6.9% finance rate jumped to 10.9%!!

[Sidicks]

While this might look expensive when considering the car in isolation if I plough the value of my Taycan order onto my deposit for the house we plan to buy next year, I save significantly more on the mortgage than the interest on the car, so the overall picture needs to be considered.

Are you suggesting that the rate you are paying on your mortgage is MORE than the finance rate on the Taycan? Or have I misunderstood your point?

Sponsored

 

[Wilson]

i bought a 1 year old MY21 last Dec with 9k miles on the clock for 129k€, configured on the configurator it was 169k. It also had a ppf front of 3k€. Slapped a set of 21” Satin Black RS Spyders on for 7k€, this config after price raise, now nearly tips 185k€ new. In Dec dealer offered 5.4% via independent finance, but I declined, as I didn’t need it. factory warranty ran out last month, but I’ve got 1Y warranty from the dealer up to Dec. In Nov it will be examined for Porsche approved extended warranty, if anything pops up it will be for the dealer. Once passed, I’ll take another 3years of Porsche approved for 4k€ or so.

So it seems for the next 4Y’s I‘m sort of having my cake and eating it.
doing this now, new, without savings, seems crazy money. And I would probably never do it.
I’ve always been brought up with “it’s about what you can afford, not what you can get away with”
But if you can‘t pay cash, with these rates you‘ll bleed.

Whilst I appreciate your viewpoint here it is only one way of looking at the picture and it’s highly dependent on having free cash sat in the bank.

Ate you suggesting that the rate you are paying on your mortgage is MORE than the finance rate on the Taycan?

Not at all but you pay your mortgage over a much longer term and therefore even if you can get 4.1% which is an excellent rate in the UK just now it would save much more putting 100k into the deposit in terms off loan to value discounts and overall borrowing reduction than the car costs over 4 years of its life.

Now granted you repeat that over and over with the car but in my current circumstances cash in the bank which has been saved and has a demonstrable source is vital for me when actively looking for my next house and the best mortgage deal I can get.

I might look at this very differently when I come to replace the Taycan at the end of the deal and hopefully interest rates will have reduced to the point where this is a none problem again but time will tell on that one. For clarity I was initially going to lease it but PCP worked out cheaper on the monthly payments regardless of interest rate and obviously retains the flexibility to change or get out of the car at any point I chose to take the hit.

Food for thought, JLR Aberdeen finance through Black Horse and were routinely offering finance at 9.9% when the base rate was 0.25%, I would hate to see their quotations today!!

 

[Sidicks]

Whilst I appreciate your viewpoint here it is only one way of looking at the picture and it’s highly dependent on having free cash sat in the bank.

Not at all but you pay your mortgage over a much longer term and therefore even if you can get 4.1% which is an excellent rate in the UK just now it would save much more putting 100k into the deposit in terms off loan to value discounts and overall borrowing reduction than the car costs over 4 years of its life.

Of course, but that’s not really the right comparison!

Now granted you repeat that over and over with the car but in my current circumstances cash in the bank which has been saved and has a demonstrable source is vital for me when actively looking for my next house and the best mortgage deal I can get.

I might look at this very differently when I come to replace the Taycan at the end of the deal and hopefully interest rates will have reduced to the point where this is a none problem again but time will tell on that one. For clarity I was initially going to lease it but PCP worked out cheaper on the monthly payments regardless of interest rate and obviously retains the flexibility to change or get out of the car at any point I chose to take the hit.

Food for thought, JLR Aberdeen finance through Black Horse and were routinely offering finance at 9.9% when the base rate was 0.25%, I would hate to see their quotations today!!

Be careful when comparing PCP v normal loans, and look at the total cost for credit as well as the interest rate and monthly repayments!

 

[TaycanHero]

In the UK I can deduct the full £90K purchase price from my company profits in the year of initial purchase... Saving approx £20k-£22k in corporation tax...
Which I suppose pays for the finance charges...
I hadn't thought of it that way! !
?

Your corp tax "saving" (it is really a deferral) is about ££7,500. You will eventually dispose of the car. Let's assume after 4 years the car sells for £60k. We will also assume the children in Parliament have kept corp tax at 25%. £30k depreciation x 25% corp tax.

However, your interest payments are £24,525 over the term - less the est. £7,500 = £17,025, which is not worth it imo, especially where your business cannot fund £90k.

If you are buying through a business, pay cash. If you cannot fund a cash purchase, then simple business economics comes into play: the business cannot afford it where borrowing is 10% pa.

Most business owners buy the Taycan for the tax savings and because they have so much surplus cash. You are very limited in what you can do with it, outside of complicated company structures or otherwise paying hefty personal tax if you take it as income.

If a business is stretching to buy a Taycan, then they should wait until they have more retained profits.

Another option is to take a directors loan and buy second hand, buying yourself 1. A higher spec model 2. Lower depreciation.

If you time it right, you can keep the car for 12 months (financial year) + 9 months. Sell it, then pay back the loan, making up the shortfall from savings.

You will only pay BIK, if that is £90k @ 2% then over the term (we will call it 18 months so you are safely within the repayment time limit) = £2,700 in personal tax or £150 a month for 18 months vs £350 in interest for 48 months.

The depreciation curve will be shallower buying second hand as well, plus you dump the car after 18 months also curtailing heavy depreciation vs 4 years.

If I were you I wouldn't bother. It's just a car.

 

[Wilson]

Of course, but that’s not really the right comparison!

Be careful when comparing PCP v normal loans, and look at the total cost for credit as well as the interest rate and monthly repayments!

All I am saying is that buying the car on PCP is not right for everyone but its not something to be dismissed as stupid either.

I use my cash elsewhere and buy my cars from disposable income, I expect many people in the UK fit into this category with PCP being so common here. I have no intention of paying the balloon payment and keeping the car as I change my main car every 2.5-3 years so half decent deposit, maximise the future value and the cost of owning a Taycan for 3 years is almost exactly 50% of the on the road price.

That's fine for me when depreciation probably runs around 15% per year in the UK, will be impacted by the incoming facelift and I still have my cash in the bank actually earning interest for once!

 

[Sidicks]

All I am saying is that buying the car on PCP is not right for everyone but its not something to be dismissed as stupid either.

I use my cash elsewhere and buy my cars from disposable income, I expect many people in the UK fit into this category with PCP being so common here. I have no intention of paying the balloon payment and keeping the car as I change my main car every 2.5-3 years so half decent deposit, maximise the future value and the cost of owning a Taycan for 3 years is almost exactly 50% of the on the road price.

That's fine for me when depreciation probably runs around 15% per year in the UK, will be impacted by the incoming facelift and I still have my cash in the bank actually earning interest for once!

Having cash in the bank can make sense for a variety of reasons, but economically it rarely makes sense as you are extremely unlikely to be earning enough to meet the cost of finance, once risk and tax are taken into account. That was my point.

For many people the basic economics are not the key part of the decision!

 

[Wilson]

I absolutely agree with you, it is all down to personal circumstances.

 

[Redhot2474]

It has to be fully electric and new to be eligible for the 100% allowance against corporation tax

Probably a more significant savings buying used anyway

 

[charliemathilde]

It’s unfortunate but interest rates are going up and have been for a year. it’s a rough time to buy an expensive new car. 10% doesn’t sound competitive. 6.5% is more like it (for the best credit ratings). Still a lot more expensive than a year-ish ago were 1.9% was possible

Unfortunately the dealer and Porsche finance terms have always been pretty terrible in the US.

I’d step back from worrying about the rate specifically and start doing some month about the total interest costs in absolute terms and what works for your budget. It’s possible to refinance later, although it’s tough to see interest rates coming down any time soon.

 

[charliemathilde]

TL;DR the central banks WANT it to be a shitty time to make new large purchases in order to slow inflation

 

[Eugene88]

Yeah agree with personal circumstances. Plus don’t forget that finance companies are trying to earn money I was offered 10.31 rate on Porsche, looked elsewhere and found 7.4, however got only 8.9, which is still better and saving me appx £10-12k. Porsche got upset of course haha. I did hire purchase as I will be keeping the vehicle, as I can afford monthly payments and I dislike balloon payments. PCP doesn’t sounds like a good idea in UK from finance point of view unless it’s a company car and you are saving on VAT. But little do I know, being excited collecting the car next week haha

Sponsored