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      10-19-2009, 09:35 AM   #1
stevew
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Finance Recomendations

Looking at replacing the 325i with a new one in Dec. As there is negative equity on the current vehicle which doesn't make it sensibly to pay the balloon. Done a deal in principal with the local stealer on a new Highline version which equates to a 13% discount.

1 - Has anyone done better than 13% recently?

2 - Looking for alternatives to the stealers PCP deal, have searched older threads on here & contacted a couple of the ones recomended but as they were oldish posts has anyone got any recomendations they could pass on?

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      10-19-2009, 10:05 AM   #2
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I've been looking at the broker4cars website recently. Their illustrations suggest a 14% discount (but not on options) and they are suggesting finance rates of 6.4% on lease purchase.

http://www.broker4cars.co.uk/?referr...FZMwpAod-RsUsw
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      10-19-2009, 10:16 AM   #3
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The OP wants PCP which will not attract anywhere near that low an APR. However, that site still appears to be getting some good deals at the moment and is worth a look. Anything around the 9% mark would seem reasonable on PCP at the moment..
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      10-19-2009, 10:49 AM   #4
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Quote:
Originally Posted by MEGA View Post
The OP wants PCP which will not attract anywhere near that low an APR. However, that site still appears to be getting some good deals at the moment and is worth a look. Anything around the 9% mark would seem reasonable on PCP at the moment..
Agreed, but the detail is worth looking at.

For a 335i msport over 4 yrs / 40k miles they are suggesting:

10.9% APR for PCP with a balloon of 9,520

6.4% APR for lease purchase with a balloon of 8,400

Both balloons are low. I reckon you would easily get 15k for the car at the end of the term. Maybe less, but anything under 10k is well and truly safe.

Where it gets more interesting is the total payable. Lease purchase is 3,309.28 less than the PCP figure.

As the risk on value is pretty low, for me lease purchase is the obvious answer IF those rates are real.
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      10-19-2009, 05:17 PM   #5
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I've been speaking with Gareth @ Bespoke Auto this week and have been really impressed with what he can offer. Similar monthly figures (slightly less than BMW) but massively more flexible (ie. get out early without getting completely spanked) plus a lower balloon payment at the end. Win Win Win.

Here's his site. Give his a try. Say Roger on here told you to call.
http://www.bespoke-auto.co.uk/
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      10-20-2009, 05:35 AM   #6
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My only concern with lease purchase over PCP is the Balloon payment because, as far as I understand it, I must have sufficient finance to afford the balloon payment at the end of the contractual period because it is not optional. With a PCP I can just hand back the vehicle with no questions.

Anyone got any advice/opinons?

Cheers
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      10-20-2009, 05:55 AM   #7
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Either sell the car privately at the end of the term (and fingers cross make a little profit) to settle the outstanding finance, hand the keys back to the dealer, use the car as a part-ex with or without any profit against a replacement (and let the dealer settle the finance) or take out a personal loan to cover the outstanding balance. Loads of options really.

With these 'balloon' finance deals you never fully pay off the car. You are essentially only funding the depresciation of the car (with interest & charges). The dealer may claim that you may build up some equity however, whether you do or not, doesn't mean you'll own the car. You'll always have the 'balloon' to fund or hand the car back.
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      10-20-2009, 10:19 AM   #8
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PCP and the option to hand back is irrelivent vs. lease purchase to me because I mod my cars and could never hand back in either case. Its simply, the lower baloon as a result of PCP (It was much more significantly lower for me than in the prices stated above) means I will almost certainly be in positive equity so to speak when the term ends, and can make a profit on the car. This would have been touch and go with HP, so I decided not to risk the car putting me out of pocket.
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      10-20-2009, 12:00 PM   #9
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Quote:
Originally Posted by stevew View Post
My only concern with lease purchase over PCP is the Balloon payment because, as far as I understand it, I must have sufficient finance to afford the balloon payment at the end of the contractual period because it is not optional. With a PCP I can just hand back the vehicle with no questions.

Anyone got any advice/opinons?

Cheers
With PCP the dealer takes the risk on the resale value. If you don't want to pay the balloon you just give the car back.

With Lease Purchase you take the risk. The balloon has to be paid .. either by:

1. Selling the car and using the proceeds to settle the finance.

2. Taking out a new loan to cover the final payment.

The balloon payments in the illustration I posted are very low. There is no chance that the outstanding finance would exceed the value of the car at the end of the term. On that basis there is no real value in paying extra to get the dealer to take the risk.

PS - forgot to mention that these agreements are now regulated under the consumer credit act, which means you can end it without penalty by returning the car once you have paid 50% of the amount owed.
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      10-20-2009, 02:15 PM   #10
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Quote:
Originally Posted by NFS View Post
With Lease Purchase you take the risk. The balloon has to be paid.

PS - forgot to mention that these agreements are now regulated under the consumer credit act, which means you can end it without penalty by returning the car once you have paid 50% of the amount owed.
I hadnt realised the first bit about Lease Purchase.

Also, I heard quite recently that, if you hand your car back early, this shows on your credit history. Not necessarily a black mark against you credit score but more like a note on file to say you didnt go full term (might they assume it became unaffordable as opposed to just wanting to change your car). Anybody know if there's any truth in this?
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      10-20-2009, 04:52 PM   #11
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Sounds like crap to me, but would be interested for someone to confirm ?
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      10-20-2009, 05:34 PM   #12
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So far as I can make out:

1. If you do a Voluntary Termination it will be noted on your credit file

2. It shouldn't necessarily affect your credit rating, but it's possible.

The ability to terminate a regulated agreement after paying 50% is written as an express contract term in loan agreements. I don't see why it would be treated differently to any other decision to settle a loan early, but it's a risk.
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      10-21-2009, 02:40 AM   #13
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Quote:
Originally Posted by NFS View Post
The balloon payments in the illustration I posted are very low. There is no chance that the outstanding finance would exceed the value of the car at the end of the term. On that basis there is no real value in paying extra to get the dealer to take the risk.

PS - forgot to mention that these agreements are now regulated under the consumer credit act, which means you can end it without penalty by returning the car once you have paid 50% of the amount owed.
I've been doing a bit more research & the balloons that are given by lenders these days are a lot lower than in the past so at the end of the agreement that the car should be worth more. Dealer PCP balloon is 13,998 & an independant finance company balloon on a LP is 13050 which is about the same as the "trade in" value of my current car with a balloon of 15,500, hence the reason I'm not looking to keep it. As a test to the accuracy of the balloon I have looked on auto trader and the going rate for 2006/56 325I Msport Coupe with less than 40k miles is around 15-16k so when the car gets to the 3 year mark it should be worth the same, if not more because of the highline extras. As you say, if the car was worth less, you do still have a get out clause as you can hand the car back to the lender under the voluntary termination right as you've paid more than 50% of the loan.
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      10-21-2009, 03:14 AM   #14
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Quote:
Originally Posted by stevew View Post
I've been doing a bit more research & the balloons that are given by lenders these days are a lot lower than in the past so at the end of the agreement that the car should be worth more. Dealer PCP balloon is 13,998 & an independant finance company balloon on a LP is 13050 which is about the same as the "trade in" value of my current car with a balloon of 15,500, hence the reason I'm not looking to keep it. As a test to the accuracy of the balloon I have looked on auto trader and the going rate for 2006/56 325I Msport Coupe with less than 40k miles is around 15-16k so when the car gets to the 3 year mark it should be worth the same, if not more because of the highline extras. As you say, if the car was worth less, you do still have a get out clause as you can hand the car back to the lender under the voluntary termination right as you've paid more than 50% of the loan.
When the markets fell at the end of last year they took residual values with them (although BMW had damaged them anyway because of some huge discounting).

A lot of cars on PCP have been handed back because the balloon was higher than the value and BMW have made a significant loss on the disposal of these cars. The 7 series was particularly badly affected as many seem to have been on 2 or 3 year PCP's at favourable rates to shift stock. BMW have been selling these returned cars through car supermarkets rather than dumping them back into the dealer network.

I think that the balloons being proposed now reflect this. BMW don't want to be caught out again, so they are sticking with safe figures, even if that pushes up the monthly payments.
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