Report finds savers cashing in pensions to buy luxury cars

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Reports have found that more and more savers are cashing in their pensions to buy luxury cars.

Magnitude Finance, which specialises in the finance of cars priced over £25,000, has seen an increase in the amount of customers using their newly-released pension money to purchase vehicles.

It comes in the wake of a change of rule that allows anyone over the age of 55 to draw parts, or all, of their pension savings in cash.

One customer of Magnitude Finance actually cashed in his pension to use as a deposit for four cars, including a Bugatti EB110 and a Jaguar XJ220.

The finance for these two cars alone totalled £610,000, with the two cars costing £875,000 altogether.

Head of sales at Magnitude Finance said: "Then pensions minister, Steve Webb, famously said people could go out and buy cars like Lamborghinis once they cashed in their pensions under the new reforms and now some people 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 added: "The client is expecting his collection to appreciate in value at a greater level than his pension investment previously did."

The customer had further financial arrangements made for two Ferraris, a 512M and a F430 Scuderia with a total value of £430,000.

With a record low interest rate 0.5%, car buyers are capitalising with any increases promised to be just fractions of a percentage point.