Proposal From Ferrari (Calculations)

[LamboPH]

Hi,

I have received a proposal from Ferrari on a 2019 488.

Can anyone figure out how the following numbers are calculated from the attached proposal:

B - ?

F - ?

[Dinoboy]

B is interest on the whole amount borrowed.
F is the final payment if you want to own it at the end.

[RogGT-R]

LamboPH said:

Hi,

I have received a proposal from Ferrari on a 2019 488.

Can anyone figure out how the following numbers are calculated from the attached proposal:

B - ?

F - ?

evening,

Would seem to read:

Price of car £180K less deposit £30K leaving £150,000 borrowed.

Total interest payable (£150K @ 6%) over the term is figure B which is then added to the amount outstanding on the car giving you your total balance over the four years including interest.

You then have a final payment which is the £180,314.20 less £1,538.60 * 47. Basically your deposit is the same as the interest payable on the entire £150K meaning the car, assuming you pay off that £108K in full in cash at the end of the loan, actually cost you £210K.

I would argue (pretty hard) on the rate as Bank of England is basically 0% at the moment and a loan of this size at more than 3% is OTT (Mortgage rates are 1.5% with correct equity over 5 year fixed term!).

I would shop around or argue hard on the rate as every 1% saves you £1,500 per year or £6K over the life of the loan - which pays for the extended warranty at the very least.

Hope that helps and people correct me if the above is out of whack!

Edited by RogGT-R on Sunday 26th July 21:37

[LamboPH]

Thanks Dino & Rog.

Sorry, I know these figures mean, but how do they calculate / arrive at those figures?

B (Charges): 6% of £150,000 = £9,000... which is wrong so I'm clearly missing something stupid here... I can't figure out how the arrived at £30,314.2 (charges)

F (Balloon): how and where did this figure come from... is this just a figure that Ferrari Finance think is a good safety net for them, in case you can't pay the balloon at the end (i.e - £108,010 will be owed, but they might predict the car to be worth £125,000 at the end of the term... therefore covering themselves if they need to take the car off you at the end of the term, IF you can't pay the £108,010?... i.e - they have a car worth £125,000 and you only owed £108,010)

[Dinoboy]

Here is a great little PCP reckoner where you can play with interest rates to see the big difference it makes getting 4.5% instead of 6%.

http://www.pcpcal.co.uk

[sociopath]

Without doing the maths (its sunday, I've been drinking) the interest isnt 6% on 150k for the whole period, as you're paying back funds during the period too, so you dont actually owe 150k for 48 months

[anonymous-user]

£108010 is what you owe of the total amount payable, after the £30000 deposit and making the 47 payments. It’s standard PCP stuff.

Total amount payable is £210324.

47 payments of £1538.60 is £72314.20.

Deposit is £30000.

There is £108010 left to pay.

As for the 6% interest on £150000. 6% is the annual interest rate. This is a 48 month term. Hence a lot more than £9000 is accrued!

This is not specific to Ferrari, or in need of a finance professional.

Edited by mstrbkr on Sunday 26th July 22:01

[LamboPH]

Thanks Dino, it's a useful calculator, but it still doesn't tell you how F was calculated :-)

Thanks SocioPath... you certainly don't sound like the person to mess with... particularly if you have been drinking :-)

Any accountant or finance person here, that has 5 mins to map out exactly how B is calculated... and i'm sure a Ferrari or Finance person might be able to confirm if my logic behind F is correct (safety net at end).

[LamboPH]

mstrbkr said:

£108010 is what you owe of the total amount payable, after the £30000 deposit and making the 47 payments. It’s standard PCP stuff.

Total amount payable is £210324.

47 payments of £1538.60 is £72314.20.

Deposit is £30000.

There is £108010 left to pay.

Yes, I know £108,010 is the amount left to pay, but you only know the Total Amount Payable (£210,324) because you already have been given the figure of £108,010, but how was £108,010 originally calculated?

Total Amount Payable = Balloon + Charges + Deposit

But how is the Balloon calculated?

Apologies if I am missing something silly here... but I don't think you can calculate the balloon... it's something that Ferrari Finance give you?

For example, if I look at a McLaren for £180,000 on their site. The numbers won't be the same, right?

Edited by LamboPH on Sunday 26th July 22:02

[anonymous-user]

LamboPH said:

Yes, I know £108,010 is the amount left to pay, but you only know the Total Amount Payable (£210,324) because you already have been given the figure of £108,010, but how was £108,010 originally calculated?

You asked specifically where that figure came from

[LamboPH]

mstrbkr said:

You asked specifically where that figure came from

Yes, but your formula / maths don't explain how that figure was originally created. That's what I am asking.

You are using the 'Total Amount Payable' figure in your maths... but the Total Amount Payable figure already has the Balloon in it... BUT how and where does the balloon figure come from?

[DoubleSix]

Surely the balloon is simply a function of the ‘book price’.

Dealers (or specifically finance providers) will estimate what they believe a car of equivalent spec will trade for at the end of the credit agreement and hence the sum may seem arbitrary to you as it’s ’their’ figure.

[LamboPH]

DoubleSix said:

Surely the balloon is simply a function of the ‘book price’.

Dealers (or specifically finance providers) will estimate what they believe a car of equivalent spec will trade for at the end of the credit agreement and hence the sum may seem arbitrary to you as it’s ’their’ figure.

Yes, this is what I am thinking, whereas others feel like they seem to be able to work it out... you can't... it's a figure that Ferrari or any dealership give you.

[gmasterfunk]

180k - (47x1500)...

Plus the 10 option to purchase.

[Dinoboy]

The 108k is a figure the finance company comes up with based on a number of things, how many miles you plan to do over the 4 years and there calculation of the cars residual value. As you say, the figures will be different depending on the car chosen. You could go berserk with options on a new BMW M760 and just about get it to £180k, the monthly payments would be about £3200 a month as it'd be worth about £15k 4 years down the line.

[DoubleSix]

LamboPH said:

DoubleSix said:

Surely the balloon is simply a function of the ‘book price’.

Dealers (or specifically finance providers) will estimate what they believe a car of equivalent spec will trade for at the end of the credit agreement and hence the sum may seem arbitrary to you as it’s ’their’ figure.

Yes, this is what I am thinking, whereas others feel like they seem to be able to work it out... you can't... it's a figure that Ferrari or any dealership give you.

Yup.

Straight forward estimate on residual value at end of term.

Car worth less? Hand it back...

Car worth more? Pay it off and pocket the difference in value.

[ferdi p]

LamboPH said:

Yes, this is what I am thinking, whereas others feel like they seem to be able to work it out... you can't... it's a figure that Ferrari or any dealership give you.

They've set the balloon at 60%, probably the maximum the finance company will allow on that specific vehicle.

[anonymous-user]

LamboPH said:

Yes, but your formula / maths don't explain how that figure was originally created. That's what I am asking.

You are using the 'Total Amount Payable' figure in your maths... but the Total Amount Payable figure already has the Balloon in it... BUT how and where does the balloon figure come from?

So you only needed to know how B was calculated then? You asked for how F was calculated!!!

[bennno]

LamboPH said:

Hi,

I have received a proposal from Ferrari on a 2019 488.

Can anyone figure out how the following numbers are calculated from the attached proposal:

B - ?

F - ?

B is full interest on loan over a 4 year period (apr is annual percentage rate so you’d pay C. 6% per year of balance, if you pay back loan earlier you’d expect a rebate of this charge on a regulated agreement?)

F is the final payment you need to make to buy the car after 4 years. It’s likely to be worth this or more, unlikely to be worth less. Is it a guaranteed future value enabling you to buy, or hand back. If it’s worth more you just sell it to a dealer and have them pay the finance and surplus to you.

A 30k deposit might put you in similar age McLaren for >£900 Month with a 60k balloon.

[anonymous-user]

Oh crikey, you meant how is the GMFV determined. I’m sorry but I’m not the only one who has mistaken the way your question was written about how the calculations in the photo work.

To explain B fully someone would need to show it on a spreadsheet. But the PCP calculator posted above shows the figure you have to be correct.

Edited by mstrbkr on Sunday 26th July 22:42