Legislation reforms lead to petrol-heads putting pension money into classic cars
More people are cashing in their pension pots, and buying classic cars, according to classic car finance company Magnitude Finance.
Recent changes to UK law mean that those over 55-years-old with Defined Contribution pension schemes are entitled to draw part or all of their pension in cash, leading to greater financial assurances for lenders.
The move means that a number of eligible 55-plus year olds are now looking to make the most of their retirement fund by withdrawing the cash and putting it to better use. While some are investing in property, and others high-interest accounts, a few have also put the money into classic cars.
According to Magnitude Finance, which specialises in providing finance for vehicles over £25,000, many people are also well placed to receive finance for such cars, owing to the repayment reassurances connected with a cashed-out pension.
Record low interest rates are also thought to be a contributing factor in the rise of pension-for-car agreements, with the current going rate of 0.5% not forecast to significantly increase for the foreseeable future.
Magnitude revealed that one client cashed in his pension, and used part of it as a deposit for four cars, including a Bugatti EB110 and a Jaguar XJ220. Finance totalling £610,000 was arranged for these two cars. The customer had further funding arranged for two Ferraris: a 512M and a 430 Scuderia with a combined value of £430,000.
Tim Marlow, Head of Sales at Magnitude Finance, said: ‘Former pensions minister, Steve Webb, famously said people could go out and buy cars like Lamborghini's once they cashed in their pension under the new reforms and now some are.
‘By cashing in his pension, this client has given the financial institutions lending the money assurance and that allowed him to leverage the lending.
‘He has then utilised his existing contributions that were previously being paid into his pension to cover the monthly finance repayments which allows him to invest in more cars.’
Marlow also confirmed that said client was currently considering a Ferrari Testarossa, again thanks to the new legislation.