Porsche finance

[Dabz]

Absolutely, that and inflation. It pains me to have a load of money sat there being inflated away.

I did set up an SPV earlier this year. Seriously considering property development by loaning it profits from my other business. Not now though. UK property is 5 months behind what has happened in the US... I've also never done it before, so there is an element of risk. Overseas property dev is another thing I could explore, I much prefer hot sunshine anyway.

Extremely limited with what you can do with company profits. I suppose you can buy a Porsche EV

I’d 100% recommend this - I have an SPV that owns my main business, so profits go upward as inter company dividends and from there I can invest, withdraw or whatever. Currently it’s sat being eaten away by inflation like you, but I’m drip feeding a unit trust investment, some in property (which is doing well but only because I bought pre-house price craziness) and the rest sat depreciating while earning about 1.7%. Once the property market resets I’ll be poised to jump in.

the taycan will use up 100k of profits in the main business, I’m maxing out pension every year as well…giving out pay rises left right and centre too. Lovely problem to have and my team are benefitting too

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[Stoneageman]

I think I can be of help here since I am a commercial real estate broker so I am all over interest rates. I also picked up my Taycan with Porsche financial services. First of all, interest rates in the US will go up a few more times, exactly how many? No one knows for sure. Next if interest rates go up, even though you have reserved a car, does not mean you locked in the interest rate. It will also go up accordingly. Though you should as your finance manager if you can buy rates because I locked in a 2.99% interest rate when the standard was 4%. Last thing is since I work so closely with interest rates, no one expect interest rate to be ever lower than 5 for a long, long time. So it will most likely remain pretty high for a while. It makes buying cars really bad if you are buying with loan. However, most of my money goes to real estate so I am gearing up for some big big spendings.

 

[4SJB]

B61 I am sorry, but you are plain wrong. Even the Bank of England is predicting inflation back down to 2% in 2024.
As for ICE BMW vs Taycan, no matter what the finance costs, the overall cost of ownership to a UK company owner/director will be significantly less. If you buy the BMW through the company you will have enormous Benefit in Kind costs and if you buy it personally you have got to pay tax and NI on dividends or salary.
Before I purchased my 4S in Dec 2020 I had a M340i on order and the net cost of the Porsche which was twice as expensive, was significantly less. Not to mention electricity cost vs £300-400 of fuel per month.
I have a CT4S being delivered in November and the net cost is little more than my wife’s Mini Countryman!
All of this also ignores the cost of servicing - 4S is less than £500 for the first 20000 miles. A BMW will probably cost half that just for the oil change!

 

[TaycanHero]

B61 I am sorry, but you are plain wrong. Even the Bank of England is predicting inflation back down to 2% in 2024.
As for ICE BMW vs Taycan, no matter what the finance costs, the overall cost of ownership to a UK company owner/director will be significantly less. If you buy the BMW through the company you will have enormous Benefit in Kind costs and if you buy it personally you have got to pay tax and NI on dividends or salary.
Before I purchased my 4S in Dec 2020 I had a M340i on order and the net cost of the Porsche which was twice as expensive, was significantly less. Not to mention electricity cost vs £300-400 of fuel per month.
I have a CT4S being delivered in November and the net cost is little more than my wife’s Mini Countryman!
All of this also ignores the cost of servicing - 4S is less than £500 for the first 20000 miles. A BMW will probably cost half that just for the oil change!

I hope you are right but real inflation is running at at least 10% and that's a conservative estimate.

BoE inflation rates are chasing that, so do we expect that 10%+ to decline at what would be a record breaking reversal next year with serious supply chain problems, commodity squeeze, fiat monetary system collapsing, cheap money era ending, war?

Call me sceptical, but I just cannot see it happening.

I also cannot remember a single forecast from any central bank that's been accurate.

It would be prudent to expect everything to cost more next year, especially borrowed money.

 

[Dabz]

Let’s be honest though, the BoE aren’t great at future predictions so take their 2% with a pinch of salt. I had breakfast with the governor of the BoE a couple months ago and he wasn’t predicting the current mess. He assured me we’d peak at 8% inflation and be back to 4% by Christmas….

 

[4SJB]

Dabs I appreyyour point and certainly don’t expect 2%, but by the beginning of 2024 the current inflationary pressures of massive increases in energy costs and the fact we will either be in or cookout if a recession, technical or otherwise, mean that inflation will be lower.
Mortgage interest rates are a great indication of what markets expect as 5 year fixed money is the same cost or cheaper than 2 year money, which is unheard of.

 

[Sidicks]

Though you should as your finance manager if you can buy rates because I locked in a 2.99% interest rate when the standard was 4%. Last thing is since I work so closely with interest rates, no one expect interest rate to be ever lower than 5 for a long, long time.

Are you talking flat rate interest or APR?

 

[Fish Fingers]

Interesting the mechanics between interest rates and inflation which some people miss ...

Interest rates may be 1.75% now / 5% next year.
Straightforward......
Next year sounds more expensive (it is).

But inflation is measured against the previous year.
So if we get inflation this year of say 10% and next year it drops to 5% (which sounds low) it still means prices ratcheted up 15% over the 2 years (high).
To bring things back to normal it would need to be - 5% (which it won't).

Classic case of elevator (up and down) v escalator (up only - normally).

Very disjointed recently.
High inflation / low interest rates.

Sorry....off topic. 🫢

 

[Stoneageman]

Are you talking flat rate interest or APR?

Interest rates.

Honestly I think the good thing with interest rates going up is less people will buy cars which means dealership markups will be less or gone. I paid 10k over what the Taycan cost but I was fine with it because 2.99% isn’t coming back.

 

[Sidicks]

Interest rates.

Honestly I think the good thing with interest rates going up is less people will buy cars which means dealership markups will be less or gone. I paid 10k over what the Taycan cost but I was fine with it because 2.99% isn’t coming back.

Both flat rate (simple interest) and APR (compound interest) are interest rates - however 2.99% flat rate and 2.99% APR are very different in terms of actual interest paid.

When someone is quoting an interest rate, it’s important to understand what sort of rate it is. In the UK, the APR has to be quoted, as it’s the true rate actually paid.

 

[Stoneageman]

Both flat rate (simple interest) and APR (compound interest) are interest rates - however 2.99% flat rate and 2.99% APR are very different in terms of actual interest paid.

When someone is quoting an interest rate, it’s important to understand what sort of rate it is. In the UK, the APR has to be quoted, as it’s the true rate actually paid.

I don’t know how UK does things but in US it’s interest rates. APR usually is only applicable in credit card bills. And then mortgages follow a different structure depending on the type of property and the deal. Though let’s be honest here APR includes your simple rate, which means if someone says rates are going up, you can expect both to go up. In the context of what I was saying, rates will continue to spike. Despite if you’re speaking about simple rates or APR, both will see such increase obviously.

 

[Sidicks]

I don’t know how UK does things but in US it’s interest rates. APR usually is only applicable in credit card bills. And then mortgages follow a different structure depending on the type of property and the deal. Though let’s be honest here APR includes your simple rate, which means if someone says rates are going up, you can expect both to go up. In the context of what I was saying, rates will continue to spike. Despite if you’re speaking about simple rates or APR, both will see such increase obviously.

APR ’does not include simple rate‘. APR is a compound rate. Of course you are correct that if rates go up then that will affect both compound and simple rates.

However, whether your 2.99% is a good rate or not depends if it was a simple rate or a compound rate, that is the point I was making.

Whether it’s called an APR or effective rate or whatever, it’s important that it is the correct rate to focus on, not the simple rate.
Too many people try and compare different rates and aren’t comparing the same thing at all.

 

[Stoneageman]

APR ’does not include simple rate‘. APR is a compound rate. Of course you are correct that if rates go up then that will affect both compound and simple rates.

However, whether your 2.99% is a good rate or not depends if it was a simple rate or a compound rate, that is the point I was making.

Whether it’s called an APR or effective rate or whatever, it’s important that it is the correct rate to focus on, not the simple rate.
Too many people try and compare different rates and aren’t comparing the same thing at all.

I think you’re right and online especially with different customs it gets lost in translation. The OP has to figure out if it will be a good rate for him. However, the point remains that the OP did not lock in any rate by placing an order on a vehicle. You lock in the rate when you sign the contract that you have purchased the vehicle.

 

[Algsnowden]

Thanks for all the comments. I have done my calculations with what I perceive to be worst case scenario- APR 10.9% and GTS saloon price going up by £4000. That higher APR would alone would be £270 more a month just on interest alone.

The Taycan still works out cheaper than the BMW when considering running costs given I can claim back corporation tax on the total value of the car and interest. I will look at alternative finance though, I’ve seen Clydesdale Bank mentioned a few times. Although I’m sure the APR may be more competitive, the balloon payment will likely be a lot lower which means the monthlies may not be that different (although more equity in the car on selling).

 

[Evie0146]

Hi I’m new here ! Just wanted to say I ordered my Taycan in April from Cambridge and had a pcp quote at 6.9% apr , obviously now it had gone up and was very concerned about it going up even more and making the payments Ridiculous! So I rang today and spoke to the SA and she assured me that she knows it has gone up but they will honour the apr and the monthly payments that I was quoted, but obviously I will still get the price increase of the base price. I’m not sure if that’s helpful to anyone

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