AndyMcGowan

Just like the vehicles themselves, high performance car finance is a thoroughbred.

Some basic principles

At the risk of stating the obvious, high performance cars tend to come with high performance prices.

That simple fact typically leads to the following realities:

• given the sums involved, people purchasing high performance cars will be particularly keen on cost-effective high performance car finance deals;

• some vehicle funding organisations may find this to be a business domain they are not entirely comfortable operating in.

Why financing deals vary

There are a number of factors that might influence the pricing structures of car finance providers.

Some of those are external and are things over which the provider has no real control. The obvious examples here are the Bank of England’s base rate and to some extent, overall sentiment in the money markets at a given time.

However, there are other factors that are more variable and over which a car finance provider may need to exercise judgement. They might include:

• whether or not the purchase price seems sensible against a realistic market valuation of the vehicle;

• the potential borrower’s credit history record. This is essentially an interpretation of the risks associated with lending to you as an individual. It’s worth noting that having a few blemishes on your credit history records does not necessarily mean you will be ineligible for car finance. Your history may be more likely to influence how much the provider will ask you to pay for your borrowing;

• their overall commercial positioning in the marketplace. This is discussed further below.

Different funds providers may evaluate these issues differently. That will have a direct influence on their pricing policy and in turn on how much you will need to pay for your finance.

Specialist providers

Not all car finance providers feel comfortable when discussing high performance vehicles and their typically larger purchase prices.

This is very much a question of the market they are operating in and the degree to which they are risk-averse.

This should not be a surprise. In many business domains, some companies operate more comfortably in some sectors of the marketplace than others. The same is true with car finance providers.

Some companies may simply not offer finance for performance vehicles or those above a certain price. Others may do so but may apply a pricing regime which effectively means they will struggle to compete with specialist high performance car finance providers.

Specialist providers will not be inhibited or frightened off by either the vehicle you are purchasing or its price. Of course, just as is the case with any other loan, they will wish to make sure that you are able to make a contribution from your own finances (typically called “the deposit” and that your overall financial position is such that it indicates you will be able to afford the repayments on the amount you’re borrowing.

This is why it’s important to only purchase a car that you know you can afford, as if you are late in making any payments, you are at risk of having your vehicle removed from the lender. They trusted you to make these payments, and when you don’t make them, they have every right to take them off you. When this happens, you may be required to contact a professional who has subsequent knowledge of repossession law in the hopes that they can come to an arrangement with the lending company.

So, always think clearly before looking for a car.

Summary

Retailing high performance cars is typically regarded as a specialist activity. Funding the purchase of such cover should be seen in a similar light.

If you have a performance vehicle in your sights, it might be sensible to contact a specialist car funds provider sooner rather than later for an initial discussion.