PCP Extension Quote - Good Deal? Can I negotiate?
Discussion
Hi all,
My current PCP agreement is coming to the end of it's 3 year term end in Feb and I've been contacted by BMW Finance to confirm whether I'm handing the car back or they'll take the final balloon payment via Direct Debit.
The car is a 2015 BMW 330d Touring xDrive M Sport Plus with a few options (upgraded brakes, 19" wheels, Pro Nav, privacy glass etc) and a service place transferred from the previous owner that runs until July 2020. It's a fantastic car hence me enquiring for an extension.
The current deal was £2.4k down, £370 a month over 3 years for 8k mile allowance with a £14.8k GMFV (on the road price was £25k). The extension quote is for a 12 month term, £335 per month, increase in mileage to 10k, £12.5k GMFV with a lower APR and mileage penalty charge than my current agreement.
Initially it sounded a good deal, is there anything I've missed? How can I verify it's good value for money? I use the 20% to 25% calculation for leases but not aware of one for PCP.
Thanks in advance.
My current PCP agreement is coming to the end of it's 3 year term end in Feb and I've been contacted by BMW Finance to confirm whether I'm handing the car back or they'll take the final balloon payment via Direct Debit.
The car is a 2015 BMW 330d Touring xDrive M Sport Plus with a few options (upgraded brakes, 19" wheels, Pro Nav, privacy glass etc) and a service place transferred from the previous owner that runs until July 2020. It's a fantastic car hence me enquiring for an extension.
The current deal was £2.4k down, £370 a month over 3 years for 8k mile allowance with a £14.8k GMFV (on the road price was £25k). The extension quote is for a 12 month term, £335 per month, increase in mileage to 10k, £12.5k GMFV with a lower APR and mileage penalty charge than my current agreement.
Initially it sounded a good deal, is there anything I've missed? How can I verify it's good value for money? I use the 20% to 25% calculation for leases but not aware of one for PCP.
Thanks in advance.
Depends on what your intentions are.
If you think you will definitely sell or hand back the car at the end of the extension period then it's worth considering.
If you think that you may keep the car even longer than the extension period then you could consider getting a personal loan for the £14800 and pay it off in full over 4 or 5 years for around the same monthly payment.
Advantages of the PCP over the personal loan are
- the guaranteed future value should you wish to hand it back at the end of the agreement
- you aren't using up all or part of your personal credit line in the event that you may wish to borrow money to fund something else in the future
- the finance company retains a liability should you have a consumer complaint about the car.
Is it a good deal? The APR and the £ cost of the interest per annum will e clearly shown on the quote / offer that you have. You can compare this with that of other loans that you are eligible for.
ETA
You asked if you could negotiate. Presumably that is with a view to getting a lower monthly payment?
The variables to achieving that would be the term of the agreement, the final payment which is largely driven by your chosen mileage, the interest rate and the amount borrowed.
I'm sure that they would offer you a lower payment in exchange for a longer term, lower mileage or increased deposit. Whether there is anything they can do about the interest rate then you will have to ask them.
If you think you will definitely sell or hand back the car at the end of the extension period then it's worth considering.
If you think that you may keep the car even longer than the extension period then you could consider getting a personal loan for the £14800 and pay it off in full over 4 or 5 years for around the same monthly payment.
Advantages of the PCP over the personal loan are
- the guaranteed future value should you wish to hand it back at the end of the agreement
- you aren't using up all or part of your personal credit line in the event that you may wish to borrow money to fund something else in the future
- the finance company retains a liability should you have a consumer complaint about the car.
Is it a good deal? The APR and the £ cost of the interest per annum will e clearly shown on the quote / offer that you have. You can compare this with that of other loans that you are eligible for.
ETA
You asked if you could negotiate. Presumably that is with a view to getting a lower monthly payment?
The variables to achieving that would be the term of the agreement, the final payment which is largely driven by your chosen mileage, the interest rate and the amount borrowed.
I'm sure that they would offer you a lower payment in exchange for a longer term, lower mileage or increased deposit. Whether there is anything they can do about the interest rate then you will have to ask them.
Edited by Wooda80 on Friday 13th December 14:44
Edited by Wooda80 on Friday 13th December 14:48
In pure financial terms it doesn't look like a great deal simply because they are charging you £4020 to cover depreciation of £2300. This of course assumes the GMFV's are accurate.
If you just want a decent car to run for the next 12 months, and there are no large impending maintenance bills on the horizon then £335 a month isn't bad compared to what would be available on lease for similar money.
However if you were looking to keep the car longer, buying looks the better option.
If you took at loan for £14800 over 48 months payments would be around £330.
If you kept the car 2 years you would owe around £7100 but you would hope the car would be worth around £10k, so a 2 year deal costs you more like £5100 or £208 a month.
If monthlies are really important to you, you could take the loan for 60 months which would reduce payments to £268 and you can still settle it after 2 years.
You take the depreciation risk on if you buy it of course.
If you just want a decent car to run for the next 12 months, and there are no large impending maintenance bills on the horizon then £335 a month isn't bad compared to what would be available on lease for similar money.
However if you were looking to keep the car longer, buying looks the better option.
If you took at loan for £14800 over 48 months payments would be around £330.
If you kept the car 2 years you would owe around £7100 but you would hope the car would be worth around £10k, so a 2 year deal costs you more like £5100 or £208 a month.
If monthlies are really important to you, you could take the loan for 60 months which would reduce payments to £268 and you can still settle it after 2 years.
You take the depreciation risk on if you buy it of course.
Thanks for all of your inputs.
I have no intention of keeping the car, I have a company car allowance that effectively covers the cost but obviously any savings are a benefit (or hive away for tyres/MOT etc) which is why a lower monthly price is attractive compared to other lease prices for a similar quality car.
I have no intention of keeping the car, I have a company car allowance that effectively covers the cost but obviously any savings are a benefit (or hive away for tyres/MOT etc) which is why a lower monthly price is attractive compared to other lease prices for a similar quality car.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff