How does equity release compare to other ways of raising money?
Last month, we wrote a blog post about using a classic car collection to fund a new business deal for one of our clients using his Aston Martin DB4.
We thought it would be helpful to share some more information about equity release using a classic car as security because there is barely any information on the internet, so many people don’t realise that their assets might not be locked in their property, but locked in their garage!
Here’s a breakdown of some traditional ways to raise money and how they compare to equity release:
Raising a loan against your property.
This is the usual way to raise money to raise money so that you can fund a business deal, extension or divorce. To raise a loan against a property, you would need a specialist surveyor, a valuation, permission form your existing mortgage company for another lender to do a second charge, you’ll need to get a solicitor.
Pro: This is the traditional route for raising money.
Cons: This will take time for the funds to clear.
Selling your classic car.
Not only would this be a potentially heart-breaking decision, it will take quite a long time to sell the car, particularly if the car is worth a lot of money and there is a niche market for it. So, this isn’t a great option if you want to raise money quickly. Plus, a classic car is an asset that will increase in value over time, so it wouldn’t be a wise solution in the long-term.
Pro: This is only a pro if you want to create some space in your garage!
Cons: Loss of a car you love. Longer term, you might lose money.
Bank loan
This is an option if you want to raise money, however it is likely to involve a huge amount of admin and paperwork, questions and the rates may not be as favourable.
Pro: This is another traditional way to raise money.
Cons: Admin. Paperwork. Conversations with your bank manager. Enough said!
Taking money from your business
If you take the money out of your business, it will be as salary or dividend, which means you’ll be taxed on it. If you finance a deal from your personal funds, using your classic car as security, you will not need to declare this on your tax return.
Pro: By far the quickest way to get hold of the money if you need it in a hurry
Cons: Difficult if you have a business partner who may not agree to this loan, especially if it’s for your personal needs and not related to the business.
Andy Wise, managing director of Fast Car Finance said:
“We can use our car equity release schemes in so many different ways for people and as you can see, it is a fast, relatively hassle free way to raise money quickly. Fast Car Finance can provide both regulated and unregulated loans and as a specialist broker, we can arrange the best options for you within a matter of days.”
“One of our customers bought a brand new £120k Range Rover. It was a special edition and he wanted to buy it quickly, for cash, to take it out of the market place and avoid someone else driving it away. However, he knew that this wasn’t the best way to spend his money. By speaking to us, we released his equity in the car and he then had monthly payments at an APR that was lower than the return he got when he reinvested the money elsewhere.”
“This customer managed to purchase the car that he wanted, acted with discretion (nobody knew that he was taking out a loan for the car) and through equity release, was able to reinvest his money in other areas which would provide him with a greater return.”
If you’ve got a classic Ferrari sat in your garage, but also have a desire for a £100k kitchen refurbishment (as was the case for another Fast Car Finance customer), give the team a call on 01635 785 400 or contact us here and we can work out the best option to release equity from your assets quickly and efficiently.
