New Car PCP - Agreed February, Car Delivered, Dealer now insisting on New % Rate Set at Huge Cost.

artyboy

Bit late to this one but have to say that while it is entirely the OPs prerogative to take finance, I'm puzzled why anyone would choose to do so, even at 5.9%, if they have the wherewithal to pay cash. 

The only possible conclusions I have is that there is either a good manufacturer contribution (ie discount) for taking out finance, which can then be settled almost immediately - I've been there and done that, including with JLR, but I'd have thought in this scarce new car market, such contributions are few and far between.

Or... the OP has an alternative investment paying a sure fire >5.9% that it is better to keep rather than pay off the car finance. In which case, do tell, I'm all ears 

Grumpy_chap

artyboy said:

Or... the OP has an alternative investment paying a sure fire >5.9% that it is better to keep rather than pay off the car finance. In which case, do tell, I'm all ears 

That alternative investment would need to pay the >5.9% after tax,  Given that the OP is buying an EQS, I think we can make a reasonable assumption that the OP would be paying at least 40% income tax rate, quite probably 45%.  That means the investment yield needs to be <10%.

The only thing is, if the OP has own Ltd Co., that would change the calculation as the expense would be incurred before corporation or dividend tax and the resulting BIK is low.