for supercars and the like, where you might only pay interest only (or have a giant balloon), providing you select a car for where used values are very bouyant. Is this real?!
Can confirm an old boss of mine ran Ferraris using this sort of product. This was in 2016 though.It's important to be aware of the key distinction between regular PCPs and "Supercar Finance" as described.
With a PCP, the lender takes the risk on the future value of the car. If there's a massive depression and used-car values crash, you just return the car at the end of term, and the fact it's worth half what was expected is the lender's problem, not yours.
With supercar finance, you take the risk. E.g. if you finance a £100k car interest-only for 3 years, at the end of term you have to return £100k to the lender (less the initial deposit). You cannot just give them the car instead.
You can sell the car privately or to a dealer, and if you get back £100k or more from the sale then happy days.
However if the car realises less than the original value when resold, you're on the hook for the difference.
Therefore these products have an associated risk. Obviously the appropriateness of a given deal depends on both the disposable income of the customer, and also the residual record of the make and model of car being financed.
The way I see it, more responsible lenders will tend to set lower expected future values (and thus correspondingly higher monthly payments) to avoid the risk of you getting yourself into trouble, whereas less scrupulous outfits may be prepared to let you make more of a gamble on future residual values.
It's entirely up to you how far you want to push your luck, but it's good to have your eyes open about the situation, and not end up sleep-walking into an "endowment mortgage" type situation.
With a PCP, the lender takes the risk on the future value of the car. If there's a massive depression and used-car values crash, you just return the car at the end of term, and the fact it's worth half what was expected is the lender's problem, not yours.
With supercar finance, you take the risk. E.g. if you finance a £100k car interest-only for 3 years, at the end of term you have to return £100k to the lender (less the initial deposit). You cannot just give them the car instead.
You can sell the car privately or to a dealer, and if you get back £100k or more from the sale then happy days.
However if the car realises less than the original value when resold, you're on the hook for the difference.
Therefore these products have an associated risk. Obviously the appropriateness of a given deal depends on both the disposable income of the customer, and also the residual record of the make and model of car being financed.
The way I see it, more responsible lenders will tend to set lower expected future values (and thus correspondingly higher monthly payments) to avoid the risk of you getting yourself into trouble, whereas less scrupulous outfits may be prepared to let you make more of a gamble on future residual values.
It's entirely up to you how far you want to push your luck, but it's good to have your eyes open about the situation, and not end up sleep-walking into an "endowment mortgage" type situation.
PaulD86 said:
I looked at purchasing something which could probably be classed as being in that territory. Had I gone for it I would have used my Cayman R (owned outright) as deposit and financed the rest, about £55k. I was thinking HP but their finance chap gave me a range of options. A number were as you suggest and at least one was effectively paying only interest on the loan. I was given about 5 scenarios, but one I recall would have had me in the car for about £300/month. Granted, my deposit was not insignificant, but the finance guy basically said the finance company didn't see the car losing much value and thought it could increase so they would offer these packages. I remember being amazed that I could drive a car of that value for so little.
The finance company doesn't take a view on future value. If the value of the car falls, the borrower has to pay. The lender generally likes to check that the client has a house with a mortgage as that's the easiest way to get the money off them if they don't have any cash.
Of the client doesn't have a mortgage then they often won't get an offer.
Remember, the 'finance guy' doesn't care about the client either. They will say whatever they can, within the extremely lax regs, to get the deal done.
DonkeyApple said:
PaulD86 said:
I looked at purchasing something which could probably be classed as being in that territory. Had I gone for it I would have used my Cayman R (owned outright) as deposit and financed the rest, about £55k. I was thinking HP but their finance chap gave me a range of options. A number were as you suggest and at least one was effectively paying only interest on the loan. I was given about 5 scenarios, but one I recall would have had me in the car for about £300/month. Granted, my deposit was not insignificant, but the finance guy basically said the finance company didn't see the car losing much value and thought it could increase so they would offer these packages. I remember being amazed that I could drive a car of that value for so little.
The finance company doesn't take a view on future value. If the value of the car falls, the borrower has to pay. The lender generally likes to check that the client has a house with a mortgage as that's the easiest way to get the money off them if they don't have any cash.
Of the client doesn't have a mortgage then they often won't get an offer.
Remember, the 'finance guy' doesn't care about the client either. They will say whatever they can, within the extremely lax regs, to get the deal done.
akadk said:
10% interest on a £100k balance is pretty chunky !
depends how you look at it. I am not sure how they structure it all, but £100k at 10% is just over £5k a year (if I am working that out correctly). So assuming the car is still worth what you paid, that's all you pay over the year. Obviously that 'trick' only works if you are comfortable that the car is worth what you paid. That's where the car nerdery comes in! I love that though. In a way it has some similarities to playing the lease game i.e. trying to find a lease that is cheaper than the depreciation over the term. I did that a few times and had a couple of warm vehicles... best one being a new Audi S8. Blown2CV said:
well this is where the difference lies as, I am informed, the funder I was told about will source a car for you and will recommend which models are best suited for future value retention.
But the borrower will be wearing all the downside risk including default costs. 
The 'investment advice' (by a party not regulated to give investment advice btw) will not negate the downside liability.
At the end of the day it's just an ultra low margin loan that looks secured against the car but is normally secured against the lien potential of the client's home. You might lend to someone who doesn't have a mortgage but you'd want to be very comfortable that they have a very good reason to settle the deficit. A typical example there would be a professional line of work where a debt default would jeopardise the career.
Blown2CV said:
depends how you look at it. I am not sure how they structure it all, but £100k at 10% is just over £5k a year (if I am working that out correctly). So assuming the car is still worth what you paid, that's all you pay over the year. Obviously that 'trick' only works if you are comfortable that the car is worth what you paid. That's where the car nerdery comes in! I love that though. In a way it has some similarities to playing the lease game i.e. trying to find a lease that is cheaper than the depreciation over the term. I did that a few times and had a couple of warm vehicles... best one being a new Audi S8.
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