640D depreciation
Discussion
Dryce said:
Jon1967x said:
A 6GC can be had new with a large discount making them retail for 55k inc a few options. Makes it a 5-10k loss in one year.
Book part-ex values were under £40K at a year old last time I looked.Any dealer trying to shift a used one at say £45K is going to have a hard time shifting it on a finance package against some of the contract hire deals on new ones.
Dryce said:
Jon1967x said:
A 6GC can be had new with a large discount making them retail for 55k inc a few options. Makes it a 5-10k loss in one year.
Book part-ex values were under £40K at a year old last time I looked.Any dealer trying to shift a used one at say £45K is going to have a hard time shifting it on a finance package against some of the contract hire deals on new ones.
Helicopter123 said:
I can't believe anyone would spank up £40k on a 6 series without doing some basic research?
Well they clearly do otherwise they wouldnt sell any used ones.Plus there are people out there who'll trade in something worth £20K then finance the rest on straight finance.
A new one only "works" if you use a PCP or lease deal. Not everyone wants that or sees the benefits of it.
daemon said:
A new one only "works" if you use a PCP or lease deal. Not everyone wants that or sees the benefits of it.
Can you explain that paragraph, please. I can see pros and cons of cash purchase or private loan, but struggle with benefits of PCP over either. Leasing doesn't appeal to me either.
To be fair, I do c.30K miles p.a. So I do understand they're usually not targeted at people like me.
Edinburger said:
daemon said:
A new one only "works" if you use a PCP or lease deal. Not everyone wants that or sees the benefits of it.
Can you explain that paragraph, please. I can see pros and cons of cash purchase or private loan, but struggle with benefits of PCP over either. Leasing doesn't appeal to me either.
To be fair, I do c.30K miles p.a. So I do understand they're usually not targeted at people like me.
PCP gives places a cap on your exposure to depreciation, while allowing you to drive a more expensive car for a lower monthly payment than a straight HP agreement.
Downside to both is mileage (which you are aware of) and cost of options, which are usually straight line over the length of the agreement unless they help the residual (NAV, wheels etc).
I work in finance and certain (but not all deals) are VERY cheap ways into a desirable car.
Edinburger said:
daemon said:
A new one only "works" if you use a PCP or lease deal. Not everyone wants that or sees the benefits of it.
Can you explain that paragraph, please. I can see pros and cons of cash purchase or private loan, but struggle with benefits of PCP over either. Leasing doesn't appeal to me either.
To be fair, I do c.30K miles p.a. So I do understand they're usually not targeted at people like me.
The "premium" manufacturers will often set up deals that instead of heavily discounting their cars to move them, they will inject cash incentives into a PCP deal - usually via a "manufacturers contribution" or a disproportionately high final value, or both.
So if you were otherwise planning on buying a new car @ £60K and running it three years and returning say £25K, then it may well be cheaper to use a PCP or lease deal that offers £5K deposit and £400 a month.
Its a "win" for the customer as they get a cracking deal, and its a "win" for the manufacturer as they move metal without having to discount massively, AND they control what happens to the car after 3 years as most will go back to the manufacturers finance company and can be sold off to the dealer network, rather than "escape" to non franchised dealers.
There are lots of "ah buts..." but thats the basic principal of it.
As you say, by doing 30k miles per year, you're a lot less likely to be able to make the figures look attractive.
daemon said:
Edinburger said:
daemon said:
A new one only "works" if you use a PCP or lease deal. Not everyone wants that or sees the benefits of it.
Can you explain that paragraph, please. I can see pros and cons of cash purchase or private loan, but struggle with benefits of PCP over either. Leasing doesn't appeal to me either.
To be fair, I do c.30K miles p.a. So I do understand they're usually not targeted at people like me.
The "premium" manufacturers will often set up deals that instead of heavily discounting their cars to move them, they will inject cash incentives into a PCP deal - usually via a "manufacturers contribution" or a disproportionately high final value, or both.
So if you were otherwise planning on buying a new car @ £60K and running it three years and returning say £25K, then it may well be cheaper to use a PCP or lease deal that offers £5K deposit and £400 a month.
Its a "win" for the customer as they get a cracking deal, and its a "win" for the manufacturer as they move metal without having to discount massively, AND they control what happens to the car after 3 years as most will go back to the manufacturers finance company and can be sold off to the dealer network, rather than "escape" to non franchised dealers.
There are lots of "ah buts..." but thats the basic principal of it.
As you say, by doing 30k miles per year, you're a lot less likely to be able to make the figures look attractive.
Think I new most of this and the other downside is that it ties you in to BMW, Mercedes, etc.
In my situation, I'm comfortable that private financing and/or cash gives me the best deal and situation.
Edinburger said:
Think I new most of this and the other downside is that it ties you in to BMW, Mercedes, etc.
In my situation, I'm comfortable that private financing and/or cash gives me the best deal and situation.
I consider it to be less restrictive as once you've come to the end of term you can just hand the car back and go somewhere else and negotiate the best deal.In my situation, I'm comfortable that private financing and/or cash gives me the best deal and situation.
If you have a 3 year old BMW to trade in, the best price is usually through a BMW main dealer (who want to retail it), so if you rock up to your local merc or audi dealer, they're going to have to off load it, and usually at a lesser price.
Most manufacturers do these sorts of deals now - my wife had a Subaru Impreza WRX-S last time - and its common on most other brands too.
daemon said:
Edinburger said:
Think I new most of this and the other downside is that it ties you in to BMW, Mercedes, etc.
In my situation, I'm comfortable that private financing and/or cash gives me the best deal and situation.
I consider it to be less restrictive as once you've come to the end of term you can just hand the car back and go somewhere else and negotiate the best deal.In my situation, I'm comfortable that private financing and/or cash gives me the best deal and situation.
If you have a 3 year old BMW to trade in, the best price is usually through a BMW main dealer (who want to retail it), so if you rock up to your local merc or audi dealer, they're going to have to off load it, and usually at a lesser price.
I also smile when people quote "5k down then 24 months at only £400" - that 5k equates to another £200 a month.
At the end of the day get the car as cheap as possible, sell it for as much as possible, the bit in the middle is just cash flow and financing.
Jon1967x said:
PCP isn't magical. The residuals are not as good as they were when the thing was introduced and it must be pretty tough taking it back to a dealer knowing that the purchase price at the end of a PCP for the car is say 30k and the forecourt of similar stuff is 40k. The idea was to leave enough margin in the difference between final payment and car worth to protect the dealers from a falling market (like around 2004 when they got it wrong) and for the dealer to say "I recon we can cover your deposit on the next one...". I was told at Audi that they work on 80% of the value as the final payment.
Your understanding is flawed - the dealer doesnt get the car back, its the finance company. It has nothing to do with the dealer. Therefore if the residual is £30K and the dealer is offering you £35K, then you're quids in. If the dealer is offering you £25K then you simply hand it back to the finance company.Jon1967x said:
I also smile when people quote "5k down then 24 months at only £400" - that 5k equates to another £200 a month.
Yes. Clearly. Its obviously in the finance companys interest to ensure you have enough cash in the deal in case it all goes tits up early on.Also, these deals are usually carefully calculated. They know most people can raise a few thousand if needs be - moreoften by residual value from their last deal or by a trade in - and people often have a specific monthly payment in mind. Pitch your "offer" with the right deposit and monthly payments for your target audience and the car should sell itself.
Likewise its a simple calc that most people do to see how much its going to cost them over the term.
Jon1967x said:
At the end of the day get the car as cheap as possible, sell it for as much as possible, the bit in the middle is just cash flow and financing.
+1Edited by daemon on Tuesday 29th April 13:03
converted lurker said:
Just buy it outright with cash you have saved up. There is no cheaper way. Then sell privately when you fancy a change.
All this finance wizardry is only ever performed so that somebody somewhere makes money out of you.
You must be the type of person who buys an M5 for cash All this finance wizardry is only ever performed so that somebody somewhere makes money out of you.
daemon said:
Jon1967x said:
PCP isn't magical. The residuals are not as good as they were when the thing was introduced and it must be pretty tough taking it back to a dealer knowing that the purchase price at the end of a PCP for the car is say 30k and the forecourt of similar stuff is 40k. The idea was to leave enough margin in the difference between final payment and car worth to protect the dealers from a falling market (like around 2004 when they got it wrong) and for the dealer to say "I recon we can cover your deposit on the next one...". I was told at Audi that they work on 80% of the value as the final payment.
Your understanding is flawed - the dealer doesnt get the car back, its the finance company. It has nothing to do with the dealer. Therefore if the residual is £30K and the dealer is offering you £35K, then you're quids in. If the dealer is offering you £25K then you simply hand it back to the finance company.I think in principle we're saying the same thing. I said dealer as I've only ever had PCP quotes from them but you're right, technically its a finance company
If I didn't do 20,000 miles a year I think I'd very much be in the market for an M5 without recourse to finance. Not new obviously. I have an aversion to burning money needlessly. 18 months old seems more sensible.
My point was that until recently I had started doubting myself because so many people seem to do this whole £4,000 down then 36 months of £400 routine that I thought I must be missing something. But I wasn't. It's just people buying cars they can't afford paying loan interest to do so.
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
My point was that until recently I had started doubting myself because so many people seem to do this whole £4,000 down then 36 months of £400 routine that I thought I must be missing something. But I wasn't. It's just people buying cars they can't afford paying loan interest to do so.
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
converted lurker said:
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
It doesn't work that way unless you keep the car or a long time - and many people don't - they like new cars and are willing to pay a premium to own one.And the cheapest way to do what you're suggesting isn't to buy a new car but to purchase an older car that has already depreciated.
Take this a step further and you optimise it towards bangernomics.
For those who would pay for a new car and choose to keep it only a few years and move on then the car is just a cost. How you deal with optimising that cost is based on the deals available to suit your use.
converted lurker said:
If I didn't do 20,000 miles a year I think I'd very much be in the market for an M5 without recourse to finance. Not new obviously. I have an aversion to burning money needlessly. 18 months old seems more sensible.
My point was that until recently I had started doubting myself because so many people seem to do this whole £4,000 down then 36 months of £400 routine that I thought I must be missing something. But I wasn't. It's just people buying cars they can't afford paying loan interest to do so.
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
My point was that until recently I had started doubting myself because so many people seem to do this whole £4,000 down then 36 months of £400 routine that I thought I must be missing something. But I wasn't. It's just people buying cars they can't afford paying loan interest to do so.
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
converted lurker said:
My point was that until recently I had started doubting myself because so many people seem to do this whole £4,000 down then 36 months of £400 routine that I thought I must be missing something. But I wasn't. It's just people buying cars they can't afford paying loan interest to do so.
If i could be bothered to find a parrot woosh...converted lurker said:
Seems like an expensive way to spend your motoring life when you could just save up once and then never pay loan interest ever again.
Brilliant. Well thought through. Because of course if you buy with cash, cars never depreciate and they never wear out.Just brilliant.
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