financing a high priced car

cantdecide

How do the people with new €75k 530s and E300s finace their cars?

Obviously a successful man might choose to pay outright but wouldn't some be reluctant to write such a big cheque? Can you part finance a prestige car???

Just curious...

keefg

cantdecide wrote:

How do the people with new €75k 530s and E300s finace their cars?

Obviously a successful man might choose to pay outright but wouldn't some be reluctant to write such a big cheque? Can you part finance a prestige car???

Just curious...

If your credit rating is good enough a bank will lend you anything. My uncle in UK has a civil eng company and he has a 100k (sterling) limit on his credit card.
Why so high? I asked. Just incase he sees a truck or bit of plant for sale when he is on different sites around the country. He can buy it there & then, then he gets a loan from the bank to pay off his card

Anan1

I'd imagine many would be bought outright. Car finance is very expensive money, the wealthy tend to know better.

cantdecide

But if a successful company owner earns, for example, a steady €150k a year wouldn't finance allow him to get a serious set of wheels? If he earns that much, wouldn't a BMW 5 be a bit humble for him even if he owns it outright?

milltown

A fair few would be leased to companies too. €7-800 per month would probably get you any of the cars mentioned on a three year lease. Company/director don't have any worries about servicing or repair costs and they get to claim the VAT back on the lease. When the lease is up, send the car back and get a new one.

OK, they'll never own the car but for the same money every month they have a fully maintained car, never more than three years old. I'd say a good few "ordinary" motorists who take loans or finance would keep changing for a new car once the present one is paid for. They're forking out their money in much the same way.

lomb

most would indeed be leased. this way the bank keeps the car as security for the loan(very important), and the buyer who really has no interest in keeping the car past 2-3 years gets to drive the car for an agreed payment that is budgeted for.
in the uk most high end cars are leased or purchased outright. on new cars the usual means to financing is the manufacturers /garages own scheme like hire purchase for personal owners(no vat) or leasing for vat registered companies.

Anan1

cantdecide wrote:

But if a successful company owner earns, for example, a steady €150k a year wouldn't finance allow him to get a serious set of wheels? If he earns that much, wouldn't a BMW 5 be a bit humble for him even if he owns it outright?

Anyone I know on €150k is driving a €10k car and making the rest of their money work for them. I dunno, maybe there are people who hock themselves up to the ears for a flash car. There may also be certain tax incentives. In my opinion though, borrowing for a car is kind of like borrowing for your groceries.

cantdecide

Anan1 wrote:

Anyone I know on €150k is driving a €10k car and making the rest of their money work for them...

You must know some real tightarses then cos if I were earning 150k, I'd want a flash car and the right time to do it is when your earning that kind of money.

Screw it, you have to live your life, too. You can't take it with you.

mikemac

I think the point that Anan1 is trying to make is that rich people are financially savvy and don't waste money a depreciating asset like an expensive car when they are better options.

Whereas people who are new to wealth (my house value increased:rolleyes: ) don't do this at all.

The truely rich don't need to flaunt it.

Lawdie

milltown wrote:

and they get to claim the VAT back on the lease. When the lease is up, send the car back and get a new one.

Can't claim back VAT on a car lease.

vir7ual

Lawdie wrote:

Can't claim back VAT on a car lease.

cant claim the Vat on the car but you can claim the VAT on the value of the lease. if a lease is costing you 1000euro a month, you can claim 200 back on VAT.

micmclo

micmclo wrote:

...don't waste money a depreciating asset like an expensive car when they are better options.

I dont think its a waste if someone has the money to buy what they want. Whats the point in having the money if you dont enjoy it. I know I would buy a Lamborghini murcielago in the morning if I could. The sound of the engine alone would be worth it.

Anan1

Sylvie Famous Lumberjack wrote:

I dont think its a waste if someone has the money to buy what they want. Whats the point in having the money if you dont enjoy it.

Yes, but we're talking about people who don't have the money. Buying a car is one thing, borrowing for a car is quite another.

Anan1

Anan1 wrote:

Yes, but we're talking about people who don't have the money. Buying a car is one thing, borrowing for a car is quite another.

Thats a good point. the only think is most people borrow to buy an average car which would be much the same as a person with a higher salary borrowing more to buy a more expensive.

Lawdie

vir7ual wrote:

cant claim the Vat on the car but you can claim the VAT on the value of the lease. if a lease is costing you 1000euro a month, you can claim 200 back on VAT.

Nope, you can't. Go check it out. The only exception is a registered taxi driver.

Also a point in your math. 1000€ repayment does not equal 200€ VAT. Divide €1000 by 1.21 to get the net repayment.

NewApproach

micmclo wrote:

The truely rich don't need to flaunt it.

I heard that the owner of Ikea furniture (one of the richest men in the world) drives a 10 year old Volvo!

bazz26

Credit is cheap these days and there are quite a few people out there living well outside their means but giving the perception that they are not.

Most large prestige cars I would guess in this country anyway are either leased or bought by companys and included as perks of the job and having some sort of tax benefit to the company in question.

Alot of people who have genuinely earned their wealth are usually not foolish enough to actually go out and waste their money on a prestige car that looses a fortune the minute they drive out the door of the showroom. Most wealthy people earn their riches by being careful how they spend it. There is an old saying "A fool and his money soon part company".

milltown

Lawdie wrote:

Nope, you can't. Go check it out. The only exception is a registered taxi driver.

I stand corrected.

I just assumed that was why most (all?) lease deals advertised seem to indicate VAT, whether it's included in the banner figure or not, whereas regular finance deals make no mention of it.

R.O.R

VAT can be reclaimed on Commercial vehicles but not on passenger vehicles (can be recalimed in most of Europe but once again Ireland decides not to comply).

There are 2 main reasons for leasing.

1. Budgeted - you know exactly how much you will pay each month for your car, particulaly with a maintenance contract as well. No big bills out of the blue.

2. You could use the 150k (for example) in better ways than investing in a depreciating asset.

keefg

Instead of all us guessmongers going back and forth why don't all the rich boards members tell us the truth?

So come on you billionares out there - own up - what do you do with your cash?

prospect

All the high end vehicles in our company are leased.

Any employee who traditionally had a company car and who doesn't want a BIK hit has bought their own vehicle, usually a 3-4 year old prestige car.

Owen

Anan1 wrote:

I'd imagine many would be bought outright. Car finance is very expensive money, the wealthy tend to know better.

Eh ... no. The majority of clever people who do buy the 100k+ cars, do indeed finance them. Why blow money that's making interest, when you can setup a low rate finance agreement (Bearing in mind, these people are financially shrewd, well connected, and generally get money at a significantly lower base rate than we can)? In nearly every example I've seen of someone buying a prestigous car, there is a financial institution involved in lending the money in some form or other.

cantdecide

keefg wrote:

Instead of all us guessmongers going back and forth why don't all the rich boards members tell us the truth?

So come on you billionares out there - own up - what do you do with your cash?

Wouldn't you like to know;)


There are a lot of up-and-comers who also have to make the right impression. The same 10 yr old Volvo probably wouldn't impress a potential new client to a small firm. The ikea guy definitely has his money earned so he can afford to be automotively eccentric (for want of a better word) if he's not a grown up boy racer like most people here.

I know a particularly wealthly guy who has been successful for quite some time amd he has a garage that I could only dream about. I can only aspire to his daily driver- BMW 745.

I ask because there are a lot of these cars on the road- so much so that you wouldn't even take any notice of them any more.

R.O.R

I know that one of the Maybach's in Ireland and the SLR that was in MDL for ages were both financed.

As pointed out above - makes more sense for the really rich to use their money in other areas rather than tying it up in costly assets.

maidhc

R.O.R wrote:

As pointed out above - makes more sense for the really rich to use their money in other areas rather than tying it up in costly assets.

Most "really rich" I know just don't buy fancy cars...

...most people with fancy cars I know are not really all that rich.

I would think though that when someone buys (say) a bugatti veyron, it is from money they just have nothing better to do with. I would think though most BMW 5 series and E-Class mercs are bought on finance by people who if the truth be told find it difficult to afford them.

Anan1

ned78 wrote:

Eh ... no. The majority of clever people who do buy the 100k+ cars, do indeed finance them. Why blow money that's making interest, when you can setup a low rate finance agreement (Bearing in mind, these people are financially shrewd, well connected, and generally get money at a significantly lower base rate than we can)? In nearly every example I've seen of someone buying a prestigous car, there is a financial institution involved in lending the money in some form or other.

My reasoning is that if a wealthy person doesn't have 100k just lying around spare to buy a car then they'll probably be working towards a situation where they do. Financing a car won't help with this. This is, of course, just my personal opinion - I haven't sold cars in a long time.:)

Owen

Anan1 wrote:

I haven't sold cars in a long time.:)

In the words of Monty Python ... "You lucky lucky bastard"!

Anan1

ned78 wrote:

In the words of Monty Python ... "You lucky lucky bastard"!

One of those days, is it?;)

Tony Danza

I would say that the majority of wealthy people buying cars or any luxury product for that matter buy it with the help of the bank, since they probably get loans for a low percent, whereas their investments would be worth high percentages.

I would say that they're wealthy because the amount they owe is a lot less than their assets. Plus investments that are yielding high interest, I would say can't be just withdrawn at the drop of a hat to buy a car for 100k.