640D depreciation
Discussion
Finance companies do it to make money and they are not immune from the depreciation a cash buyer suffers.
The only time financing is better than buying outright is if manufacturers are hiding big discounts behind a finance package (which does happen – particularly with things like 6 and 7 series).
However, as a general rule, if you've got the cash, buy the car.
The only time financing is better than buying outright is if manufacturers are hiding big discounts behind a finance package (which does happen – particularly with things like 6 and 7 series).
However, as a general rule, if you've got the cash, buy the car.
daemon said:
Brilliant. Well thought through. Because of course if you buy with cash, cars never depreciate and they never wear out.
Just brilliant.
Perhaps I needed to explain more clearly. My point was that once you've saved up and bought car 1 with actual money you can then spend the next three years saving your £300whatever a month towards car 2 and so on for your adult life. You pay no finance fees, no debt interest and your savings acrue interest whilst building to each trade in. Over many years and many cars this saving will add up to a lot of money. Just brilliant.
These pcp's and personal leases just seem like an added cost to me which is worth avoiding for a lifetime with just a little early restraint.
I think initial depreciation of cars is worse now then it was twenty years ago before all this finance sleight of hand.
100 % agree
converted lurker said:
Perhaps I needed to explain more clearly. My point was that once you've saved up and bought car 1 with actual money you can then spend the next three years saving your £300whatever a month towards car 2 and so on for your adult life. You pay no finance fees, no debt interest and your savings acrue interest whilst building to each trade in. Over many years and many cars this saving will add up to a lot of money.
These pcp's and personal leases just seem like an added cost to me which is worth avoiding for a lifetime with just a little early restraint.
I think initial depreciation of cars is worse now then it was twenty years ago before all this finance sleight of hand.
These pcp's and personal leases just seem like an added cost to me which is worth avoiding for a lifetime with just a little early restraint.
I think initial depreciation of cars is worse now then it was twenty years ago before all this finance sleight of hand.
converted lurker said:
Perhaps I needed to explain more clearly. My point was that once you've saved up and bought car 1 with actual money you can then spend the next three years saving your £300whatever a month towards car 2 and so on for your adult life. You pay no finance fees, no debt interest and your savings acrue interest whilst building to each trade in. Over many years and many cars this saving will add up to a lot of money.
These pcp's and personal leases just seem like an added cost to me which is worth avoiding for a lifetime with just a little early restraint.
I think initial depreciation of cars is worse now then it was twenty years ago before all this finance sleight of hand.
You do have to factor in the opportunity cost of that cash though.. if you'd stuck it in a stocks and shares ISA a year ago it would have gone up by more than the cost of borrowing in a PCP, of course it could also have gone down or made a tiny increase in a cash account, but that money could have done something for you. The difference is the edge a lender has over a saver but it would be wrong to assume that the cost of the loan could not be offset to a degree if you had the cash option.These pcp's and personal leases just seem like an added cost to me which is worth avoiding for a lifetime with just a little early restraint.
I think initial depreciation of cars is worse now then it was twenty years ago before all this finance sleight of hand.
At the end of the day, cars cost money. And generally, the more expensive and newer the car, the more it costs.
For what its worth, I buy my cars outright and I agree there is far too much debt - keeping up with the Jones' (or Singh, Patel, McDonald, McIroy, Smith.. take your pick) is worse today than its ever been
Edited by Jon1967x on Wednesday 30th April 19:36
Or five years ago the opportunity cost in an equity fund would gave been -37%. 45 years of changing your car every three years is 15 cars. 15 balloons, 15 arrangement fees, return fees, extra mileage fees, damage fees plus 45 years of 5% interest will add up to a nice retirement present.
converted lurker said:
Perhaps I needed to explain more clearly. My point was that once you've saved up and bought car 1 with actual money you can then spend the next three years saving your £300whatever a month towards car 2 and so on for your adult life. You pay no finance fees, no debt interest and your savings acrue interest whilst building to each trade in. Over many years and many cars this saving will add up to a lot of money.
A car is just a cost.If the deal on the table is cheaper to pay monthly then take it - if it's cheaper to buy outright then buy it.
If the monthly costs less then the depreciation you'd experience from a discounted purchase then that a is cheaper way of covering that cost.
Arithmetic beats dogma.
converted lurker said:
Or five years ago the opportunity cost in an equity fund would gave been -37%. 45 years of changing your car every three years is 15 cars. 15 balloons, 15 arrangement fees, return fees, extra mileage fees, damage fees plus 45 years of 5% interest will add up to a nice retirement present.
You might also add the advice to avoid the likes of the 640d and buy that once Dacia to last a lifetime.I got my 640d on contract hire because there were big BMW discounts and I like to change my cars regularly. Clearly if it was just about money I would buy a used car that had already taken a big hit on depreciation and keep it until it was uneconomic to repair but I like cars and life's too short. There is no right/wrong/best way to finance a car, different strokes for different folks.
I got my 640d on contract hire because there were big BMW discounts and I like to change my cars regularly. Clearly if it was just about money I would buy a used car that had already taken a big hit on depreciation and keep it until it was uneconomic to repair but I like cars and life's too short. There is no right/wrong/best way to finance a car, different strokes for different folks.
Nobody ever said anything about keeping a car for life or buying a Dacia. I just made the point that having finally sat down with a Salesman, listened to the spiel and then crunched the numbers myself I realised that these finance deals are just an expensive ongoing debt instrument that adds to the total cost of ownership and can be avoided by, just once, saving up the cash and then always being a customer not requiring finance.
I really thought with nine out of ten new BMWs being sold privately on finance/lease that I was missing something. But I wasn't. Just saying.
I really thought with nine out of ten new BMWs being sold privately on finance/lease that I was missing something. But I wasn't. Just saying.
converted lurker said:
Nobody ever said anything about keeping a car for life or buying a Dacia. I just made the point that having finally sat down with a Salesman, listened to the spiel and then crunched the numbers myself I realised that these finance deals are just an expensive ongoing debt instrument that adds to the total cost of ownership and can be avoided by, just once, saving up the cash and then always being a customer not requiring finance.
I really thought with nine out of ten new BMWs being sold privately on finance/lease that I was missing something. But I wasn't. Just saying.
But you are missing something.I really thought with nine out of ten new BMWs being sold privately on finance/lease that I was missing something. But I wasn't. Just saying.
Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
-Z- said:
But you are missing something.
Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
?? Never realised finance companies were charities giving away 6k. So where do they recover that money.. Do they buy with a further 6k discount or magically sell for a 6k premium? Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
Jon1967x said:
-Z- said:
But you are missing something.
Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
?? Never realised finance companies were charities giving away 6k. So where do they recover that money.. Do they buy with a further 6k discount or magically sell for a 6k premium? Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
Plus 2k up front... Making 19k..
Plus VAT making it 23k
Jon1967x said:
Jon1967x said:
-Z- said:
But you are missing something.
Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
?? Never realised finance companies were charities giving away 6k. So where do they recover that money.. Do they buy with a further 6k discount or magically sell for a 6k premium? Leasing is cheaper than paying cash over the term of the lease. Obviously if you keep a car 6 yrs then it changes.
Take M5s £73k list or £62k after discount. To lease one for 2 years was £15k.
They are up for £45k on the BMW used site, these are for ones with £5k of options, so they probably bid the owner about £41k. So buying cash is at least £6k more expensive over 3 years.
Plus 2k up front... Making 19k..
Plus VAT making it 23k
It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
HoHoHo said:
I can tell you categorically my M5 is costing me £26650 in lease payments over 36 months including 6 months up front.
It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Broadspeed can sell you that 75k car for 61k, knock off the 26k you're paying and you're at 35k. What do you think yours will be worth at the end of the lease?It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Most of the reasonable 61 plate cars are up for low 40k
Edited by Jon1967x on Thursday 1st May 06:50
Jon1967x said:
HoHoHo said:
I can tell you categorically my M5 is costing me £26650 in lease payments over 36 months including 6 months up front.
It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Broadspeed can sell you that 75k car for 61k, knock off the 26k you're paying and you're at 35k. What do you think yours will be worth at the end of the lease?It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Most of the reasonable 61 plate cars are up for low 40k
Edited by Jon1967x on Thursday 1st May 06:50
£35k at a push?
HoHoHo said:
Jon1967x said:
HoHoHo said:
I can tell you categorically my M5 is costing me £26650 in lease payments over 36 months including 6 months up front.
It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Broadspeed can sell you that 75k car for 61k, knock off the 26k you're paying and you're at 35k. What do you think yours will be worth at the end of the lease?It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Most of the reasonable 61 plate cars are up for low 40k
Edited by Jon1967x on Thursday 1st May 06:50
£35k at a push?
Jon1967x said:
HoHoHo said:
Jon1967x said:
HoHoHo said:
I can tell you categorically my M5 is costing me £26650 in lease payments over 36 months including 6 months up front.
It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Broadspeed can sell you that 75k car for 61k, knock off the 26k you're paying and you're at 35k. What do you think yours will be worth at the end of the lease?It's a £75k car and I paying less than the expected depreciation over that period.
That's on a 12k per annum non-maintained agreement with BMW and I don't have to pay road tax as it's included.
Most of the reasonable 61 plate cars are up for low 40k
Edited by Jon1967x on Thursday 1st May 06:50
£35k at a push?
HoHoHo said:
The maths as you suggest is there or thereabouts and by leasing I'm happy I'm almost certainly going to be no worse and probably better off.
There is also a lot to be said for predictability. My used 6 has depreciated more than I would have liked (despite buying it nearly new and at nearly 30k less than its list price inc all options) whereas the Z4 I bought for the wife at a year old has lost hardly anything in 30 months compared to todays prices. Jon1967x said:
HoHoHo said:
The maths as you suggest is there or thereabouts and by leasing I'm happy I'm almost certainly going to be no worse and probably better off.
There is also a lot to be said for predictability. My used 6 has depreciated more than I would have liked (despite buying it nearly new and at nearly 30k less than its list price inc all options) whereas the Z4 I bought for the wife at a year old has lost hardly anything in 30 months compared to todays prices. I might be a able to buy a car at £61k but they won't get near the lease figures.
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