Man maths assistance requested please?

[safrane]

Sounds easy to add to the mortgage but from recent experience (getting just a 20% mortgage with an 80% deposit and enough take home pay between us to pay the balance off in 12 months) took months and involved far more hassle, phone calls, interviews etc etc...you had better arrange sharpish and then look for a car.

 

[Felonious Crud]

Remember that mortgage lending is far more heavily regulated than car finance. I suppose it's easier to repossess a car, and it's a more liquid asset than a house. We can probably expect some tightening of car financing regulations in due course.

 

[Rwc13]

I have an offset mortgage at 1.74% which is in credit for more than 80% of the capital borrowed. It sure makes a handy working capital facility if I ever need finance for anything.

 

[iainw]

Hi,

There are obviously lots of different views on financing, and what makes sense for one may be different for others.

It’s almost certainly hypothetical now anyway, as I’m no longer interested in the car I was looking at, but given that I’ve already shared the inner workings of my personal man maths calculator with you all in an attempt to learn from other’s perspectives, here’s some more ramblings.....

I’ve historically been completely debt averse, and other than my mortgage have zero borrowings. I also am fortunate enough to have a decent chunk of equity in my house, as my mortgage is only about a 1/3rd of the house value. As such, I probably could, very easily, increase my mortgage by the extra 40k. I could also, theoretically, pay this off within two years, as I currently have an interest only mortgage, fixed at just under 2%, where I can (and do) pay 10% of the capital off in a lump sum per year. However, this would still mean that there was an extra 40k on the mortgage for at least the next 3 years, which is when my current fix runs out.

So adding the car purchase to my mortgage would cost me 2% per year for the next three years, which (if borrowing 40k) is £2400. This assumes I’m able to completely remove the £40k in 3 years time...

Alternatively, if I bought the car on finance, and let’s assume I could get 5.9% over the same three year period, that would be £7,080. So a difference of £4,680....

That adds up to the price of a new clutch, so why wouldn’t I go the mortgage route?

As Adam says- if only over 3 years - on the mortgage would be a no brainer. Why did you even consider car finance?

 

[iainw]

I have an offset mortgage at 1.74% which is in credit for more than 80% of the capital borrowed. It sure makes a handy working capital facility if I ever need finance for anything.

With this facility why did you take out Finance via AM for the finance if you could have had 1.74%?

 

[JonW]

As Adam says- if only over 3 years - on the mortgage would be a no brainer. Why did you even consider car finance?

Fair question.

Because:
A) there’s a hassle attached to increasing my mortgage amount and explaining why I want to borrow £40k to buy a newer, more expensive car (especially as the Bank would know we have more than that in our savings account - earmarked for other things)
B) it feels more financially irresponsible to increase my mortgage just to get a newer Maser
C) buying the car on finance (if from or organised by the dealer) meant I may have been able to get it for a lower price (as they would also make a bit of a turn on the financing)
D) it was all a bit of a whim and a fancy, and I probably hadn’t fully thought it through!

 

[iainw]

Good points. It just proves how , although we try to apply logic toall our decisions regarding car purchasing. The decisions are still utterly illogical and based on heart over head. Man maths at its best!!

 

[JonW]

Good points. It just proves how , although we try to apply logic toall our decisions regarding car purchasing. The decisions are still utterly illogical and based on heart over head. Man maths at its best!!

Very true - if we were being logical we’d be on a different forum waxing lyrical about the efficiency of our German cars...

 

[Felonious Crud]

Fair question.

Because:
A) there’s a hassle attached to increasing my mortgage amount and explaining why I want to borrow £40k to buy a newer, more expensive car (especially as the Bank would know we have more than that in our savings account - earmarked for other things)
B) it feels more financially irresponsible to increase my mortgage just to get a newer Maser
C) buying the car on finance (if from or organised by the dealer) meant I may have been able to get it for a lower price (as they would also make a bit of a turn on the financing)
D) it was all a bit of a whim and a fancy, and I probably hadn’t fully thought it through!

All those are perfectly sensible and valid reasons. Well, maybe not D, so much... but A, B and C make D irrelevant anyway.

 

[rivarama]

Alternatively, if I bought the car on finance, and let’s assume I could get 5.9% over the same three year period, that would be £7,080. So a difference of £4,680....

That adds up to the price of a new clutch, so why wouldn’t I go the mortgage route?

If I was going to finance a car I would also go through the mortgage route in your situation.
That £4680 is either a new clutch as you alluded to, or 2 years worth of maintenance! I know what I’d do

 

[Rwc13]

With this facility why did you take out Finance via AM for the finance if you could have had 1.74%?

Because, at the time, I had used most off the offset credit short term to buy an investment property. Plus the monthly payment on the car finance was irrelevant.

 

[Oliver6796]

Id go with discourteous. Still waiting for my call back ! . I’m going to go as far as saying it on a thread, walk away from this one.

I take it all back, just had my call

 

[JonW]

I take it all back, just had my call

Fabulous - did they ask if you are still interested?

 

[Oliver6796]

Fabulous - did they ask if you are still interested?

Yeah a touch base call and to see if im still looking for a Strad.

 

[slay]

I take it all back, just had my call

I am sure that you told them that you have bought one elsewhere and they have missed out your business!

 

[Oliver6796]

I am sure that you told them that you have bought one elsewhere and they have missed out your business!

I did indeed, I did refrain from saying snooze you loose.

 

[Felonious Crud]

I did indeed, I did refrain from saying snooze you loose.

Did they sound surprised? Every time a slow dealer finally calls back and I've said you're too slow, I bought one elsewhere, they seem genuinely taken aback. Like there's only one place on the planet you can buy some car or other and it's their place.

 

[Oliver6796]

Did they sound surprised? Every time a slow dealer finally calls back and I've said you're too slow, I bought one elsewhere, they seem genuinely taken aback. Like there's only one place on the planet you can buy some car or other and it's their place.

Think it was a bit of a shock to him, he wasn’t humpy tho but didn’t really say a lot. Bit of tale between legs moment I think.

 

[slay]

I do wonder if that he was kicking himself and will start returning calls promptly. How difficult is returning phone calls? A car salesperson who does not follow up the leads quickly - he should be fired ! How could these people sell these exotic cars of when they do not even have the courtesy to return calls?

 

[philw696]

I do wonder if that he was kicking himself and will start returning calls promptly. How difficult is returning phone calls? A car salesperson who does not follow up the leads quickly - he should be fired ! How could these people sell these exotic cars of when they do not even have the courtesy to return calls?

You should try working with them.
I have worked in a few Dealership's as a technician and the Sales guys think they are the most important people there.
Most are full of Sh1t and care about nothing other than themselves they are certainly not team players and usually have no qualifications.
Its always baffled me.