As ISA’s lose their appeal and investors look for alternative investments, where are people looking to invest? Ever thought about investing in leased cars?
A survey of UK personal investors has highlighted a demand for ‘alternative investments’ offering returns that outperform traditional investments such as ISA’s as low interest rates and 3% inflation continues to bite.
The survey of 500 personal investors reveals that 56% of those surveyed stated that they are only attracted to investment opportunities that guarantee to deliver a minimum return of 6% per annum. As traditional investments such as ISAs, fixed bonds or deposit accounts no longer produce sufficient results and the buy to let property market became unpredictable and sometimes extremely lengthy and complicated, Investors are increasingly turning to alternative investments with the expectation that they can achieve higher returns.
Alternative investments that those surveyed said that they have invested in to deliver their target of a minimum 6% return included fine wine, solar energy, mining and peer-to-peer lending and, cars?
Prior to 2012 the only parties that enjoyed the leading rates on investing in the car funding process were banks and car finance institutions using the deposits and savings of the populace while the latter gets nowhere near the returns that can be achieved by funding cars. So lucrative is this industry that one of the biggest insurance giants – Admiral has joined the car funding business in December 2017. Why? They want the money gained from selling insurance to grow at market leading rates. The booming car finance market has also reportedly earned Black Horse finance its strongest performance up 20% to £10.9bn.
One company that encourages individuals to invest in cars that are then leased is Buy2LetCars.com. The business asks investors to hand over £14,000, which it says is enough to fund a new car. That car is then leased out and the investor receives £250 a month from the lease payments for the next three years, adding up to £9,000. At that point, with the lease expiring, the investor is sent an £8,080 lump sum. It is these figures that allow Buy2LetCars to claim that the return to investors is 27% irr over three years, or 9% irr a year.
Investors in Buy2LetCars have seen returns ranging from seven percent per annum to eleven percent, based on their contribution. The Buy2LetCars investment model essentially replaces banks with individual funding for car purchases. This involves loaning Buy2LetCars a lump sum to fully fund the purchase of a new car, then arranges to lease the car through the sister company Wheels4sure.Source: whatinvestment.co.uk