BMW Select finance and VED

[paulsheppard]

Just about to sign on the line for a 5dr BMW 118d M Sport. Reg Mar 10. 13,000 miles. Bluetooth, space grey from main dealer. Asking price £17,950 negotiated to £16,950. Next service parts and labour included. PCP plan negotiated with £1000 deposit, then £290.95 per month for 47 months (total £14,674.65). MGFV set at £6500. I see this as worst case costing £4000 over screen price to keep the car, although I am planning to out it after 2.5 to 3 years. The rate is something in the ballpark of 9.9-10.3% APR.

Q. Is this a fair deal?
Q. Can you advise if road tax, albeit only 30 quid, is included in all PCP agreements and if so, where I would find the reference to show BMW.

Any advice very gratefully received.

P

[Gruber]

paulsheppard said:

Just about to sign on the line for a 5dr BMW 118d M Sport. Reg Mar 10. 13,000 miles. Bluetooth, space grey from main dealer. Asking price £17,950 negotiated to £16,950. Next service parts and labour included. PCP plan negotiated with £1000 deposit, then £290.95 per month for 47 months (total £14,674.65). MGFV set at £6500. I see this as worst case costing £4000 over screen price to keep the car, although I am planning to out it after 2.5 to 3 years. The rate is something in the ballpark of 9.9-10.3% APR.

Q. Is this a fair deal?
Q. Can you advise if road tax, albeit only 30 quid, is included in all PCP agreements and if so, where I would find the reference to show BMW.

Any advice very gratefully received.

P

Well I collected my late-59 plate 3-door yesterday (again, a 118d M Sport) and the deal you've negotiated is slightly better than the one I got, so I'd say you've not done too badly there.

And no - road tax isn't included. Although at only 30 quid the dealer I bought from was happy to throw in the first year's tax.

[andy665]

Not a bad deal but be prepared to be in negative equity after 2.5 years, by then the new 1 series will be out, residuals will have dropped and the GMFV offers no protection before the natural end of the agreement

[R26Andy]

If your planning to "out" earlier than the end of the PCP why do it in the first place? Why not just got for a 24, 30 or 36 month PCP instead. The difference in payments is very small as (obviously) the GFV increases on shorter agreements.

I done a 30 month agreement (£313 a month on a very similar price car to yours) and its perfect me as I will be able to hand the car back at exactly the time I will be bored and will not have to pay for servicing it or putting new tyres on during the agreement (new tyres just put on and 2 year service package negotiated into the deal).

Edited by R26Andy on Saturday 15th January 12:49

No road tax isnt included

Edited by R26Andy on Saturday 15th January 12:52

[paulsheppard]

Great replies thank you.new member.so,should I explore a 3 year pcp which with a higher mgfv.what are the benefits? Or get a quote for straight hp? (don't want to end up in negative equity..again!).

Just as importantly.I really am keen on this car and it's low costs.do you think it's still ok to buy a 118d m sport with a new 1 series looming in 2011/12? Should I go for a model with less threat of obsolescence?

All thoughts and opinions v welcome.

[R26Andy]

PCP deals are only good value if you keep it for the full term, so you need to work out how long you want to keep the vehicle. Get them to provide you figures for 24, 30 and 36 month terms to help make the decision.

You will always be in negative equity at the start of a finance agreement (PCP or HP) IF your only putting down a £1k deposit (6%). You need to put down a deposit of at least the depreciation that will occur when you drive out the showroom with a new car - around 20%. If its used car this can be slightly less, say 15%.

[gizlaroc]

I don't see there being a problem doing it over 48 or even 60 months myself, the way I look at it is if you do want to stay in it for another 6 months at least you can.
It doesn't make that much difference to the monthly amounts and you get back the charges you have not used, so you don't pay the interest for the months you are not keeping it for.
Problem with 24 month deals is you have to walk away and BMW don't let you refinance, you would have to go back to the dealer and buy it again!

Some brands will refinance it for you.

I paid £18450 for our 9 month old 123d M-Sport Auto, and with £1450 deposit it was £270 a month with an £7300 balloon over 48 months.

That makes it seem like far more of a bargain than the 118d to be honest.

[R26Andy]

I would do a search for "handing car back early on PCP" before taking out a 48 or 60 month that you dont need.

[gizlaroc]

With BMW it makes absolutely no difference now, as it probably doesn't with any lender.
It all changed in April 2008, the way they worked out settlement figures was looked at by the regulators and they stamped down hard on the rules, they can no longer front load the interest, or if they do they have to refund every penny for the period it is not borrowed over.

[R26Andy]

Point taken, but going back to the OPS concern about negative equity and the OP stating he will hand it back at around 30-36 months - the difference between handing the car back at 30 months on a 30 month agreement and terminating at 30 months on a 48 or 60 month agreement is negative equity.

Even if the OP only get finance charges for the part of the agreement up until termination, with only £1k deposit its highly unlikley the car is going to be worth what is owed on the agreement as the OP will have lost around £3k the moment it leaves the forecourt.

Therefore a 30 month contract (say and additional £20/month = £600) would allow him to hand it back while with nothing further to pay while a 48/60 month contract would cost him about £2k to settle.

[R26Andy]

Point taken, but going back to the OPS concern about negative equity and the OP stating he will hand it back at around 30-36 months - the difference between handing the car back at 30 months on a 30 month agreement and terminating at 30 months on a 48 or 60 month agreement is negative equity.

With only £1k deposit its highly unlikley the car is going to be worth what is owed on the agreement as the OP will have lost around £3k the moment it leaves the forecourt.

Therefore a 30 month contract (say and additional £20/month = £600) would allow him to hand it back while with nothing further to pay while a 48/60 month contract would cost him about £2k to settle.

[gizlaroc]

I agree there, if you want an easy life and to trade it back in you will get hit hard.

[paulsheppard]

Thanks again all. So BMW now can no longer front load interest. So I am not failing to repay capital in the early part of the agreement? Good news, right? So if I should renegotiate a shorter PCP term, should this greatly, or at all, affect the rate? Also, if it is so much to my advantage to have a shorter agreement and hence not risk negative equity, then why does anyone ever opt for a 4 or 5 year PCP? (Assuming that the monthly payment isn't greatly different between a 3 year and a 4/5 year deal).

Am I making any sense? I don't want to put more money in, I don't want the car forever. I'd like to think that I will go for the best possible iteration of this PCP deal. Any more comments welcome.

ps. To the 123d driver. Yes, your figures are somewhat similar but on a more expensive car in your case. I wonder however if rising fuel and VED prices will lead to economical models like the 118d reaching or even exceeding the value of higher power machines over the next few years? Just a thought.

[rich_vw]

In relation to the 'outing' of the contract early, say 3 years in to a 4 year PCP I believe the contract makes allowance for this but it may be worth you checking.

As with a standard HP you have a right to terminate once half the total amount payable has been met, this should all be detailed to you prior to signing.

[R26Andy]

paulsheppard said:

So if I should renegotiate a shorter PCP term, should this greatly, or at all, affect the rate? Also, if it is so much to my advantage to have a shorter agreement and hence not risk negative equity, then why does anyone ever opt for a 4 or 5 year PCP? (Assuming that the monthly payment isn't greatly different between a 3 year and a 4/5 year deal).

I think I paid 0.5% extra APR for a shorter term.

I can only guess why most people are on 48/60 months but I think its down to marketing by the car dealers - it makes the repayments as low as possible and therefore that what people get "sold on" as they are fixated by the fact they can get a car they could never otherwise afford for such a low monthly repayment they never think to ask about shorter deals so they never find out that its only £20/30/40/month. I think alot of peoples aspirations are bigger than their bank accoutns and literlally cannot afford even that extra £20/30/40/month.

I automatically got quoted on 48 and 60 month deals, they never even asked me how long I wanted the PCP over, I had to phone up and dictate to them what I wanted. THis makes me suspicous so I think there is much more profit in it for them due to the accumulated interest over the longer period.

Just an additional though, I forgot tht PCP works the same way as HP in that you can out once half the finance amount has been paid (halfs and thirds rule) but this comes later in a PCP deal due to the balloon payment. Looking at your figures you will be able to get out of a 47 month PCP at 37 months with no cost to you.

Andy

Edited by R26Andy on Monday 17th January 11:01

[paulsheppard]

OK, final time to bother you all.

Here's the agreement.

36 months.
£1000 deposit
£326 per month

RV £8100

APR 10.9% (up from 10.3% quoted for 48 months due shorter term).

Regulated agreement. Exit at any time but anticipating exit after 2 to 2.5 years which should show a little equity towards a new vehicle.

Don't forget, next service parts and labour included. Also £400 retail scotchgard inside and out treatment included.

Car is BMW 118d M Sport, space grey, sensatec, bluetooth. manual, 13,000 miles, £16.950

[gizlaroc]

paulsheppard said:

ps. To the 123d driver. Yes, your figures are somewhat similar but on a more expensive car in your case. I wonder however if rising fuel and VED prices will lead to economical models like the 118d reaching or even exceeding the value of higher power machines over the next few years? Just a thought.

You will probably find the payments will go up a fair bit if you shorten the term.


I sold my 123d 14 months and 20k miles later for £450 less, a pretty good return in my book, it is a very desirable car.

[gizlaroc]

Also, consider a 120d, residuals are better so tend to cost the same if not less then the 118d when financing.

[J500ANT]

I wouldn't ever bank on having any equity on a PCP deal, dealers seem to make sure of that.

[R26Andy]

paulsheppard said:

OK, final time to bother you all.

Here's the agreement.

36 months.
£1000 deposit
£326 per month

RV £8100

APR 10.9% (up from 10.3% quoted for 48 months due shorter term).

Regulated agreement. Exit at any time but anticipating exit after 2 to 2.5 years which should show a little equity towards a new vehicle.

Don't forget, next service parts and labour included. Also £400 retail scotchgard inside and out treatment included.

Car is BMW 118d M Sport, space grey, sensatec, bluetooth. manual, 13,000 miles, £16.950

Your deal is very similar to mine, slightly better finance package but I got two years servicing worth £600 thrown in for free so swings and roundabouts really. If your happy go for it! Just dont bank on having lots of equity in the car when you come to get rid!

Edited by R26Andy on Tuesday 18th January 10:26