640D depreciation
Discussion
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.
converted lurker said:
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.
You are missing something.With say an average BMW these days costing £35,000, how long would it take someone to save that up? Say £400 a month? So thats just over 7 years. Of setting aside £400 a month.
Once they've got there, they then buy the car with £35,000 cash. In three years time the car will be worth half that. So just to replace it like with like again after 3 years, you'd need to save another £500 a month, just to cover depreciation. Then you buy another car, drive it three years, and save £500 a month to cover depreciation.
My wife has a £35,000 BMW on a PCP deal that cost her £3,000 down and £309 a month. That works out at £392 a month over the three years. She'll then use the little bit of equity in the deal and add a bit of cash in to take her up to £3,000 again and repeat.
Your way - you're saving £400 for seven years, then setting aside £500 a month to cover depreciation, then repeat.
PCP route - approx £400 a month, every three years you get a new car.
laingy said:
BMW push finance because they make money out of it. They loan you the money and it is secured on an asset (their assets), and generally on a 10& apr (in the small print). Easy money
I dont necessarily agree. I believe BMW finance is a mechanism for selling cars. They can structure the deals to suit selling the cars they want to sell.I dont think BMW would sell too many cars if they were £30,000 cash and no finance available.
I agree with that, but generally the finance rate in most deals will be about 10% e.g. the finance helps to sell cars but also make money. I never normally look at the list/discount as I think they are all made up now. They want us to belive we are getting a deal when actually they are quoting a list price which cars are never sold at. The same philosophy used in selling sofas at DFS.
daemon said:
My wife has a £35,000 BMW on a PCP deal that cost her £3,000 down and £309 a month. That works out at £392 a month over the three years.
I agree with the sentiments in your post but I'm curious as to which £35k BMW you can get for £309/month over 3 years with only £3k down? Even assuming a relatively modest annual mileage I'd have thought most £35k BMW's would cost rather more than that!JNW1 said:
daemon said:
My wife has a £35,000 BMW on a PCP deal that cost her £3,000 down and £309 a month. That works out at £392 a month over the three years.
I agree with the sentiments in your post but I'm curious as to which £35k BMW you can get for £309/month over 3 years with only £3k down? Even assuming a relatively modest annual mileage I'd have thought most £35k BMW's would cost rather more than that!If you got a price on one of those now you're prob be looking in the region of £3-4k down + £400+/mon.
Great PH bicker this..
Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
- Finance company is prepared to take a punt on the GFV of the car being higher than it turns out to be.
If anyone knows an accountancy trick that does it a different way and doesn't involve a VAT fraud then you shouldn't be on here, you should be in the Cayman islands enjoying life because you will have made a lot of money in life.
Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
- Finance company is prepared to take a punt on the GFV of the car being higher than it turns out to be.
If anyone knows an accountancy trick that does it a different way and doesn't involve a VAT fraud then you shouldn't be on here, you should be in the Cayman islands enjoying life because you will have made a lot of money in life.
Phateuk said:
It's all about timing. My M135i was £1800 down and £301/mon on a "list" price of ~£33k.
If you got a price on one of those now you're prob be looking in the region of £3-4k down + £400+/mon.
I can see that you could get a low monthly payment on the back of a special finance deal and/or a large discount but to get down to £300/month I struggle to understand how you can be financing £32k (i.e £35k less £3k); doesn't quite gel to me unless the vehicle concerned has a fantastic residual! If you got a price on one of those now you're prob be looking in the region of £3-4k down + £400+/mon.
JNW1 said:
daemon said:
My wife has a £35,000 BMW on a PCP deal that cost her £3,000 down and £309 a month. That works out at £392 a month over the three years.
I agree with the sentiments in your post but I'm curious as to which £35k BMW you can get for £309/month over 3 years with only £3k down? Even assuming a relatively modest annual mileage I'd have thought most £35k BMW's would cost rather more than that!There was a very narrow window in which BMW were doing a "complementary upgrade" from SE to M Sport, a £1000 deposit contribution and the dealers were still giving close to 10% off the car, so the cars list price came to around £35,000 but the "real" price was something like £29K. The same car would previously have worked out at around £400 a month and probably would now.
As someone else said, its all about timing
Interestingly the 19 inch wheel upgrade didnt cost anything in terms of monthly payment or deposit as the cost of them as an upgrade was totally offset by the increase in the residual value.
Edited by daemon on Thursday 1st May 19:27
Jon1967x said:
Great PH bicker this..
Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Finance company is usually owned by the manufacturer, and used to subsidise the car on the marketplace.Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Jon1967x said:
- Finance company is prepared to take a punt on the GFV of the car being higher than it turns out to be.
Its BMW finance (or whoever the manufacturer is) who gets the car back. They'll auction them off at closed auctions back to the main dealers.Edited by daemon on Thursday 1st May 19:28
It all sounds a bit mate-of-mate this timing business when for some reason BMW offload via lease/finance cars which are nicely spec'd, popular and selling well at hefty discount only available to those willing to pay on credit.
People seem to take the fantasy list price and then compare it to the Trade trade in price then think they're monthly premium adds up to less, often ignoring the initial deposit. Broadspeed were offering me a brand new UK 535d with pro nav and visibility and business speakers for £40400 delivered. That's a huge chunk off list. The BMW main dealer with a one year old same car chewed my ear off about a personal lease deal which would have had me paying loads more for a year older car.
BMW Finance THEMSELVES are getting the money to lend you to buy their product at a bond cost of around 2.125%
BMW (UK) Capital plc 2.125% p.a. CHF 500 Mio. 29. Jun 10 29. Jun 15 CH0113927575
http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bm...
So add their operating costs on and it must be costing them 3% a year to lend you your £30k for three years. That HAS to be being covered by you.
If I just take a £35k chunk out my savings/existing motor and buy a car outright and save the £400 a month lease payments into my ISA and hey presto after three years I've got a part-ex plus £14,400 plus £1,000 interest and I can actually scare the next BMW dealer with changing to a different marque as I'm not dependent on his bulls
t guaranteed future value to give me the equity to start the next credit agreement.
Nobody beats depreciation but nobody dodges interest either.
People seem to take the fantasy list price and then compare it to the Trade trade in price then think they're monthly premium adds up to less, often ignoring the initial deposit. Broadspeed were offering me a brand new UK 535d with pro nav and visibility and business speakers for £40400 delivered. That's a huge chunk off list. The BMW main dealer with a one year old same car chewed my ear off about a personal lease deal which would have had me paying loads more for a year older car.
BMW Finance THEMSELVES are getting the money to lend you to buy their product at a bond cost of around 2.125%
BMW (UK) Capital plc 2.125% p.a. CHF 500 Mio. 29. Jun 10 29. Jun 15 CH0113927575
http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bm...
So add their operating costs on and it must be costing them 3% a year to lend you your £30k for three years. That HAS to be being covered by you.
If I just take a £35k chunk out my savings/existing motor and buy a car outright and save the £400 a month lease payments into my ISA and hey presto after three years I've got a part-ex plus £14,400 plus £1,000 interest and I can actually scare the next BMW dealer with changing to a different marque as I'm not dependent on his bulls
t guaranteed future value to give me the equity to start the next credit agreement.Nobody beats depreciation but nobody dodges interest either.
daemon said:
Jon1967x said:
Great PH bicker this..
Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Finance company is usually owned by the manufacturer, and used to subsidise the car on the marketplace.Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Jon1967x said:
- Finance company is prepared to take a punt on the GFV of the car being higher than it turns out to be.
Its BMW finance (or whoever the manufacturer is) who gets the car back. They'll auction them off at closed auctions back to the main dealers.Edited by daemon on Thursday 1st May 19:28
Jon1967x said:
daemon said:
Jon1967x said:
Great PH bicker this..
Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Finance company is usually owned by the manufacturer, and used to subsidise the car on the marketplace.Only way PCP can be cheaper is if one or both of the following basic facts is true
- Finance company can get the car cheaper than you can (or a subsidy that you can't get maybe through a bulk purchase etc, or manufacturer subsidising the finance - it all amounts to the same thing, its cash that someone is prepared to give but not to you directly)
Jon1967x said:
- Finance company is prepared to take a punt on the GFV of the car being higher than it turns out to be.
Its BMW finance (or whoever the manufacturer is) who gets the car back. They'll auction them off at closed auctions back to the main dealers.Edited by daemon on Thursday 1st May 19:28
converted lurker said:
It all sounds a bit mate-of-mate this timing business when for some reason BMW offload via lease/finance cars which are nicely spec'd, popular and selling well at hefty discount only available to those willing to pay on credit.
Its not really. Right place at right time. Certainly was for us. And a matter of keeping an eye on their "offers" section. Plus theres various threads running on here.converted lurker said:
People seem to take the fantasy list price and then compare it to the Trade trade in price then think they're monthly premium adds up to less, often ignoring the initial deposit.
No. Never done that. Ever. And i dont know of anyone who has. converted lurker said:
Broadspeed were offering me a brand new UK 535d with pro nav and visibility and business speakers for £40400 delivered. That's a huge chunk off list. The BMW main dealer with a one year old same car chewed my ear off about a personal lease deal which would have had me paying loads more for a year older car.
Bearing in mind that Broadspeed simply put you in touch with the main dealer who'll do that deal, why not buy that car on a PCP deal, then you can keep you £40K in the bank? You may well be able to take advantage of a further finance contribution from BMW?converted lurker said:
BMW Finance THEMSELVES are getting the money to lend you to buy their product at a bond cost of around 2.125%
BMW (UK) Capital plc 2.125% p.a. CHF 500 Mio. 29. Jun 10 29. Jun 15 CH0113927575
http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bm...
So add their operating costs on and it must be costing them 3% a year to lend you your £30k for three years. That HAS to be being covered by you.
Its covered by the profits they make on the car. Its better business to offer finance incentives than to discount their cars heavily unnecessarily. BMW (UK) Capital plc 2.125% p.a. CHF 500 Mio. 29. Jun 10 29. Jun 15 CH0113927575
http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bm...
So add their operating costs on and it must be costing them 3% a year to lend you your £30k for three years. That HAS to be being covered by you.
converted lurker said:
If I just take a £35k chunk out my savings
Ah, one of our resident Powerfully Built Company Directors!Sorry, i hadnt realised.
converted lurker said:
/existing motor and buy a car outright and save the £400 a month lease payments into my ISA and hey presto after three years I've got a part-ex plus £14,400 plus £1,000 interest
And you've turned £35,000 of savings into £17,500 worth of car. Doesnt make much sense to me?Why not just pay £400 a month and keep all your cash in the bank?
converted lurker said:
and I can actually scare the next BMW dealer with changing to a different marque as I'm not dependent on his bullst guaranteed future value to give me the equity to start the next credit agreement.
Clearly you dont understand - With a PCP deal, you dont have to stick with any manufacturer. Come end of term you take your car to wherever and get a value for it. If the value is greater than the residual, you've got equity to play with. You are under no obligation whatsoever to take it back to the dealer or to that brand.t guaranteed future value to give me the equity to start the next credit agreement.converted lurker said:
Nobody beats depreciation but nobody dodges interest either.
So why not use somebody elses money via cheap interest and a subsidised contribution to fund the depreciation?Edited by daemon on Thursday 1st May 20:55
Clearly I do understand that the BMW dealer can offer you a better trade in value on your BMW than the Audi dealer can because he's a specialist retailer of that brand with the in house ability to present the car properly to a customer base 100% of whom are looking for BMWs. It's a brand lock in strategy and I don't fancy negotiating from that starting position.
You seem to think that two identical cars will depreciate at a different rate because one is owned by the driver and the other is owned by a finance company. I don't see how.
The money for your finance deal came from the bond market. It cost something. Your car on finance therefore cost BMW more money to put your bum in it than my bum where I put it on my debit card (£2 fee max). How can it not be cheaper for me to have the next part-ex cash accruing in the bank earning interest than to be paying the same depreciation costs plus BMWs finance cost?
The numbers I was given when I crunched them clearly showed higher cost of ownership under credit.
Yet the internet seems full of people casually shucking down £5,000 then signing up to a three year mortgage-sized payment schedule and them giving the car back when it's barely run in. Perhaps I'm still missing something.
I don't get the reference to powerfully built company directors - it must be an in joke, let me in on it. I'm an airline captain if it makes any difference to the punch line.
You seem to think that two identical cars will depreciate at a different rate because one is owned by the driver and the other is owned by a finance company. I don't see how.
The money for your finance deal came from the bond market. It cost something. Your car on finance therefore cost BMW more money to put your bum in it than my bum where I put it on my debit card (£2 fee max). How can it not be cheaper for me to have the next part-ex cash accruing in the bank earning interest than to be paying the same depreciation costs plus BMWs finance cost?
The numbers I was given when I crunched them clearly showed higher cost of ownership under credit.
Yet the internet seems full of people casually shucking down £5,000 then signing up to a three year mortgage-sized payment schedule and them giving the car back when it's barely run in. Perhaps I'm still missing something.
I don't get the reference to powerfully built company directors - it must be an in joke, let me in on it. I'm an airline captain if it makes any difference to the punch line.
converted lurker said:
Clearly I do understand that the BMW dealer can offer you a better trade in value on your BMW than the Audi dealer can because he's a specialist retailer of that brand with the in house ability to present the car properly to a customer base 100% of whom are looking for BMWs. It's a brand lock in strategy and I don't fancy negotiating from that starting position.
But that applies whether you have a car on finance or not? You go to a BMW dealer with a 3 year old 535d and providing he sees it as something he wants for stock, he'll give you a better deal that Audi or Merc? Wont matter about whether or not its on finance?converted lurker said:
You seem to think that two identical cars will depreciate at a different rate because one is owned by the driver and the other is owned by a finance company. I don't see how.
I dont think that, and i never said that.converted lurker said:
The money for your finance deal came from the bond market. It cost something. Your car on finance therefore cost BMW more money to put your bum in it than my bum where I put it on my debit card (£2 fee max). How can it not be cheaper for me to have the next part-ex cash accruing in the bank earning interest than to be paying the same depreciation costs plus BMWs finance cost?
You're missing the point. If BMW sell a car to a cash buyer, they may make £10,000 out of it. If they sell other cars on a subsidised finance deal, then maybe they make make £7,000 on those units. Clearly they are happy to go for volume sales these days, rather than a small amount of transactions. Its not that you necessarily end up paying MORE, its that BMW are happy to take LESS, for the guaranteed volume. Not saying those are the exact figures, but dont "assume" that you are getting the best out of them by paying cash, and that a finance buyer is getting a worse deal.converted lurker said:
The numbers I was given when I crunched them clearly showed higher cost of ownership under credit.
Correct me if i am wrong here, but did i not read on a previous post of yours you do big miles? Clearly in your circumstances a cash deal may well stack up better against a finance deal that takes into account above average miles. The mistake you are making is extrapolating your subjective viewpoint onto every other buying.converted lurker said:
Yet the internet seems full of people casually shucking down £5,000 then signing up to a three year mortgage-sized payment schedule and them giving the car back when it's barely run in. Perhaps I'm still missing something.
That suits a lot of people. They want a new car every three years. My wife does. Good job, lots of expendable income, likes a nice car with no hassle. She doesnt want to run a car until theres starship miles. She doesnt want to buy second hand. She wants to buy new to her spec, then rinse and repeat. Does she pay more for the privilege than she might otherwise be able to do over buying second hand and keeping it for years? Yes. Does that make what she does "wrong"? No. Does that make what you do "wrong"? No.converted lurker said:
I don't get the reference to powerfully built company directors - it must be an in joke, let me in on it. I'm an airline captain if it makes any difference to the punch line.
Pistonheads seems to have a very high proportion of people sitting on lots of cash and in "high flying" jobs (no pun intended) compared to the Real World. In the Real World 90% of people pay with finance. On here, a lot of people seem to have access to vast mountains of personal cash to buy everything with, go to the gym every day, run several companies, etc - of course with no evidence to support any of it. Hence the poke.I'm a little confused though. From other threads you seem to buy a car, run it for years, pile the miles on and repeat. You spoke recently of looking for the first of the F10's at around £15,000 to upgrade your e60, but now you're saying that you're in the market for a £40K car, and that buying cash stacks up better than finance?
Clearly it would if you're doing big miles, and i certainly wouldnt be putting £40K of either my own Hard Earned OR a finance deal given the depreciation you'll suffer?
It just seems at odds with your "i've done my homework" and careful approach to be prepared to take a severe bath bunging high miles on a new or nearly new car?
I do 20,000 miles a year. I have indeed in the past bought 4yr old large engined bmw e39/e60's and taken them round to around 180,000 miles and now it's time for the f10 chapter of that. However, having now repaid my mortgage early I am in the position to change strategy and consider anything up to and including a broker sourced new 535d. Or maybe stick with a leggy f10 for £14k and add a used boxster to the garage and go down the two car route. Problem with that is the first 981 's are still in the mid 30's which feels like too much for a toy still and everything that isn't a 981 doesn't really float my boat sports car wise. I need the oil price to drop sending the value of airline shares soaring. I'm fairly sure I haven't got any tins of custard in the house else I could take you a picture of one on the dashboard at 38,000ft later today - will a packet of prawn cocktail crisps do?
You seem to think that the finance profits are subsidising the car sale profits. I can't understand this. The car cost the same to produce, the finance is and extra cost for BMW to supply - surely the two are added together and passed to you.
The only way I can believe the finance route works is if the credit cost APR is lower than the cost of your mortgage or other debt costs which you would otherwise have to service with the cash that you do have for the term of the lease/hire purchase. Or if it's very close there may be some value in shifting some depreciation free fall risk onto the manufacturer which would have been useful during the period say 2007-2010.
So far I've openly negotiated the best price on a car as a straight purchase and then had my Dad get a quite for the same car on credit and each time there always seems a chunky charge for the credit option. There HAS to be a good reason why all the big shiny dealerships push the credit route so hard...
You seem to think that the finance profits are subsidising the car sale profits. I can't understand this. The car cost the same to produce, the finance is and extra cost for BMW to supply - surely the two are added together and passed to you.
The only way I can believe the finance route works is if the credit cost APR is lower than the cost of your mortgage or other debt costs which you would otherwise have to service with the cash that you do have for the term of the lease/hire purchase. Or if it's very close there may be some value in shifting some depreciation free fall risk onto the manufacturer which would have been useful during the period say 2007-2010.
So far I've openly negotiated the best price on a car as a straight purchase and then had my Dad get a quite for the same car on credit and each time there always seems a chunky charge for the credit option. There HAS to be a good reason why all the big shiny dealerships push the credit route so hard...
Edited by converted lurker on Friday 2nd May 00:49
Edited by converted lurker on Friday 2nd May 00:55
converted lurker said:
So far I've openly negotiated the best price on a car as a straight purchase and then had my Dad get a quote for the same car on credit and each time there always seems a chunky charge for the credit option. There HAS to be a good reason why all the big shiny dealerships push the credit route so hard...
I don't doubt what you're saying but for the vast majority of people the outright purchase of relatively expensive cars isn't an option because they simply don't have the capital to do it; the choice is between finance and not having the car (or a cheaper car) rather than between finance and outright purchase! Even for those that do have the capital available they may choose to put their money into an investment that appreciates rather than a car that depreciates; as others have said, it's all down to what suits individual circumstances.I've never done a personal lease myself but if you land on a special offer for something you want they can appear quite attractive; if you can lease for two or three years and the repayments are similar (or less) to what the car would lose in depreciation over the same period I'm not sure it makes a lot of sense to tie-up your capital and buy the car? Again, though, that may not fit for someone like yourself who chooses to buy a car, keep it for a while and put a lot of miles on it; however, it's more horses for courses rather than right or wrong IMHO!
JNW1 said:
I don't doubt what you're saying but for the vast majority of people the outright purchase of relatively expensive cars isn't an option because they simply don't have the capital to do it; the choice is between finance and not having the car (or a cheaper car) rather than between finance and outright purchase! Even for those that do have the capital available they may choose to put their money into an investment that appreciates rather than a car that depreciates; as others have said, it's all down to what suits individual circumstances.
I've never done a personal lease myself but if you land on a special offer for something you want they can appear quite attractive; if you can lease for two or three years and the repayments are similar (or less) to what the car would lose in depreciation over the same period I'm not sure it makes a lot of sense to tie-up your capital and buy the car? Again, though, that may not fit for someone like yourself who chooses to buy a car, keep it for a while and put a lot of miles on it; however, it's more horses for courses rather than right or wrong IMHO!
In broad terms I agree although we just need to be careful of semantics. "Put their money into an investment that appreciates rather than a car that depreciates" could just as easily be written as "put their money into a car avoiding interest payments rather than an investment that may not appreciate if the stock market falls or gives bugger all interest in a cash account'I've never done a personal lease myself but if you land on a special offer for something you want they can appear quite attractive; if you can lease for two or three years and the repayments are similar (or less) to what the car would lose in depreciation over the same period I'm not sure it makes a lot of sense to tie-up your capital and buy the car? Again, though, that may not fit for someone like yourself who chooses to buy a car, keep it for a while and put a lot of miles on it; however, it's more horses for courses rather than right or wrong IMHO!
And nobody knows what the actual depreciation on a car will be until you come to sell it. Taking a deal with a GFV can move that risk to someone else but you pay for that.
I'd not a financial advisor but having some savings you can draw on if needed is sage advice learnt at the university of life so I'd never advocate pouring your last penny into buying a car but then I'd not advise anyone to stretch themselves on credit either. If your only sensible choice is finance then that's what you need to do if you're determined to own that car. I and others struggle with the notion that some here believe that finance means you can have your cake and eat it, and the cost of owning a car on say a pcp is massively cheaper than buying outright.
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