Thought about ordering another one - but cancelled it

[X5Sport]

I'm going to go from owning one of these monsters outright to a BMW Select System as the depreciation is a killer!! I got an offer of only £40k on my year old E71 - since revised upwards substantially - which made me take a very hard look at how I purchase cars. Have always paid cash until now but the hit it too much to take now. Having been almost bitten once by an out of warranty expense, and knowing just how expensive these things can be to fix when the manufacturer won't play makes me nervous.

It's not that I want to change cars every five minutes, but when these beasts go wrong it is hugely expensive and often not something that can be done at home no matter how willing I might be!!

So I'm biting the bullet and taking a hit - though not as bad as it could have been - of £1300 a month and trading the car for a brand new one. The operating PCP charge is half the cost of the depreciation!!

Yeah it means the car won't really be 100% mine, but it means that BMW cop for the rest and I can (for now at least) afford to keep a car under a proper warranty all the time.

It does stop me modding it though Not that I was doing much!!

I hope to sign on the dotted (all being fair and equal) for a new E71 40d (same colours and nearly the same spec - slightly higher) which if we time it right will be built this week and here at Xmas. I still can't afford those type 215 wheels though

I do have to give the old one up in 6 weeks time though. By then we should have the Mini which will make things fairly straightforward - he says optimistically.

[pvr]

I am not following you, so perhaps you can expand on it.

Paying cash or hire, what is the difference with repairs and how could hire for say 3 years be cheaper than cash as otherwise how does the finance company survive?

Only ever bought cars with cash as well so not sure about how what you plan will work.

[EXPLORER]

he just lost 15 k on his car, in 12 months,so on hire its going to cost him 7500 a year, so hoping to half the loss,me thinks
regards

[pvr]

How can the hire company support that as they will be carrying the loss instead?

[EXPLORER]

just thinking, car costing 55k, going to loose 40k in just 5 to 6 years, so then, you got a car to sell for 15k, so you lost 40k

or rent for 7500k times 5 to 6 years, and the cost is 37500 or 45k

not far of each other, but you get the warranty all the way,, me thinks???, just for thought. 6 of 1, not sure

[EXPLORER]

maybe cause they got the car???

[EXPLORER]

sorry yea .with you, maybe they get them cheaper, tax, whatever who knows, just wondering if you never own the car, imports are cheaper, you wont care,, got to be paying them someware

[535dboy]

Nope that makes no sense to me either.

Depn is always worse as soon as you take the car - the VAT is the first immediate loss - so year 1 is always going to be terrible.

It then evens out so by year 3 so the loss has slowed a lot.

So you will be paying interest on a PCP whereas presumably your cash is earning you next to nothing and within that finance cost is the 'insurance' part of the PCP that BMW put in to hedge against the car being worth less than the GFV at the end.

I am not knocking PCPs for those that want nice cars, but if you have the cash doing nothing else then it makes no sense.

My main two cars are paid cash, the Lotus I did put on deferred loan because as you may remember I bought them all at the same time so I was already spending £100k on the main ones so another £40k on a car that sits in the garage for 90% of the year was a little harder so swallow so thought if I pay it monthly it would hurt less.

I did the deferred loan option because I had confidence in the value of the car which was proved right because I have just settled the loan and there was more equity in the car than the deposit I originally put in.

If I was doing finance on a big 4x4 I would definately do PCP as they continue to fall out of fashion the residuals will be more uncertain.

I would re-run the figures before you sign on the dotted line !

[535dboy]

PS presumably if the monthly payments are only £625/mth you are putting in a lumpy deposit too?

This on this type of car you are likely to loose the majority of

[535dboy]

PS2 it is only a 'hit' when you need to change it which you don't at the minute !

Is there even an LCI E71?

[X5Sport]

My intention was to reduce the losses in the short term, or at least I think that's my aim. I may have got it wrong, but I'm not 100% sure of how badly. I no longer have the cash just to use on a car. I suppose I'm gambling on a possible future value offered by BMW being conservative and actually coming back at a better than expected sum. I'm also worried about the paintwork on the current car. It's been partly re-sprayed and fully re-polished. That's never going to be good, so need to chop that now.

The maintnance comment was only me voicing a concern about just how much these blasted cars cost to fix.

I've got £46k back on the X6, which whilst better than the first offer, is still not as good as I'd hoped for - though not bad. Some if that is being used as the deposit and a large sum goes back in the Bank. A GFV minimum of £25k has been given at 36 months and 30k miles. It could worth be a lot more though - a huge gamble I know. I may not go as long as 36 months, in fact all the advice I've now also had is not to!

As has been said, the first year is the worst, and the VAT loss hurts the most. Of course BMW will build this in somewhere. In my current circumstances this seems to be the best way to go, and works for me. Whether it really works out as I hope it does (ie I don't get burnt) only time will tell. My 'outlaws' have done it for years and it worked well for them.

Doing it now hurts yes, but doing it in another year or two will be worse still. I could also never pay cash again due to circumstance changes so by keeping more in the Bank and adding the ability to walk away after a certain period if necessary gives me a little bit more of a safety net. I'm the wrong side of 50 and have to look at things differently. Part of the car gets paid month on month, and part is deferred. I guess I'm hedging my bets, reducing debts that we have and keeping a decent car for now all at the same time. Whether I'm right or wrong I have no real idea. It looks OK, but then this may well be the last new car I buy, and I have no idea what the future will be or bring. Funding everything is the issue, and I could end up with nowt at the end if this. Someone is bound to find a serious flaw in my illogic (I won't call it logic for that reason) and point out that this isn't the thing to do. They may be right

And no there isn't an LCI E71 until Autumn 2012 at present.

In the event, and after much more careful thought, and reading your comments, and re-running the figures, I have taken a gamble (foolish or not) and ordered a new X6 40d in the same colour combo (I think it's the best for that car) and it should arrive in January. If I was going to run the car into the ground by keeping it then the cash loss is now too much. This isn't hugely better, and I may be driving a 10 year old E53 again (nothing wrong with that I know) come 2014, but at least I've tried and had some fun too.

Right! Now I'm going to stop 2nd guessing myself about the whole thing and just enjoy the moment Until that is someone comes along and ruins it...... it was either buy another X6 now, or go back to Vauxhells!

[pvr]

Isn't it the case that you borrow the "rental" value between guaranteed value and what the car is worth, and pay interest?

So the gamble is whether the guaranteed value is lower than the actual value?

Perhaps an example would help to see how it can be better to pay hire charges versus buying cash?

[X5Sport]

I don't have one to share with it all on at present - lots of scribbles. Final details on how much/how long at the 'ultimate cost' ongoing. In simple cash terms it probably doesn't - but then it wouldn't or as you said, it would not be worth it.

One comment that was made though, was never go to full term because that is where companies make their money. Clear it earlier and they have to credit you money back but are still left with a car to sell to recover their costs/losses. It's all a gamble.

Certainly for my calcs, going much beyond two years (about 27 months for me) begins to count against me. That's probably where the 28 month average deal length data comes in. The canny ones finish at two years-ish and the less than canny at three. The latter being the ones who get caught for everything. A bit like interest free periods on 'Buy now, Pay later' deals where if you miss the repayment date you get clobbered (a lot).

I probably should be buying a 116d!!

[535dboy]

Surely the best bet would be to wait for the lci then as I cannot see any reason to change now

Judging by some of the cars I've seen p/ex I can't see it being worth more than £25k

Surely maintenance pack and extended warranty is the cheaper option

[X5Sport]

Guys your comments have raised queries that I hadn't thought of.

Much to the Dealer's annoyance I canned the order this morning. I've had everyone in the Sales Team on the phone seeing what they could do to help out, but I had missed a key part - a phrase 535dboy used 'deferred loan' - and the penny dropped. Plugging those figures in at the level of deposit I was using made this a non-starter. For a minimum deposit level, maximised payments and shortened time-frame then it's fine and works, just not the way I had it. I had bitten off way more than I could chew and would have had to give the car back in three years and walk away. Not the way to do things - which is probably why I didn't do this last year either for the current one. I knew there was a reason, but I could not work out what it was!!

Most of the sales folks have been really good. I even got the full deposit back. I think they were able to change the order back to a default one.

pvr - the final figures doing the whole lot the wrong way (max deposit, minimum payment, refinance the end stage GFV etc - that last bit I would not have done anyway) the TOTAL figure would have been a very scary £105k on a £65k car. That makes no sense at all to anyone.

If you do it with a very small or minimum deposit and use larger payments so there's a load of equity at the end to fund the next car then it works fine - more so if you take it back much earlier than the planned end (say two years instead of three). That's the trick we're planning for the Mini, which we will not keep.

Salutory lesson learned, and I pass it to all in very open public statement for all.

And thanks to some critically important comments from you folks here, I have been saved a small fortune..................and still have my X6.

I thank you.........goodnight.....