typical used car PCP APR rates

[mitchk]

stupid question really but what should I be aiming for APR wise on a BMW PCP

The car I'm looking at is a Z4M and so far been offered PCP rates of around 10% over 4 years.

I know its quite an open ended question as its down to quite a few factors, but I would really appreciate any advice before getting screwed.

thanks

mitch

[jontysafe]

Hi Mitch, I was looking at doing the same on a 335d over three years and got them down to 8.8%, not a huge difference I know. Depends on factors such as age of car at beginning of deal. Ended up buying a Z4MC with my own funding as there are some cracking deals if you have a good credit rating. Just out of interest where are you buying from and what price? Cheers, John

[mitchk]

Hello mate - £23850 from Elms BMW

bloody hell are they taking the piss that much with the 10% ?

[GoLo]

Try David at Oracle Finance 01423 795800. They brokered a rate of 8.0% (8.4%) from Fortis which meant coming in >£70 less per month on the 530D i bought last week. They were very professional.

One word of warning depending on who owned the car that you are after... Mine was ex-BMW and had been financed by them technically meaning that it wasn't HPI clear. Fortis would not release the money without the interest in the car being cleared. The finance company would not clear the interest without the money. Had to have a couple of fairly frank 'grow up, no one is going to let the car off the forecourt until everyone is happy' conversations.

Finally, avoid the BMW GAP insurance like the plague. For a retail price of under £35K you can buy RTI (return to invoice) for £175 ish - just Google RTI GAP insurance.

[wrighty78]

In reality, the difference between 8.8% and 10% won't be huge per month.

And I think you need to look at these things "in the round". So if they're offering you a cracking trade in, or a couple of grand off the asking price, but with a slighty higher APR then you're potentially getting a better deal than straight ticket price at the lower APR (if that makes sense).

That said, I'd be interested to know about the sources of funding Jonty found...

[Deva Link]

mitchk said:

bloody hell are they taking the piss that much with the 10% ?

What are you comparing it to? APR on a PCP always looks higher than on HP or personal loan due to the way the deal is structured. Also, if you change any element in a PCP deal, ie the deposit or the final value, then the APR can change.

Look at the costs in pound notes - don't get blinded by APR.

[jontysafe]

Nice car! Logic 7 sounds great in the E86 Z4. If you`re ever near Hungerford with the new car, drop me a line.

[mitchk]

no deal unfortunately - would not go lower than 10% over 4 years

shame really I would have bought today but more around I'm sure..

I was suprised in a way cause most of the cars on the AUC site have been there quite some time now and don't seem to be moving.

mitch

[jontysafe]

Have a look at this, seems very well priced:

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?ViewItem&am...

I could be biased but better than the roadster!

[gizlaroc]

Borrowing between lenders is really, really high at the moment.

Don't walk away because of 10%, if it had a balloon then it may well be worth paying a little bit more to have a Guaranteed Future Value, which you will only get using the dealer, used cars are at a ridiculous high right now price wise so having a GFV could be a god send.

Here is a good calculator, you will see there is hardly anything between 8.8 and 10%.


8.8 = £587 a month over 48 months,
10 = £599 a month over 48 months.

That is no balloon of course.

Or probably something like....

8.8%
48 x £440
balloon £8350

10%
48 x £447
Balloon £8350



Is it worth loosing a car you want over £7 a month, less than £2 a week???

Edited by gizlaroc on Friday 9th October 23:43

[mitchk]

gizlaroc - good point but this is what I was offered

Cash Price : £23995
Deposit : £4898.26
Amount of Credit : £19096.74
Interest Charges : £5322.22
Total amount payable : £29641.22
Optional Final Rental : £9331.56

47 x £324.20
APR 10.3 %

The salesman sounded suprised when I didn't jump at this but to be honest I wanted the option to walk away around 24 months and not 30 odd.

Also, how do I work out what the lower APR rates would mean ?

[a_bloke]

mitchk said:

no deal unfortunately - would not go lower than 10% over 4 years

shame really I would have bought today but more around I'm sure..

I was suprised in a way cause most of the cars on the AUC site have been there quite some time now and don't seem to be moving.

mitch

I cant believe you're walking away from a car you otherwise wanted for a *possible* difference of less than £2 per week.

[mitchk]

that is a shame then as the finance chap and salesman didn't point this out to me. I told them at the time I was in the position to test drive and purchase there and then.

I will point out that this is not the ELMS Z4M and is one more local to me.

If I was to be honest what made me reject the deal is that the first offer that they were trying to push me into was at 14.5% which they dropped to 10.3% only after I showed them a finance offer that I had on another car. I thought this was sneaky and also didn't like the fact that they only copied the offer rather than beating it by a few quid...

[Deva Link]

mitchk said:

that is a shame then as the finance chap and salesman didn't point this out to me.

Read my post above, made on Thursday.

[gizlaroc]

mitchk said:

gizlaroc - good point but this is what I was offered

Cash Price : £23995
Deposit : £4898.26
Amount of Credit : £19096.74
Interest Charges : £5322.22
Total amount payable : £29641.22
Optional Final Rental : £9331.56

47 x £324.20
APR 10.3 %

The salesman sounded suprised when I didn't jump at this but to be honest I wanted the option to walk away around 24 months and not 30 odd.

Also, how do I work out what the lower APR rates would mean ?

You need to tell them what you want to pay, and let them come back and say yae or nae.



Good loan calculator.......

http://www.dynamic-webs.co.uk/information/car_loan...

[Deva Link]

mitchk said:

to be honest I wanted the option to walk away around 24 months and not 30 odd.

You either need HP then, or a shorter PCP term.

One of the reasons the industry likes PCP vs HP is that PCP isn't designed to be terminated early, especially if the final value is guaranteed. It's very important to realise that if it is guaranteed, it's only guaranteed at the end of the term - it's entirely possible that you could be offered less (than GFV) if you terminate early.

Edited by Deva Link on Sunday 11th October 13:12

[mitchk]

thanks so much - really helpful

[outnumbered]

mitchk said:

gizlaroc - good point but this is what I was offered

Cash Price : £23995
Deposit : £4898.26
Amount of Credit : £19096.74
Interest Charges : £5322.22
Total amount payable : £29641.22
Optional Final Rental : £9331.56

So does that mean that if you want to own the car after 4 years, you would have paid them 29641, plus the 9331 ... i.e. about £39K - on a car that is today worth £24K ? Doesn't look like such a good deal if that's correct.

[Deva Link]

outnumbered said:

mitchk said:

gizlaroc - good point but this is what I was offered

Cash Price : £23995
Deposit : £4898.26
Amount of Credit : £19096.74
Interest Charges : £5322.22
Total amount payable : £29641.22
Optional Final Rental : £9331.56

So does that mean that if you want to own the car after 4 years, you would have paid them 29641, plus the 9331 ... i.e. about £39K - on a car that is today worth £24K ? Doesn't look like such a good deal if that's correct.

No - the total amount payable is...the total amount payable!

That final rental of £9331.56 is in the Amount of Credit. That's why PCP can look cheap - you defer that amount until the end of the deal, so you're only paying off (in the case above) about £10K. The idea is that that amount (plus the deposit of course) is about the same as the depreciation would be if you'd bought the car cash.

There's a couple of other things many people don't realise about PCPs:

1) You "lose" the deposit - once it's paid it's gone. I know this might seem obvious, but I've spoken to people who have PCPs who think they're going to get the deposit back at end, like as if they'd hired a carpet cleaner or something!

2) You're paying interest on the final payment right through the deal - because you're borrowing it for the length of the agreement and only paying it off right at the end.


To roughly summarise the above agreement:
You get a £24K car, by paying £5K deposit, and paying off another £10K over the life of the deal which leaves £9K to pay.

You pay interest charges on the £10K+£9K = £19K, over the life of the deal.

Edited by Deva Link on Sunday 11th October 13:35

[Goodfella]

I have just been through all this, to me PCP deals are only worth while if you are putting a small deposit down 1k - 2k because at the end you are left with nothing or the need to refinance.

On the deal I did I worked out that if I sold the car after 42 months (the length of the PCP) for the GFV I would have 2.5k in my pocket. That was using a 60 month HP deal. That include deducting the the extra a month the HP deal cost. You could say that I may find it hard to get the GFV, but I dont think there is any chance that I wont get 2.5k less that the GFV, and I wont be any worse off.

Ross