thinking of an M3 - some financial advice pls

[ChrisBarns]

I'm thinking of buying a £10k e30 M3 but I'm thinking of financing it strangely!

I have about £6k in savings so my initial thought would be to buy the car with that and borrow £4k. However i really don't want to increase my monthly outgoings and I would have no savings - what if after a period of ownership the engine specialist work costing, say £2k? I'd have to borrow money or sell the car for very little.

In just under 2 years i stand to recieve another £10k so I had decided to wait and then buy a car then. But...

I could borrow all of the £10k and use the savings to make the repayments. Obviusly I would be earning less interest in the savings than i was paying to borrow (and it would go down every month) but...

£10k costs about 300 per month for 3 years so the savings would pay for 20 months worth of repayments. After the 20 months I get the 10k and use that to pay off the remaining loan (about £5k).

This way I have savings for the first 18 months that would go along way to fixing the car should the need arise. There would be a brief spell without savings but knowing the 10k is coming through in a few months. An M3 shouldn't depreciate much so i could always sell if I really had to.

Most importantly I get the car now and not in 2 years time!

is there a financial minded person out there who can advise?

[stevotheevo]

a bottle of jack and a box of anadin extra please.

[bootyman]

a bottle of jack and a box of anadin extra please.

Ha, ha. I've read this several times and i'm still scratching my head!

Chris i know where you are coming from mate. I'm not a big fan of fibance cause not only are you paying interest, but the car is normally going down in value as well, but with an M3 i guess it's different. If you use your £6k and bowwor £4k, you will only be paying fr the borrowed £4k, which means instead of paying £300 a month you will be paying less than £150 a month. You can then save that extra £150 incase something goes wrong with the car, but you will always own the car rather than to a finance company. Interest will also be less if that makes sense

[Rosc0PColtrane]

Actually, interest on your savings should 'offset' the interest earned on 6k, although you cannot have direct debits on savings account. However, current accounts do not pay intereste either.

Borrowing the cash would make sense and repay loan/re top up savings with the £10k in 2 years is a good idea. Ensure your loan has no early replayment clause.

Look at opening a bank account that works like Barclays Open Plan system. You have a current account with upper limits and lower limits. You also have a feeder account which is a savings account earning you interest.

The upper limit should leave enough cash in your account to get by on a daily basis, say £150, certainly £40 or £50 higher than your largest DD. Your lower limit should be about £40 or so, just to ensure your debit cards work.

On a twice daily basis, the bank 'puter checks your acount to see if money needs to be moved to/from the account from/to the savings 'pot'

Understand? Good!

Get loan at cool rate. Set up repayments to come from current account. Stick £6k in feeder account. Set upper and lower limits, go about your day to day business. The system will syphon money from your savings to make the repayment, plus if you have a good month, wil ensure you save more and earn more interest by keeping the savings balance topped up.

Savings accounts earn interest in a compound fashion. Over 1 year at say 4%, £6k will net you £6240. Year 2 £6240 will net you £6614...

The interest on the loan is calculated on balance, so £10k over 2 years will accumulate £1200 interst at a flat rate of 6% (IRO 12%apr). Obviously a more favourable rate of interest will accumulate less interest. 7% apr is about 3.5%(ish) flat, £600 over 2 years.

HTH

[fozzymandeus]

Why not borrow 4k over a longer repayment term, making sure you choose one of those loans that doesn't have a redemption fee for early repayment, then clear the debt when you get the further payout.

The big disadvantage to borrowing 10k over 4k is the large increase in interest payments. Since you want to avoid increasing your monthly outgoings you could borrow over a long ish repayment term, then your outgoings will increase, but only a little. Work out what 4k loan term you can afford, then go for that.

If you can pay as much as possible up front for the car, it'll cost you less in the long term.

[stevotheevo]

just starting my second bottle

[Rosc0PColtrane]

Why not borrow 4k over a longer repayment term, making sure you choose one of those loans that doesn't have a redemption fee for early repayment, then clear the debt when you get the further payout.

The big disadvantage to borrowing 10k over 4k is the large increase in interest payments. Since you want to avoid increasing your monthly outgoings you could borrow over a long ish repayment term, then your outgoings will increase, but only a little. Work out what 4k loan term you can afford, then go for that.

If you can pay as much as possible up front for the car, it'll cost you less in the long term.

The problem is the £4k loan means the £6k savings has to be used to buy the car. Which is what we are trying to avoid.

[kadettc]

If you cannot afford it..................don;t buy it. Simple as.

[Rosc0PColtrane]

a bottle of jack and a box of anadin extra please.

Ha, ha. I've read this several times and i'm still scratching my head!

Chris i know where you are coming from mate. I'm not a big fan of fibance cause not only are you paying interest, but the car is normally going down in value as well, but with an M3 i guess it's different. If you use your £6k and bowwor £4k, you will only be paying fr the borrowed £4k, which means instead of paying £300 a month you will be paying less than £150 a month. You can then save that extra £150 incase something goes wrong with the car, but you will always own the car rather than to a finance company. Interest will also be less if that makes sense

Finance company will only own the car if the finance is 'Hire Purchase' and secured against the car. Unsecured loans have no bearing on the car.

Using the £6k takes away the rainy day fund, which we're trying to avoid.

[fozzymandeus]

The problem is the £4k loan means the £6k savings has to be used to buy the car. Which is what we are trying to avoid.

Only borrow what you need to borrow. If you have a later requirement brought on by emergency circumstances, increase your loan. This way you aren't paying interest on money you didnt need.

[Rosc0PColtrane]

The problem is the £4k loan means the £6k savings has to be used to buy the car. Which is what we are trying to avoid.

Only borrow what you need to borrow. If you have a later requirement brought on by emergency circumstances, increase your loan. This way you aren't paying interest on money you didnt need.

There's no guarantee the finance would be extended after the initial loan.

The whole point was to use the loan as a bridging loan until the £10k is received in two years (which will clear the loan). The £6k was to be kept as the rainy day fund for emergencies and unforseen issues, along with covering the monthly repayment.

I agree with only borrowing what you need but I feel you aren' fully understanding the need in question here.

[ChrisBarns]

Thanks for the advice. Maybe I should have mentioned that I'm not a good saver the £6k is unlikely to exist if i waited for the other £10k.

I like what Rosco said (Thanks) - it seems like a more specific version of what I was thinking of. It works particularly well with cars that only depreciate slowly.

In the past I owned a Porsche - only a 944 - but it had a habit of suddenly throwing-up £1500 bills and that was doing things on the fairly cheap. I never couldn't pay but it did have an impact on drinking funds! I want to avoid this.

[maxfield]

You can buy a nice M3 for 6-8K and not have anything to fix.

M3's are very reliable and don't need £Â£Ã‚£Ã‚£'s spending on them all the time.

[e30bmlover]

wow mate thats complicated! you can pick up good m3's for 8k i dont care what anyone says. does your work offer any overtime? if so GRAB IT! shit iv hammered in 60hrs of night rate o.t this month, got my pay slip and smiled......... it was worth it. my advise..... save and grab like @uck.

[biggee]

I'm guessing it was'nt the tax you paid that made you smile.

[e30bmlover]

I'm guessing it was'nt the tax you paid that made you smile.

lol, no that bought a tear to my eye! our o.t works on the first 4 hours are paid at time and a half and the rest at double time(working nights greatly increases the rate) im paid for what i know!

[retro-wheels]

You can buy a nice M3 for 6-8K and not have anything to fix.

M3's are very reliable and don't need £Â£Ã‚£Ã‚£'s spending on them all the time.

true, i bought mine for 4.3k and ive had no actual problems that have stopped me from driving it apart from the wheel bearing.

but actually thats not true becuase i have a few things i need to fix

[Rosc0PColtrane]

Thanks for the advice. Maybe I should have mentioned that I'm not a good saver the £6k is unlikely to exist if i waited for the other £10k.

I like what Rosco said (Thanks) - it seems like a more specific version of what I was thinking of. It works particularly well with cars that only depreciate slowly.

In the past I owned a Porsche - only a 944 - but it had a habit of suddenly throwing-up £1500 bills and that was doing things on the fairly cheap. I never couldn't pay but it did have an impact on drinking funds! I want to avoid this.

No problems mate. 7 years in Financial Services had to count for something!!!

I'm shite at saving too. Knowing how to manipulate banking systems has cained my credit rating. My impatience has left me with nasty debts which means I have little money to throw at my car.

Working in recruitment, I should make some serious money in the next 6-8 months, clear some debts and free up disposable income.

If you do take the loan, make sure you definately pay it back with the 10k, don't be tempted to treat yourself. Self discipline, or lack thereof, is my downfall!!

If you do have any questions, let me know!!

[Dr Firefly]

If you cannot afford it..................don;t buy it. Simple as.

No offence, but I think that was the best piece of advice given so far. If you're getting £10k in 2 years (and are you completely sure about that?) just wait the 2 years. My grandad had a saying - "he who gets in debt is f**ked."

That way you'd have £16k in 2 years plus the interest on £6k for 2 years (over £600). That's mint M3 money plus enough to keep it going for years.

Just my opinion, so again, don't take offence. Your choice and if you go for it, hope the car's worth it - wish I could have one!

[Rosc0PColtrane]

If you cannot afford it..................don;t buy it. Simple as.

No offence, but I think that was the best piece of advice given so far. If you're getting £10k in 2 years (and are you completely sure about that?) just wait the 2 years. My grandad had a saying - "he who gets in debt is f**ked."

That way you'd have £16k in 2 years plus the interest on £6k for 2 years (over £600). That's mint M3 money plus enough to keep it going for years.

Just my opinion, so again, don't take offence. Your choice and if you go for it, hope the car's worth it - wish I could have one!

That sounds like post war mentality. The sort of thing I'd expect to hear form a bitter toothless pensioner. Fear what you don't understand. Borrowing money can work out cheaper than spending savings. Even in debt, you're not fecked. I know of people who have ran up huge unsecured debts, gone bankrupt, 8 months later, have a clean slate to start rebuilding a credit rating.

[casper8r]

Hmm... this is going slightly offtopic, but I think there's f**k all wrong with post-war mentality. First, "mend or make do so you don't have to buy new" is not always a bad idea as many e30 owners will know.

Second, living large on credit, spending money you don't necessarily make or know how to make is mostly stupid (that's not a jab at anyone btw). In this day and age with help of people like Rosco it might be possible to get out of many sticky situations but in my book its better not to get into them in the first place.

I have a much larger bone to pick with modern celebrity mentality than post-war thinking.

[E30Mark]

Hmm... this is going slightly offtopic, but I think there's f**k all wrong with post-war mentality. First, "mend or make do so you don't have to buy new" is not always a bad idea as many e30 owners will know.

Second, living large on credit, spending money you don't necessarily make or know how to make is mostly stupid (that's not a jab at anyone btw). In this day and age with help of people like Rosco it might be possible to get out of many sticky situations but in my book its better not to get into them in the first place.

I have a much larger bone to pick with modern celebrity mentality than post-war thinking.

Today's thinking is just spend spend spend! Great for the economy, not so good for the rest of us!

Think long and hard about spending money you don't have on a car you don't know. Call me tight, but I've learnt over the years not to spend borrowed money on depreciating assets. You could argue the M3 will appreciate, but not if you roll it into a field tomorrow!

[bootyman]

Second, living large on credit, spending money you don't necessarily make or know how to make is mostly stupid (that's not a jab at anyone btw). In this day and age with help of people like Rosco it might be possible to get out of many sticky situations but in my book its better not to get into them in the first place.

I have a much larger bone to pick with modern celebrity mentality than post-war thinking.

I think the expression you're looking for is CHAMPAIGN DRINKERS WITH LEMOADE POCKETS

[BD76]

or complete tossers

[JudgeBaxter]

I can't comment on how you should finance things to be honest, but I have been an avid E30 M3 price watcher for the last couple of years, as I have toyed with selling mine several times. I would say that prices seem to have REALLY firmed up over the past couple of years, and I don't see them dipping either. Standard non-Evo or Ltd edition cars are regularly fetching between £10K and £12K. Evo's and LEs are fetching crazy money - Munich Legends sold a 31K mile Evo2 for a touch over £20K literally only a couple of weeks ago!!!!

Yes there are cars out there at £8K, yes there are some good ones that pop up from time to time at that money, but I would hazard a guess that you would still need to get some bits and bobs done on an £8K car to get it how you want, whereas £10K should put you in minter (or very near to mint) territory as you'll be looking at cars in the £11K+ range and haggling down presumably?

£10K should see you with a VERY good late 215bhp car, with low (sub 90K-100k miler) miles. That same car could well be £1K to £2K more in a couple of years time in my opinion, possibly even more with so many good cars now going back to Germany. At £10K it really shouldn't need anything major doing other than routine stuff and the odd component that might go through age or fair wear and tear....If you buy a car at this level now, look after it etc. it should be a very sound investment - you really shouldn't loose a penny value wise and will probably make a few quid valuation wise two years down the line.....

It's not all about money though - you'd get an additional 2 years of fun, fun, fun - which you really can't put a price on!!!

In summary - if you think you have found a really good car, and you are a 100% that you want one, then I would steam in now. That same car will definitely be A) a fair bit more expensive, and B) A lot harder to find, when you come to look in two years time - in my humble opinion of course

Good luck!!

Regards,

David.

[Rosc0PColtrane]

Hmm... this is going slightly offtopic, but I think there's f**k all wrong with post-war mentality. First, "mend or make do so you don't have to buy new" is not always a bad idea as many e30 owners will know.

Second, living large on credit, spending money you don't necessarily make or know how to make is mostly stupid (that's not a jab at anyone btw). In this day and age with help of people like Rosco it might be possible to get out of many sticky situations but in my book its better not to get into them in the first place.

I have a much larger bone to pick with modern celebrity mentality than post-war thinking.

Today's thinking is just spend spend spend! Great for the economy, not so good for the rest of us!

Think long and hard about spending money you don't have on a car you don't know. Call me tight, but I've learnt over the years not to spend borrowed money on depreciating assets. You could argue the M3 will appreciate, but not if you roll it into a field tomorrow!

This has all gone far off topic. This is all pertinent if you think two dimensionally about a loan.

This is actually about crunching numbers to find a way of managing the numbers cost effectively.

The m3 can be insured for an agreed value, hence covering the loan, which itself is covered by the £10k that is due in two years. I'm not sure if classic car companies offer GAP insurance, but if so, this will even cover any defecit in clearing the finance.

It has feck all to do with celebrity culture or credit culture. This is down to making use of existing financial mechanisms as a means to an end.

People do feck up with credit but it's not the end of the world. It's not condemned in the Bible or the Koran, so there's no need to spit or make the sign of the cross at the mention of credit.

[E30Mark]

People do feck up with credit but it's not the end of the world. It's not condemned in the Bible or the Koran, so there's no need to spit or make the sign of the cross at the mention of credit.

But there is good debt & bad debt!

I personally don't have a problem with debt / credit - as long as it's managed (Not just blindly ignored) I'm just re-mortgaging a property so i can

a) Buy another one,
b) Go on holiday with the equity release...

But it, use it, enjoy it

[ChrisBarns]

Good stuff Rosco.

(ps I think Muslims believe they are not allowed to charge or pay interest on a loan)

[Rosc0PColtrane]

Good stuff Rosco.

(ps I think Muslims believe they are not allowed to charge or pay interest on a loan)

That's just Muslims being canny.

"Sorry Mr Bank Manager, I cannot pay the intrest on the loan you gave me, it's against my religion."

Actually, in France, IIRC, it's against the law to take your bank account overdrawn!!!

I'm going to try that one!!!

Mark, you're spot on!!! (If you don't mind paying for a holiday over 25 years!!!)

[ShakeyC]

Not sure if i get the jist of your problem, if the car is absolutely spankingand you can realistic run the damn thing like insurance tax servicing then why not? Best thing to do is play the interest rate game put all your savings in a high interest savings account say at 8% then get a loan for the full price of car at a lower interest rate say 3/4% (shop about, some offer 3-8months interest free with option to repay outstanding amount after 12months!) pay the monthly payments for full cost of the car say 10k. Now the cleaver bit is to keep adding to your savings after 12 months+ pay the full loan off in lump sum and your quids up as interest you earn in savings should offset the interest on repayments. Its about timing and finding the right loan, savings and interest rates, read small prints!

[Rosc0PColtrane]

/\ That was my point

However the existing savings will be used to pay the motnhly payments, with the balance cleared from the £10k in 2 years.

[casper8r]

It has feck all to do with celebrity culture or credit culture. This is down to making use of existing financial mechanisms as a means to an end.

People do feck up with credit but it's not the end of the world. It's not condemned in the Bible or the Koran, so there's no need to spit or make the sign of the cross at the mention of credit.

Like I said, it was offtopic. I'm rubbish with numbers, so there might be a medieval superstition element involved - people are scared of what they don't understand. Rosco, you're it now, be prepared to be asked for finance advice from now on

[Stiggler]

You could buy a knackered car for £50, spend £9000 doing it up and then you would have saved yourself £50.

I thank you.

(I am available for weddings and Bar Mitzphas)

[Rosc0PColtrane]

It has feck all to do with celebrity culture or credit culture. This is down to making use of existing financial mechanisms as a means to an end.

People do feck up with credit but it's not the end of the world. It's not condemned in the Bible or the Koran, so there's no need to spit or make the sign of the cross at the mention of credit.

Like I said, it was offtopic. I'm rubbish with numbers, so there might be a medieval superstition element involved - people are scared of what they don't understand. Rosco, you're it now, be prepared to be asked for finance advice from now on

OK, thanks, for the heads up. I'll be calculating my charges for advice if you need me.

[Rosc0PColtrane]

You could buy a knackered car for £50, spend £9000 doing it up and then you would have saved yourself £50.

I thank you.

(I am available for weddings and Bar Mitzphas)

It's Bar Mitzvah....

That'll be £10 please!