BMW Dealer Finance Good or Bad ?

[mickys]

Hi guys - just trying to get an feel of what a good to reasonable deal would be on PCP for a £25K car - so far the dealer has offered me a deal over 4 years at what seems to be an apr of 13.8% which I think is high ?

Is this negotiable or a fixed rate at any BMW dealer ? the total deal would cost me an extra £7K at the end of four years which again I think this is alot ?

As you can tell, Ive always paid in cash for my cars so have never had finance at all. What I would like to do is buy a car on PCP have it for say 2 years and then swap it so I've always got a reasonably new car.

Could any of you give me some pointers to how this is done and what a descent apr is - the dealer is just trying to confuse me with figures I think..

thanks in advance,

micky

[Talkwrench]

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

[Podie]

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

Unless they have a 0% deal, go elsewhere... be quick though - credit crunch is coming...

[Donut]

mickys said:

Hi guys - just trying to get an feel of what a good to reasonable deal would be on PCP for a £25K car - so far the dealer has offered me a deal over 4 years at what seems to be an apr of 13.8% which I think is high ?

Is this negotiable or a fixed rate at any BMW dealer ? the total deal would cost me an extra £7K at the end of four years which again I think this is alot ?

As you can tell, Ive always paid in cash for my cars so have never had finance at all. What I would like to do is buy a car on PCP have it for say 2 years and then swap it so I've always got a reasonably new car.

Could any of you give me some pointers to how this is done and what a descent apr is - the dealer is just trying to confuse me with figures I think..

thanks in advance,

micky

APR's are always higher on PCP deals than on HP, ask for the flat rate that will tell you if it's good or not.

Currently the low rate plus deposit contribution that is offered on certian models beats anything that any bank can/could come up with.

I don't see how the dealer can confuse you, it's dead simple.
Put £X down as a deposit and pay £X over 23 months followed by 1 final payment, if the car is worth more you get the money towards a new one, if it is worth less then give it bank to BMWFS or if you so wish pay it and keeep it.

I would recomend that you put down as small a deposit as possible to achieve an affordable monthly payment.

[Dr Jekyll]

Donut said:

I would recomend that you put down as small a deposit as possible to achieve an affordable monthly payment.

Surely you want as large a deposit as possible to reduce the interest you end up paying?

[bennno]

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

Not the case in my experience, many manufacturers are relatively cash rich and use cheap finance as a method for selling lots of cars whilst banks lend purely to make money for doing so.

13.X% is high, unless its a very old car. I would suggest you tell the sales chap in the garage that the car looks fine for you to buy but you think their finance is expensive so you have booked a meeting with your bank early next week. Say if he can improve it to 10% in the meantime that you would go with him anyway and pay deposit.

Bennno

[Donut]

Dr Jekyll said:

Donut said:

I would recomend that you put down as small a deposit as possible to achieve an affordable monthly payment.

Surely you want as large a deposit as possible to reduce the interest you end up paying?

Depends on your view point and how regularly you can build large lumps of cash.

[Talkwrench]

I still maintain that if you have cash in your hand and a car in mind, you'll get a far better price from a dealer than you would being tied in with a finance package.
Try phoning round a few dealers enquiring about a straight cash purchase. Hammer them as low as you can and see what they come up with.

[mickys]

having a look at a couple of x5's tomorrow

thanks

[doodlebug]

OP said:

BMW Dealer Finance Good or Bad ?

Not if it is as good value as their warranty.

[pgilc1]

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

And a bank will offer a PCP / residual deal on your bmw will they?

[pgilc1]

Talkwrench said:

I still maintain that if you have cash in your hand and a car in mind, you'll get a far better price from a dealer than you would being tied in with a finance package.
Try phoning round a few dealers enquiring about a straight cash purchase. Hammer them as low as you can and see what they come up with.

Sorry, this is plain wrong.

The price you buy your car for will be independent of the finance deal. If its not then the dealer is trying to hoodwink you.

Always negotiate the price of the car THEN the finance arrangements, dont let the dealer convince you of 'easy payments' and being 'within your budget'

The dealer makes money off the finance deal too thus will welcome your financed purchase with open arms, not offer you less discount because of it.

[pgilc1]

bennno said:

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

Not the case in my experience, many manufacturers are relatively cash rich and use cheap finance as a method for selling lots of cars whilst banks lend purely to make money for doing so.

13.X% is high, unless its a very old car. I would suggest you tell the sales chap in the garage that the car looks fine for you to buy but you think their finance is expensive so you have booked a meeting with your bank early next week. Say if he can improve it to 10% in the meantime that you would go with him anyway and pay deposit.

Bennno

The o/p is buying a used car, probably 2-3 years old.

[Deva Link]

pgilc1 said:

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

And a bank will offer a PCP / residual deal on your bmw will they?

Of course they will. You can even get one at Sainsbury's:
http://sainsburysbank.whatcar.com/pcp.asp

[pgilc1]

Deva Link said:

pgilc1 said:

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

And a bank will offer a PCP / residual deal on your bmw will they?

Of course they will. You can even get one at Sainsbury's:
http://sainsburysbank.whatcar.com/pcp.asp

Not any use to the o/p as its only with new cars and only ones that they supply, but i concede thats an example of a bank offering a PCP deal

Edited by pgilc1 on Thursday 15th November 22:18

[Deva Link]

pgilc1 said:

Deva Link said:

pgilc1 said:

Talkwrench said:

Im my experience, there is no such thing as a good financial deal form a car manufacturer!
If you require finance, the bank will always be cheaper by a considerable margin.
BMW are best at selling BMW's. Banks are usually pretty good at selling money.....

And a bank will offer a PCP / residual deal on your bmw will they?

Of course they will. You can even get one at Sainsbury's:
http://sainsburysbank.whatcar.com/pcp.asp

Not any use to the o/p as its only with new cars that they supply, but i concede thats an example of a bank offering a PCP deal

The used bit only became apparent later.

I'm bemused why someone looking for to change car every 2 yrs would be looking at 4 yr deals - getting out of a deal halfway through is always going to have you on the back foot.

And regarding the big deposit points, it important ('cos I'm sure many people don't twig this) to realise that effectively the deposit is gone the moment it's paid. I've seen people use their current car as deposit and get quite low monthly payments and they think it's great. Then at the end of the deal they've got nothing because, surprise surprise, the car is only worth the same (or less) than the guranteed final value.

[taffyracer]

BMW Finance is at least .5% more than anything you can get elsewhere, Lombard do some good deals, if you have to go BMW finance then insist on balanced payments and no more than2% of FHBR, PCP's are crap unless you know you'll keep the car for the period that you are financing it over, change early and you'll get clobbered

[bennno]

taffyracer said:

BMW Finance is at least .5% more than anything you can get elsewhere, Lombard do some good deals, if you have to go BMW finance then insist on balanced payments and no more than2% of FHBR, PCP's are crap unless you know you'll keep the car for the period that you are financing it over, change early and you'll get clobbered

Another load of rubbish, if the amount borrowed is less than 25k the current law stipulates a maximum early termination penalty of 2 months interest irrespective of whether its a pcp or straight finance.

The halves and thirds rule applies to sub 25k finance also. i.e. paid more than a third and goods cannot be taken without a court order or paid more than a half and you can give back with no consequence (even if you did a million miles and car is worthless). You dont get this if you just take a straight bank loan.

Balance payments are not as attractive as they were due to current interst rates and its not as easy to get 2% above unless you borrow more than £25k which reduces the risks as the halves and thirds rule doesnt apply. At the moment its generally 2.5-3% over base.

Bennno

[Terry Tibbs]

the only way, that i know of, to have a four year deal then swap after two is through traditional hp
which always seem cheaper than pcp

its the way i've purchased the last four cars, hp over five years reach the magic figure in the contact about 50% or so - return the goods in reasonable condition - no mileage stipulations just return them in good condition

in which time i've saved for the next deposit

i have also been told that you can do that with leasing, hand i back after 30 months or so but i've no idea if this is correct

[Chippers54]

bennno said:

taffyracer said:

BMW Finance is at least .5% more than anything you can get elsewhere, Lombard do some good deals, if you have to go BMW finance then insist on balanced payments and no more than2% of FHBR, PCP's are crap unless you know you'll keep the car for the period that you are financing it over, change early and you'll get clobbered

Another load of rubbish, if the amount borrowed is less than 25k the current law stipulates a maximum early termination penalty of 2 months interest irrespective of whether its a pcp or straight finance.

The halves and thirds rule applies to sub 25k finance also. i.e. paid more than a third and goods cannot be taken without a court order or paid more than a half and you can give back with no consequence (even if you did a million miles and car is worthless). You dont get this if you just take a straight bank loan.

Balance payments are not as attractive as they were due to current interst rates and its not as easy to get 2% above unless you borrow more than £25k which reduces the risks as the halves and thirds rule doesnt apply. At the moment its generally 2.5-3% over base.

Bennno

This is correct I think you will find that in most cases the average finance term written is very different from the actual length it runs e.g. most contracts are written for 36/37 months but the majority only run about 25 months. This is often for various reasons, people getting bored of the car etc but quite often people get to an equity point where the car is worth more than the outstanding finance which makes it easy to change into a new vehicle.

You might also find that BMW Financial Services will offer a better residual value than people like Lombard which means payments should be lower.

At the moment with the current deposit contribution offers across a range of models BMW Finance is pretty competitive. I don't think that these offers are available on used cars so not necesarily relevant for the OP.

Either way I reckon you could get it down a couple of %