[Soul_Glo]

I understand it up to the point of.. you put down a deposit.. make fixed regular payments... at the end of it you make the balloon payment (hahaha no!) or hand it back in and walk away... (sometimes owing them for reasonable damage).. but I never understood the part-exchange bit of it...

At the end of the agreement you can use the value of the car... to get another new model (obviously designed to keep you locked in their eco-system and pay for the 15 receptionists who offer to make coffee)... so this is where I am confused... not all the models in the used approved search state that they will have a Guaranteed Future Minimum Value (GMFV)... so my questions are...

1. Can one get the dealer to agree to a GMFV if they are not offering it on their website with the used approved car details?

2. Have many people been successful in requesting the dealership to agreed to a return to invoice value rather than a return to market value?

Thank you.

[Jat]

Dealer can probably price you on a per car basis. There are some terms for the finance, I think the overall age and mileage on the car at the start of the agreement will determine if it is eligible for it.

As for the part ex bit, this works in relation to the GMFV and the current market value of the car.

The GMFV looks attractive on paper, but it is rarely set to leave you a big equity in the car. In most cases, the market value is around the GMFV, however, on some cars, they give you a ridiculously high GFMV to make the finance cheaper (such as on early orders for M cars etc). Financial market and economy makes a huge impact on used car prices, and so estimated what a car is worth is 3 years say is a gamble, and the dealers will tend to lean on the safe side not to end out of pocket.

[Soul_Glo]

Thanks. I'm not looking to profit and guess it makes sense for them to undervalue vehicles to avoid loss. For me coming out on top would be breaking even or not getting ripped too badly.

[gangzoom]

Don't get too suckered in by all the marketing around GMFV/future part exchange value etc....First and foremost work out the TRUE APR of any finance deal.

Add up the TOTAL cost of the deal, so deposit + monthly payment + GFMV + Fees = Total cost of deal. Than you can work out the true APR.

I've found in most cases PCP (which this is) on used car have horrible APRs and best avoided. It's cheaper to go in with a re-arranged bank loan than take out dealer PCP deals.

On brand new cars often you can get lucky, if the manufacture is keen to shift a particular model they will throw in lots of discounts etc...But the theory stays the same, add up ALL the costs and work out the true APR, and this will show you just how good 'value' the deal is.

[Jat]

Originally Posted by gangzoom

Don't get too suckered in by all the marketing around GMFV/future part exchange value etc....First and foremost work out the TRUE APR of any finance deal.

Add up the TOTAL cost of the deal, so deposit + monthly payment + GFMV + Fees = Total cost of deal. Than you can work out the true APR.

I've found in most cases PCP (which this is) on used car have horrible APRs and best avoided. It's cheaper to go in with a re-arranged bank loan than take out dealer PCP deals.

On brand new cars often you can get lucky, if the manufacture is keen to shift a particular model they will throw in lots of discounts etc...But the theory stays the same, add up ALL the costs and work out the true APR, and this will show you just how good 'value' the deal is.

This is exactly what I mean. They will discount vehicles when they need to sell them, for along while the F10 M5 was 0%. Also, in respect of APRs vs PCP, the other handle to grasp is that if lucky, you get a car that is cheaper on PCP since you do not need to pay the full term of the borrowing (unlike a bank loan) and you can if you get a good deal, save on the total cost of ownership. In respect of used car on PCP, you can compare the deposit and the PCP payments for the 50% period (after which you can normally hand back the car for no cost assuming you meet the contract conditions e.g. mileage, condition etc), vs borrowing the total sum you need to purchase and paying interest.

I have been fortunate in that in two instances, BMW finance has worked out cheaper that the equivalent depreciation - hence it was better for me to use PCP that either buy outright and sell in the future, or borrow from a bank at lower APR and then sell in the future. Its all horse for courses.

[Soul_Glo]

Cheers guys really appreciate the input. It gives me something to think about. I will keep an eye out for any deals (if we can call them that) and do the calculations. The better half wants a new BM Trouble You and she has been there for me through thick and thin so I will get her one... and since I have known her she likes to change car every 3-4 years the Select option kind of made sense to me... we had a 435d grande coupe when she worked for BMW - shouldn't have left the contract :-p

[padders]

Originally Posted by Broken_Gearbox

I understand it up to the point of.. you put down a deposit.. make fixed regular payments... at the end of it you make the balloon payment (hahaha no!) or hand it back in and walk away... (sometimes owing them for reasonable damage).

If you truly have no intention of paying off the car then why go PCP at all since you are in effect leasing it so maybe better to down that route.

Secondly, be aware that PCP terms tend to look too good to be true because it isn't immediately apparent that while you are making payment over the term you are also paying interest on the outstanding GTFV (balloon payment amount) at the same time. You don't get half the car amount interest free like some people assume. Apologies if I am stating the obvious.

I presume your second question is regarding Gap insurance? If not then I think you have fundamentally misunderstood how PCP works. Regarding Gap, you can have RTI or replacement car if you pay for it but always go aftermarket as the dealer will screw you over every time as their commission on Gap is multiples of 100%

[Soul_Glo]

Yes that is correct. No intention to own the car. Therefore getting a new car and lining their pockets while I am at it I know... My father in law mentioned leasing but I need to learn more about what it is and how it works... and who would be some of the good companies.. I guess it is time to make a separate thread..

[padders]

Can't help you there as I have never looked into it but might make sense. PCP may still work for you if the manufacturer puts a big enough incentive in and the APR is low but be aware what I said above about how you are liable for interest on the whole amount over the term. The M135i for instance is very reasonable on PCP at the moment due the availability of huge discounts from new and relatively high Gtfv's, std APR is 5.9%. I have heard of £350pm or less over 3 or 4 years.not bad for a baby M car.

[335ier]

It can work out very expensive. Don't get too suckered in. Look at contract hire if its against a new vehicle.
Don't buy dealers GAP insurance, but you might want to have it there are plenty of other places offering much better deals.

Happy car buying.

[ahmedb]

I'm happy to share my BMW Finance cashflow forecast spreadsheet which the 1st owner produced on my current car.

I'm sure many of you can conjure something similar yourself but it takes into account all costs (barring NPV, time value of money)