Finance deal spike for luxury cars

Bridford, which last November reported supplying £1m of finance on the Range Rover Evoque alone and recorded £4.4m-worth of business in March with the introduction of variable rates, said more customers were opting to take finance deals instead of losing up to £50,000 in the first year of running a luxury car. As well as the aversion to losing equity in a vehicle, finance deals were proving popular as they gave customers the option of exchanging their car for the latest model or, potentially, taking full ownership of a car that, a year after purchase, looks likely to increase in price.

Specialist luxury car financer Bridford is
reporting a “spike in finance deals” as customers seek to mitigate
depreciation on prestige models.

As well as the aversion to losing equity in a
vehicle, finance deals were proving popular as they gave customers
the option of exchanging their car for the latest model or,
potentially, taking full ownership of a car that, a year after
purchase, looks likely to increase in price.

Tim Marlow, owner of Bridford, explained this
market phenomenon with the example of the Ferrari Enzo and McLaren
F1 in recent years, and now with the Ferrari 458 Italia and
Lamborghini Aventador LP700-4, which all look likely to reach a
status whereby their values will increase in years to come.

Marlow said prices for the Italia and
Aventador were reaching £245,000 and £330,000 against list prices
of £173,181 and £242,280 respectively: “So, by linking the facility
to the depreciation curve via finance, they can avoid paying into
an asset that is losing its value and give themselves far more
options by not tying up their capital.”

Outstanding finance

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Although finance deals may be tempting more
customers into Lamborghinis and Ferraris, statistics from the
Finance & Leasing Association Vehicle Recovery Scheme could
sound a warning over finance for such models and customers.

Monthly figures show models from either marque
have accounted for the car recovered with the greatest value of
outstanding finance 11 times since summer 2010.

Together, 17 Lamborghinis and Ferraris with
outstanding finance have made the monthly ‘top-10 most-valuable’
cars recovered by the scheme since summer 2010, with a total
outstanding finance value of almost £1.3m.

A full analysis of statistics from the FLA
Vehicle Recovery Scheme and HPI Crushwatch will be published in the

March issue of
Motor Finance
magazine.

richard.brown@vrlfinancialnews.com