Another defector

[bigbob]

Correct, and dgmx5 isn’t a million miles out on the numbers.

The biggest surprise in this for me was the low interest rate available on a used car. When I bought a Range Rover recently, the interest rate on a used one was double that on a new one - clearly pushing the buyers in the direction of buying new

Yep some brands seem to push you to new with silly APRs on used stock. Mind you can always go to people like Oracle to get lower but it sounds like AM understand that realistic APRs on used cars keeps people in the game and ultimately protects residuals. I'm fussy on spec and have not bought a used car for a long time but my recent trip to an AM garage had me only looking at used cars as first year depreciation is large. I'm wonder what a DB11 or new shape Vantage might cost me in a couple of years as I wouldn't need all the seats by then. The alternative is the hat and the rabbit they are making in Modena.

 

[Felonious Crud]

This is a good place to experiment. You'll need to plug it into your man-maths calculator as the output data is pretty raw.

http://www.pcpcal.co.uk/

 

[outrun]

You've done well Robert. Generally the deals on offer from car dealerships can be well beaten by using a knowledgeable broker. To put that into perspective, on my car, it's about £800 less a month using my broker than it is with Ferrari finance. Ferrari try and get to use their system and tell you that this gets you points towards one day being on the magical list for the special models - Pista, TDF, Spezciale etc. Of course, that only matters if you want on the list, which doesn't bother me. I only wanted to buy for the least I could and leave money in the bank instead of in a depreciating asset. I pay less for the FF than I did for the Stradale. Although I paid a larger deposit to cover off any depreciation etc over time.

 

[dgmx5]

Are AM dealerships franchised or a part of the AM network?

Maybe they see it more of an investment to get you into the brand although their recent listing is predicated on a substantial increase in new car sales. How much is the cheapest new AM you can buy?

 

[JonW]

Put very simply it is the car equivalent of an interest only mortgage. Some of that interest is paid monthly some is what you lose of your deposit.

The bit I don’t understand is that, if we assume that the numbers are roughly as stated, it is still borrowing c.40k over 2 years. I know there’s no repayment of any of that, but how does this result in monthly payments of £12.06? That is less than 1% APR?

 

[bigbob]

The bit I don’t understand is that, if we assume that the numbers are roughly as stated, it is still borrowing c.40k over 2 years. I know there’s no repayment of any of that, but how does this result in monthly payments of £12.06? That is less than 1% APR?

It happens when the deposit is more than the gap between the purchase price and the GFV. The APR has an effect but it is more than offset by the large deposit.

 

[rockits]

If someone offered me £10k for my 4200 to drive a £32,500 early Vantage V8 at £6 per month, I would be tempted because that car will not be less than £22,500 in 2 year's time. I cannot see that happening but if an AM dealer wants to call me I am listening.

I have never bought on finance, and I do not subscribe to the only ever lease a depreciating asset view,

You do realise that the whole deposit is lost after the 2 years? So you would lose your £10k 4200 deposit. That is effectively £416.66 per month over 24 months. Also you lose any interest or investment earning potential over 2 years with that £10k. Not much granted but maybe £500-£800. Another £20-£33 per month.

In the OP's case that £20k deposit is lost after 2 years so becomes £833.33 per month plus the £12.06 so effective payments are £845.39 per month. Then maybe £1k-£1.6k in lost interest so another £41-£66 per month. You are nearly at £900 per month at this point. Of course this doesn't allow for any cash coming back at the end which is a complete unknown at this stage.

I don't subscribe to the only ever lease a depreciating asset view either. It may be a cheaper way to finance a vehicle than more conventional means. However the bottom line is that is still a whole chunk of cash to be dumping on a car. Admittedly these cars are lovely cars no question and I would of course have one in a heartbeat. I just can't afford one!

I can of course see how these arrangements work for some but it is very much man maths at its very finest. It is very much like buying a house you can't afford in the conventional manner on an interest only mortgage which only really make sense if the property price increases. If it does then great it is fantastic. If it doesn't or falls it loses its shine somewhat!

I am an old school person who of courses takes risk as we do in business every day. However I don't like tying myself in to anything (short of mortgage!) so can get in/out whenever I choose at no penalty. I also like knowing where I am financially at any point and not spending more than I need to or can afford to. This is just me by the way and I'm not passing judgement on others.

Every body is different and does things different which is great. I'm just not brave or well healed enough to commit to shelling out nearly £1k per month on a car. Maybe next years Rodders!

 

[Rwc13]

Not true Dean. You misunderstand how this work. The ballon is the amount you pay to own the car after two years. It is based on a prudent estimate of the residual value, but as dgmx5 says, I would be staggered if the car is only worth £40k in 2 years. So the value above the prudent residual is effectively what’s left of your deposit. Of course it is possible we will see a steeper decline in the value of cars than predicted, but I don’t subscribe to that view, though if there is you may stand to lose just as much on your equivalent value fleet of 8 cars.

 

[Felonious Crud]

The actual final value of the car will not be zero, so the deposit and the monthlies are not lost. By the end, you do have something with some value. The costs are depreciation and interest. Running costs don't count - every car needs running, and recent F-cars have 'free' servicing for 7 years from new so are exceptionally cheap.

 

[rockits]

Christ I have this very wrong then. Intrigued now.

So if I put a £20k deposit down at the start then at the end of 2 years I get all £20k back? During this time I have been driving a £65k 2013 AM DB9 for £12.06 per month? Seems too good to be true does it not? I am obviously missing something.

 

[rockits]

Or to put it in idiots terms.....how much is a 2013 £65k AM DB9 going to cost me either a month or for the 2 years? The real or true cost to me to my back pocket. Seems very complex and hard work to understand how much these arrangements actually cost.

 

[D Walker]

Or to put it in idiots terms.....how much is a 2013 £65k AM DB9 going to cost me either a month or for the 2 years? The real or true cost to me to my back pocket. Seems very complex and hard work to understand how much these arrangements actually cost.

if it makes you feel better - I'm an idiot too.....

 

[rockits]

if it makes you feel better - I'm an idiot too.....

At least we both know where we stand

All my mates had interest only mortgages for years living in houses they wouldn't otherwise have been able to afford. All expecting and needing house price to rise for it to justify making sense. I guess the car thing is similar here. There may be a bonus or a sting in the tail or I don't know what if I'm honest. Very confused.

If a cars depreciation is circa £20k over 2 years surely someone has to pay for it somewhere. I can understand if your b4lls are big enough to buy a high end supercar financed that increases in value over the term earns a profit. That makes sense and can happen. However for a car that is known to likely drop substantially I don't why it would be anything other than expensive in my world.

 

[zagatoes30]

Now I'm confused

Assuming £65k purchase price and a £45k value in 2 years then based on the followoing 3 options we had mentioned before


1. Give it back, if it’s worth more than the GFV you get some cash back.

So in this case you give it back and lets say its now worth £50k, you get £5k back but you still have spent the £20k deposit and the 24x12.06?

2. Pay the balloon and own the car.

In this case you pay the £45k payment but still have paid the £20k plus finance?

3. Trade in against another car...

Use the current value £45-50k as deposit on another car, but once again you have still lost the £20k

In all scenarios the total cost is £20k plus the finance unless the cars value is better than the £45k only then do you offset the some of your deposit, or am I missing something here?

 

[dickygrace]

Correct Andy

 

[zagatoes30]

Correct Andy

Thanks thought I was going mad, but back to the OP it is a lovely DB9 and in my mind there still is something a little bit special about an Aston Martin

 

[rockits]

Thanks Andy/Dickie.

So I'm not confused and the costs I have suggested are the same as what Andy has said? So seems like circa £900 per month? I'll give it a miss thanks

 

[daverichardson]

That too is more or less my understanding
The rationale being that most people will trade in against another car (I have a lot of friends that do this - I do not) thereby keeping the car market buoyant and preserving jobs and moving money etc

 

[Rwc13]

Except that the balloon is closer to £40k and the expected residual after 24 months at no more than 5000 miles a year is expected to be more like £55k, so realistic cost more like £10k

 

[Felonious Crud]

Except that the balloon is closer to £40k and the expected residual after 24 months at no more than 5000 miles a year is expected to be more like £55k, so realistic cost more like £10k

... which is a boatload less than you'd lose if you a) leased, or b) bought something new or nearly new and paid in cash.

The only way to not lose money or cars is by a) taking public transport, or b) being a car dealer.