john banks

Huge risk to the downside, 1800 pa will seem like chicken feed if the market moves against you, which based on better than expected performance over the 4 years in a difficult market it is very easy to argue it is due a correction.

Also you have to take your initial deposit off that 37 to compare.

Rather you than me! How would you feel if the property lost 20% on the property and you have no tenant after previous one trashes it and then you are paying 598 for a near 5 year old car?

You are basically betting that you can beat a car loan with returns on property in the next four years. Takes some faith that one.

john banks

I have another little concern. Are you an employee? How secure is your job and can you keep all this going if redundant or long term sick? Also given the risks in rental property and the way people with considerable resources have already lost their shirts on property in recent years, and huge property investments have collapsed, are you exposing your personal assets to this property venture? If the worst happens would you lose your own house? Can you somehow run the car through your new business? You are not an accountant by your own admission, have you either run your own business before or taken professional advice or from someone that has?

Look before you leap. The more I think about this the more I am petrified for you with what appears to be your financial approach.

Dingdongler

Thanks Trout, doesn't look so attractive now. If rates go up I'll just end up paying for longer, I'd like the option to pay the whole thing off if rates went up but that doesn't seem like an option with this deal.

The leasing/hp thing is confusing. The richest person I know (also most financially astute, not inherited money), worth a few tens of millions. He recently leased a new BMW 730d over three years. A couple of £k down and then I think about a £k a month. All servicing etc included. So there must be something in leasing/finance etc.

Mitchy260

I'm a PAYE wage slave yes. Job, I would say is secure as I'm in a specialised role in the O&G industry. Of course, I do have insurances incase of redundancy/unemployment and there is always the option to refinance/downgrade the PCP at any point should I feel that I can no longer keep up the repayments. My own home would never be under risk, No.

Although it is a 4yr PCP, I can get out of that plan at any time with no penalty by starting up a new PCP. In order to get the RS, I came out of a 36mth PCP at the 18mth point without any penalty. The Equity I had in the deal/car went down as a deposit on the TTRS.

The same could be said If I felt that the monthly payments on the RS were unworkable, I'd downgrade the car to another in the Audi range, my payments would drop on that too. In all honesty, I only plan on keeping the TTRS for 2yrs maximum as my 3yr old will be 5 by then and he will have outgrown the rear seats in it. The 2yrs also ties in with end of warranty (I took it over 4yrs to keep the monthly payments down, only reason)

There is a lot of flexibility, I was surprised at how easy it was to cancel 1 PCP and then start another on another car. The only downside I suppose is the fact that to keep it all going, Audi have me where they want me, a customer to them.

john banks

Through his company Ding?

john banks

Starting another PCP is not a good exit strategy if your circumstances change, but you're already in this cycle it seems rolling one into another. Surely if you're going to start a property business you'd be better doing contract hire through that?

Mitchy260

I'm just small fish John, I dont have the funds to create a property portfolio. I'm not cash rich, I was just trying to show that the figures can be worked out to be fairly similar through investment of the capital to offset against the costs of the finance.

You may wonder why, it seems like a lot of work, but there is protection in the PCP deals with the GFV aspect. In addition to that, I dont have the hassle of having to sell the car either, it's just handed back at the end of the term.

IIRC you rent your house? Some would argue that this is money wasted especially considering record low interest rates and HPI over the last 12mths in most areas. You could stretch that to me wasting my money 'renting' a car

LG John

IIRC John has somehow got a rental of around £750 on a house worth £400,000. Typical rental targets are 5% annually of the value of the property. If that's the case John should be paying over £1500 a month!

In short:

[ ] he did things he isn't proud of with the landlord
[ ] he is a total luckbox


Tick as necessary

Dingdongler

John, he owns a number of companies so yes I presume through company. My self employed (ie private) income now goes through a liimited company so that applies to me as well I presume? But then isn't there a benefit in kind thing that kicks in??

Very confusing!

john banks

I am sitting out of the property market as I think it is poor value. So I'm making the exact opposite call on it than you Mitchy260, having already cashed in on the last boom before it faltered. My reasons for that are done to death, but the plan is to keep saving and buy for cash when I see the right place at the right time, so far I'm not remotely finding that the places I can afford are running away from me so something is working well with my decision.

I also have had two rentals that are very good VFM. The present one is £825, but it does cost a lot to heat as it needs new windows, and the kitchen and bathroom are old. But the space, tranquility, land and setting are fabulous and more than make up for it.

john banks

The sums or convenience must work out for him. Ask him. In Mitchy260's situation I wouldn't touch PCP with a bargepole personally.

But differences of opinion make a market

Trout

iTrader: (1)

Ding - with a LIBOR deal you can pay it off anytime you like. The penalty is usually 30 days interest - so not too punitive. You can also make lump sum payments into as you go along. This reduces the number of payments as the capital is reduced and so interest falls.

Trout

iTrader: (1)

I can make my own observation on this.

If you haven't guessed I am about to put a lump of money into a car.

I will be using a lease option as it is by far the cheapest way of buying the car. I have the cash but it is tied up in my business. Without even looking looking at capital deployment leasing is way cheaper as to release the capital in one go will attract a massive tax bill. This fact alone leads me to a leasing option.

As for the 'business cases' that John and Mitchy are making - I find these to be specious arguments. There is no investment rational that can justify buying a normal car for daily use, irrespective of the financing arrangement. The only underlying financial decision is how much money you are prepared to sink for daily enjoyment.

The good news is that the most expensive car I have ever purchased has had MASSIVELY the lowest (if any) depreciation!! My next car will have some, but proportionately not as much as run of mill drivers.

zip106

I received this email this morning...

(it's a long read, but interesting)

And as I've said before, I'd rather enjoy a depreciating asset at the moment.

http://www.fsponline-recommends.co.u...5442&l=183737&

john banks

I'll not disagree with that at all Trout, pay to play, or even pay to be transported without any sense of play has never been more true.

Despite being self employed, because I'm in a partnership where I take drawings, I don't leave a large capital balance in there except for increasing equity in a building mainly, so a big purchase for me comes from funds that are already taxed. So my decision is simple, my house, car and part of my retirement funds (the rest from pension and sale of business) are the same pot and I'm happy at different stages to have cash committed to these or saved. Since I am a natural saver from regular income (apart from spending a bit on cars I have a completely normal lifestyle) there is no problem, but for many they wouldn't have the discipline to make it work.

john banks

Yes Moneyweek can be a bit dramatic and premature, and sometimes wrong with their calls but always interesting. I bought my first house at the very bottom and that chart and sold at the very top. I wonder if I will be able to repeat it again?

Trout

iTrader: (1)

I bought at the top and then had to sell at the bottom...


...twice!! Property is not for me other than living in!

bighead

iTrader: (1)

+one here

hodgy0_2

100% and as I said earlier you have to pay to play whatever way you cut it

but if you are careful, as you have been with the GT3, it doesn't have to be catastrophic, financially speaking

was the GT3 a genuine daily driver? and if so will the replacement be

how many miles did you put on it

stilover

I'd swap banks if I were you then.

When I got my 370Z, I paid £31k on my debit card on the morning I picked it up.

Dealer ran the card, got reply requesting telephone approval. Dealer phoned bank and gave them their reference numbers. I was then asked to speak to my bank and confirm a few security questions. Money was then released.

Trout

iTrader: (1)

Genuine daily driver. Drove it all last winter even in the snow.

In the 15 months of driving it I have put on 12,000 miles. It has maybe depreciated between 0 and £2,000. Not bad value there!

Trout

iTrader: (1)

Oh - the replacement might get a little more respect.

hodgy0_2

yep - good skills Trout, no point in having a garage queen

my neighbour took me for a drive in his 360 challange stradale the other day and he absolutely nailed it every gearchange, I was quite impressed with his ballsy attitude tbh -- he hit the red line fast and often

Trout

iTrader: (1)

It is what these cars are designed for...


...well maybe the Porsche


I used to dream about a 360CS - I reckon they are harder to keep on the black stuff than the 996 GT3. All the later versions of both have traction control as well as a whole host of electrickery.

hodgy0_2

he has a GT2 as well, which he said is mental (and harder to drive than the 360), how does that compare to a GT3

i was surprised when he bought the 360 tbh as he is a Porsche fanatic

Trout

iTrader: (1)

Which GT2 - they are so different.

993 GT2 - massively desirable, huge money, very lairy to drive, takes huge skill to go fast

996 GT2 - very quick, very understeery at the limit, not as easy to balance as the GT3

997 GT2 - very, very, very quick, reportedly much better to drive, easier to drive, GT3 still has the edge for fun

997 GT2 RS - ballistic - quickest car Porsche has ever made. Sold out before announced and one of the most desirable drives available today. Basically a GT3 with 200bhp more!!!!!!!!!!!!

hodgy0_2

i think it is the 997 GT2, he says it is very very quick (and I think he his used to quick cars)

i suspect, from reading your threads re the GT3, that he would prefer to trade the finesse of the GT3 for the ballsyness of the GT2

realised his slight error and compensated with a 360

J4CKO

iTrader: (1)

How did the dealer expect to sell a year old car for more than a brand new one, is there some big waiting list or was it optioned to the hilt ?

Or were they taking the p1ss.

Dingdongler

Mitchy, I popped into my local Audi garage today whilst I've been putting the 530d through its paces. They happened to have the TT RS in there so I thought about you and had a look around it.

I'm not sure how you are going to squeeze your kids into the back of that because it seemed like there was less room than a 911. Also I found it to be a little ergonomically flawed, I had to lean forward to reach some of the *****, maybe I've been spoiled by the bimmer I'm testing as that seems to be perfection in this regard.

The sticker price was circa £55k as it had the £3k+ sports seats (that did look the business).

I suppose if it's as fast and fun as you say then all the things I've just said fade into insignificance!

Trout

iTrader: (1)

Porsche options add up VERY fast. I cannot see a C4S for over £90k on the system. I think the stealer was building in a nice phat margin!!