Help! Think I might upgrade to an F15

[paddy wright]

Evening all- been in and had a chat with BMW when my E70 was in for a service but couldn't get them to a deal I was happy with.  Is it true they only offer 4.9% Apr on new cars and not pre Reg?  surely this makes no sense as it makes a pre Reg more expensive.  The main concern I have is if I buy new the residual is 25k at year 4 (annual mileage 8k) am I likely to have equity in the car to start again? If so circa how much?

They only offered 9.5k for my E70 which seems really low given the spec (tv, pano roof, Napa leather, pro nav etc and FBMWSH).  This is the E70 I currently have with 79k on it now. http://xdrivers.co.uk/forum/index.php/topic,7906.0.html

Any advice appreciated!

[X5Sport]

BMW are not alone in charging less for new than pre-Reg cars.

From my experience they'll add £2-3k to cover the warranty cost when they sell it on.

[paddy wright]

[quote="X5Sport"]
BMW are not alone in charging less for new than pre-Reg cars.

From my experience they'll add £2-3k to cover the warranty cost when they sell it on.
[/quote]
Thanks for the reply- does that 2-3k mean i will have 2-3k in equity? Sorry for being daft- just never bought new

[MarkG_M3CP]

When buying new the car attracts all sorts of incentives - dealer, BMW UK, BMW Financial Services. As it's BMW FS that funds a new car PCP they can pretty much decide what APR to loan their money as since it comes from the corporate treasury.

When buying used (yes a pre-reg is still deemed used), the finance is usually provided by Black Horse or similar; the dealer can be flexible on rates but unlikely to match it (7% seems normal). If you make it a deal breaker they may move.

I've always found new cars on a decent APR to come out at a better monthly cost!

[X5Sport]

[quote="paddy wright"]
[quote="X5Sport"]
BMW are not alone in charging less for new than pre-Reg cars.

From my experience they'll add £2-3k to cover the warranty cost when they sell it on.
[/quote]
Thanks for the reply- does that 2-3k mean i will have 2-3k in equity? Sorry for being daft- just never bought new
[/quote]

No they'll offer you £2-3k less than they put it on the forecourt at.

[paddy wright]

Thanks for the advice, really appreciated.  Never bought where I don't own the car at the end before and worries about how I start again at the end of the PCP- I wouldn't want to buy the car and would hope for some equity to use to start again.  Is this realistic?

[CondorX5]

I think there is a "guaranteed residual" on the PCP deals for higher value cars like new X5s and even some AUC. So after the three year deal is up, dealer takes the car back at the "guaranteed price" and you get a new one and start all over again.  Unless of course you have gone over the allotted mileage or there is a little ding any where or a few marks, in which case you get hammered in punitive costs.........

I know lots of very fancy new X5s that pop up on here are "sold" in this way but I would personally never do it as it just sets off a roundabout of relentless consumerism - I have a friend who is keen on Porcsches and is constantly hankering after the next brand new one in this scheme.  If you earn large sums of money I suppose there is some sort of tax efficiency in PCPs but to throw a constant stream of £800+ per month, forever, at having a car like this which you will never own and are worried about mileage, and age related dings and scratches which happen despite looking after it as best as possible - just try shopping at a supermarket, its a case of when, not if, the car is dinged by some careless idiot and their trolley.  On the other hand, it suits some people to "buy" like this as service inclusive deals are available and before the car needs an MOT, they hand it back and go on to the next one.

There is also the option of buying the car at the end of the lease - making the hefty "balloon" payment - making it yours. Some desirable vehicles may then be saleable at more than the balloon payment, leaving you quids in with a bit of a profit to put towards another vehicle.

Personally, I just stay within affordable outright purchase for our smaller car, and do a fixed HP on the X over 3-5 years - you still have the option of dealer part ex during the course of the HP if you want to change car.
I owned my last X for 7 years before changing, its still in the family now.  Went with BMW Finance for my current X, as I had done with the previous one, they offered a decent rate and it was really simple to arrange. 

Horses for courses, as they say. Some are passionate about these PCP deals, the lucky few can just buy their brand new Xes in cash and others use bespoke finance / HP/ bank loans - but with PCP you own absolutely nothing and hand the car back after the lease ends, or find the money to pay the balloon payment and buy it outright.

In short, as I understand it, with brand new cars, it is mostly depreciation which you pay for during the lease - at the end of it,  a 3 year old X5 F15 will be worth around £40k ish, which is what you will need to find in order to buy it from the finance company.    Basically, you paid for the pleasure of speccing and receiving and drivng a brand new X for 3 years, but you own nothing at the end unless you pay up a further £30- £40k ish lumpsum

[X5Sport]

I'm doing this for the first time myself.  My Škoda is costing me £500 a month and after 42 months it goes back - because I'm doing 17,000 miles a year and intend to replace it with a newer model at that point.  If I was keeping it - as with the X6 and 330CD convertible - then I would not lease.

Once I retire then I will look to buy and keep, but as a commuter I need reliability.  Not ideal but at present I don't really have an option other than to keep buying older cars and throwing them away when they break - and hope for some reliability in the meantime.

[paddy wright]

I don't intend to keep the car after the 4 years, but would hope there was enough equity to start again on a new pcp.  A dealer has offered better numbers on a pre reg (new stock) well speced car with 4.9%apr only catch is it is white with black leather- a combo I wasn't keen on.

[m13lky]

Paddy,

In my experience with the high end bmws on pcps there will be little or no equity in the car at the end of year 4, best option may be to do the deal with a heavy discount on new or even more on pre reg &  buy it at year 4 then change it 6 months later, as every time I have changed mine they just check your owed amount at that date & offer you a little bit more or tell you they are doing you a big favour paying it off. Others are correct as most dealers now just add around 2-3k onto the price they give you so your trade in is one of the cheapest on the web no matter the spec or condition. The variation in advertised sale prices is what finally made me move onto another brand even though specs are very similar, I have seen as much as £10k variation in the same age & spec X5's at under 1 year old depending on what retailer has them, even sometimes with different garages in the same dealer group!

Good luck, check out Peter Vardy in Edinburgh as they are very keen with discounting the new cars & trade ins are usually as good as anywhere else, even if you don't go there use their deals to leaver your local dealer.

Malc

[MarkG_M3CP]

Unfortunately you can't have hefty front end discounts AND equity come the end of the term.

On my 335d xDrive, I secured £10k discount but towards the end of the PCP period is was still in negative equity by around £7k.

In the end, I Voluntary Terminated the agreement to get into my X5 before prices increased - and again secured a hefty £15k discount.

As mentioned - PCP is a large monthly payment for an asset which never becomes your own. For me this works since I fund the rentals with a company opt out payment and don't have to use my own cash/capital. I also cover 80-100k miles over 4 year so wouldn't want to keep the car anyway.

[paddy wright]

I wasn't under the impression this was the purpose of pcp- tie some equity in the car to keep people replacing every 3-4 years?

[Nat]

Hi,

I guess its each to their own. Its a bit of a sensitive subject as we are all on different incomes and if you are on a low income the last thing you want to read is someone posting that after getting their massive £250 k bonus, they waltzed into their local dealer , ticked every box and walked out with a £75K car for £60 large etc etc.............

These are just a few observations  have found in my life when trying to buy cars.

I don't understand the concept of borrowing to pay for a depreciating asset. Certainly not at 7% when the base rate is 0.25% ....! I know we all need to borrow money but 5-7% is just taking the piss .
Lets say your new X5 is £65k ...........and after 3 years its worth half or 50% .............so its worth £32.5
You put down £5k and funded/borrowed/pcp'd whatever you want to call it but it needs to be paid for £60K
At 7% thats £4200 a year , on top of money your new car is falling each year.

I know we can't all be on £100K a year so the only option to buy a new car sometimes is to borrow. I suggest borrowing @ the cheapest rate possible , naturally .  Also , its a very modern world, with everyone wanting everything now.........so i have to ask , what happened to saving up to buy a car ? That's what i did. I suspect i will be called old/fuddy or boring, but look at it this way...........I made the payments to myself , deposit up front, and made the monthly payments too . I  got interest on the money whilst I was saving and then negotiated a big cash discount. The mission was to make it as cheap as possible and it let me see if i really could afford it.

If you are a business then I get the leasing reason...............tax/write off/etc etc ..........

I just did a quick pcp online on an X5.................figures below


Maximum OTR Price         £59,142.25
Deposit                         £5,914.22
Balance to Finance         £53,228.03
Monthly Payment         £801.33
Final Payment (GFV) £22,738.00
Total Amount Payable £ £67,116.06
Representitive APR % 5.2%

I think its shocking...............its over 48 months. In that time you would have paid them £801.33x48 =£38463.84 + your deposit of £5,914.22 = £44,378.06  ( another £14,764.19 and you could have bought it outright)
You have nearly paid for the car over 4 years............yet they still want £22,738.00 off you if you want to buy it. Thats @ 5% on 10,000 miles .
Personally I think its mad.

If you can make those payments then save up for 4 years and you will have nearly £45 K. In fact @ 3% compounded interest rate  you can add another £3600 to your coffers. ( Thats the interest on your deposit + monthly payments . Before i get shot down Santander paid 3% on a current a/c and a non tax payer = NO TAX . So now you have just over £48,000. How much can you get off a £59,000 X5 ?
Quite a lot I bet. I recon you can get it for £50,000. Whats it worth after 4 years ? If you assume 40 % of its original value than after 4 years its worth £23600.
You paid £50,000 its now worth £23,600 ..........which means it cost you £26,400. Thats a lot less than the £44,378.06 you would have paid on your pcp deal for exactly the same thing. Thats a saving of £17,978.06
How much do you have to earn to have nearly £18,000 in your purse ? If you are a basic rate tax payer @ 20% thats £22,500..............thats a lot of cash.

Now I will say i have done this roughly and there may be better deals available etc etc and perhaps my thinking is a little out, but all I can tell you is every time I have looked at buying a car, without question the cheapest way has always been to buy outright . I know its hard and finances are tight, and every case is individual ,  but I just wanted to illustrate that there is another way which makes it much cheaper if you are willing to be patient and give it a little thought , rather than live in the I WANT IT NOW world.

Regards,
Nat

[X5Sport]

When I re-specced my X6 the pre-finance figure was around £69k.  By the time I had paid for it on the BMW Scheme I would have paid almost £100k!!

I still have my first X6 as I'm no longer earning a figure that allows me to buy such cars....well new at least...my current car is a Škoda Superb (half the price and more toys included rather than cost options). 

I can see why people wait a year or two and pick them up then.  Much less of a hit in your wallet.