[yippym]

First post on this UK forum so a big hello to all my bmw buddies!

I got a meeting with the brand manager tomorrow to discuss financing my M3. I am going to go for PCP or HP my question is what target APR should I aim for? What APR did you guys acheive through bmw finance?

Cheers for your advice in advance...

[Rimola]

would like to know as well

[AlanQS]

The Dealer is stuck with BMW Select for PCP but there charges are rotten. I just bought mine last week and they wanted 10.1% when I was getting 7.4% from my bank.

None of BMW Finance's products appear to be at all competitive when it comes to the interest rate.

The minute I said I would just finance it myself, the dealer heaved a sigh of relief and tried to sell me H.P. and he nearly matched my bank except my bank wasn't charging acceptance fees, administration fees, closing balance fees and wipe your backside fees.

The simple exercise I did was three year PCP, 12,000 miles per year (possibly a bit restrictive) with the balloon payment at the end. Total cost - £x

Five year bank loan with some deposit, total cost £y (less than £x)

Not comparing like with like but if at the end of 3 years pcp I just hand the car back - left with nothing. But, at the end of three years via the bank loan route, the car was worth at least £3,500 more than the outstanding loan.
And I had no excess mileage charges. And the car was mine from day one instead of never mine. And I could change my mind to get rid of it early or keep it longer.
Enough of the sales pitch, you won't get any bargains from BMW Finance.

[tisme]

I am getting a new 330D later this year, and I intend putting the car on the mortgage. So that will be just over 7% APR and hopefuly minimal or no fees.

[F31-340i]

Originally Posted by tisme

I am getting a new 330D later this year, and I intend putting the car on the mortgage. So that will be just over 7% APR and hopefuly minimal or no fees.

Are you planning to pay back the loan over 3-4-5 years or over the period of the remainder of your mortgage? Is this a long time? Have you worked out how much this will cost?

[tisme]

Originally Posted by ///ajd

Are you planning to pay back the loan over 3-4-5 years or over the period of the remainder of your mortgage? Is this a long time? Have you worked out how much this will cost?

Good question, it will be paid off over between 3 to 5 years; I do not know exactly when though.

Until 6 months ago, I had £30,000 borrowed interest and fee free on credit cards for nearly 3 years. I put the money in premium bonds and won an average of £1000 per year. But, the credit card companies are not giving away free money at the moment. Over three years I did the credit card shuffle, and just transferred the balance from credit card to credit card and never paid a penny in interest or fees.

However, there are some good credit card deals on offer to borrow say £10,000 over a year at 3%.

[c-hri-s]

When the dealer called me to say my car was consigned they also said, if I was interested in putting the car on credit (which I'm not) they could offer me 3.5% over two years. It struck me as quite a good deal, not that I plan to take it.

[Del]

Originally Posted by AlanQS

Five year bank loan with some deposit, total cost £y (less than £x)

A 5 year bank loan does seem to be the best way to go, whether you intend to keep the car for 1 year or 5 years. If you don't do too many miles, when you sell the car and settle the loan, you should end up with some cash in your pocket. Compare that to BMW PCP!

I bought a car from BMW early in 2006 when interest rates were low. I got a really good rate from Northern Rock for a 5 year loan and BMW offered to match this rate. Even though they said it would cost them money . I've got the money to settle the loan now, but it was so cheap I'll probably just keep it running. I think it's less than my offset mortgage rate.

[Serjames]

NFS and Beuforty i think had a really good thread about this somewhere...

Might be worth searching back to around october... it might prove fruitful



SJ

[BC4J]

NFS knows all about this topic. Seek his advice.

[Ted]

You'll find this covered along with a whole load of other stuff here:-

http://www.e90post.com/forums/showthread.php?t=51557

[red-max]

Originally Posted by dodgy

When the dealer called me to say my car was consigned they also said, if I was interested in putting the car on credit (which I'm not) they could offer me 3.5% over two years. It struck me as quite a good deal, not that I plan to take it.

One thing to watch out for is whether that figure is charged on the amount remaining or on the whole (initial) amount of the loan over the time period. I was offered something similar, but it turned out the figures were worked out based on the cost of borrowing the whole amount, whereas if I borrowed the money against my mortgage I would be paying off the loan each month and reducing the interest. The result was that the BMW Finance interest charged was twice as much as I expected, so the "3%" loan was less favourable than adding to the mortgage. Best to compare the total payments made, including any deposit, fees and final payments.

[tisme]

Originally Posted by dodgy

When the dealer called me to say my car was consigned they also said, if I was interested in putting the car on credit (which I'm not) they could offer me 3.5% over two years. It struck me as quite a good deal, not that I plan to take it.

Without wishing to repeat what redmax has said, this is really important.

Say you are offered 3.5% over two years and you borrow say £20,000.

If it is a "flat rate" then the interest would be 7% over two years on £20,000 ie £1,400 interest. But, the average loan outstanding would be £10,000 so the APR is 7%.

If it is APR, then 3.5% would be approximately £700 interest.

So, as a rule of thumb, the APR is twice the "flat rate"; the APR is what counts.

[SnAzBaZ]

BMW Finance is NOT competitive. Period.

It's an "easy" option for a lot of people as everything is handled in house, and very little paperwork. So if you are happy with not getting the best deal out there, then go for it.

However, if you would rather get a FAIR deal, then there are other finance co's out there, depending on your own circumstances etc.

PM me if you want a contact to a good consultant (not me) who can if nothing else get you a couple of quotes from various finance houses. Alternativly have a look at Freeway and see if they can do anything for you.

http://www.bankofscotlandfreeway.co.uk/

Andrew

[NFS]

Originally Posted by yippym

First post on this UK forum so a big hello to all my bmw buddies!

I got a meeting with the brand manager tomorrow to discuss financing my M3. I am going to go for PCP or HP my question is what target APR should I aim for? What APR did you guys acheive through bmw finance?

Cheers for your advice in advance...

BMW Finance can (and do) match the best unsecured personal loan rates available at a given time.

http://www.moneysupermarket.com/

I've had 2 BMW finance deals. The first time was for straight HP. I took a personal loan offer letter with me when I went to do the deal and BMW immediately offered to match it, with a couple of hundred quid sweetener.

With my second deal (my 330i) the loan is above the £25K 'regulated' threshold and is based on lease purchase. I struggled with BMW on this as they tried to argue that the markets use different APR's for PCP and Lease Purchase compared to straight Hire Purchase.

This turned out to be complete bollocks. I contacted Lombard whose business loans team will lend to personal customers on high value loans (circa £30K). They offered me the rate I was looking for verbally and once again, BMW immediately offered to match it.

One thing I noticed (which the guy from Lombard also mentioned) is that a typical sales tactic is to offer a bad rate for the car you want, then offer a better one for a lessor car.

They are deliberately persuading you that you can't afford the car you have chosen so that they can sell you a cheaper one at an inflated price.

That's also why they start every conversation by asking you what your monthly budget is.

I would always say that the monthly budget is irrelevant, it's the deal that counts.

[yippym]

Right been to the stealers and this is the PCP deal they propose. I am rubbish with numbers so can anyone tell me if this deal is at least reasonable? I will probably keep the car 2-3 years but the term of the PCP is over 4 years to keep monthly payments near to around £400 a month.

Cash Price = £53490

Cash Deposit = £21396

Deposit Percentage = 40%

Balence to Finance = £32094

Annual Milieage = 10000

Term = 48

Monthly Payment = £443.73

Final Payment = £23415.21

[gIzzE]

That is just a smidge undr 12% apr, quite frankly they are laughing at you mate!

I would look at around 2-3% above bank base rate at the moment so 8.5% at most.
I just got 7.4% with Lombard and that was only on £25k, £50k they would bring tha down.

For the same monthly payment you would be looking at owing £18k at the end of the 48 months.
So you would have £5500 more sat in teh car.


Anyone looking to finance needs to deal with a broker, as the dealers are making nothing on teh cars these days and all profits are being clawed back through finance.

[gIzzE]

Oh, and unless you plan on staying in the car for the full term, you need to look at a Balanced Lease Payments Scheme, all the PCP deals etc. from dealers will cripple you if you want/need out before the end of the term as they are all front loaded. So want out of that car at 2 years of a 4 year term and you will owe nearly the full amount you borrowed. Not nice!!

[AlanQS]

I ran it through Lex select which has a slight discount for my company - not very much, but the deposit and first payment was as your deposit followed by 47 monthly payments of £427.70 and a final payment of £18,472 with an APR of 6.9%

Their final payment is high which makes their monthly payment high - it's not that great.

[gIzzE]

Just doing some quick calulations, a brokers will get you the same deal as BMW are offering but over 36 months, so same deposit, same monthly repayments and same balloon, but over 3 years and not 4.
I would guess that car at 3 years old would be worth £35k? So you would see £11k back.
At 4 years it would be worth maybe £28k? so you would see £4k of your £21k deposit back.


Can I ask why you are putting £21,000 into a depreciating asset like that??

You would be better to put 10% in and get a higher balloon, drive it for 12 months and sell it again while they are still asking decent noney.

Go see an independant broker, Gareth at Bespoke will get you into the right finance package, and can probably source you a car cheaper too.

http://www.bespoke-auto.co.uk/bespoke-automotives-terms

It is the finance managers job to make as much profit from you on the finance as possible. Get some proper advice from someone who gets a flat fee, he will just make sure you have teh best deal for your situation.

[F31-340i]

Originally Posted by yippym

Right been to the stealers and this is the PCP deal they propose. I am rubbish with numbers so can anyone tell me if this deal is at least reasonable? I will probably keep the car 2-3 years but the term of the PCP is over 4 years to keep monthly payments near to around £400 a month.

Cash Price = £53490

Cash Deposit = £21396

Deposit Percentage = 40%

Balence to Finance = £32094

Annual Milieage = 10000

Term = 48

Monthly Payment = £443.73

Final Payment = £23415.21

If you have that much of a deposit, why not buy outright?

Borrow 32k at £621/month over 5 years
(FIRSTPLUS - 6.4% APR just found by quick search - not a recommendation as I 've no knowledge of them)

Total repayments after 5 years = £37k. Hence car/finance would have cost you £58k after 5 years. But at any time you can sell the car and it owes you its total value. Hence after 2 years if its still worth 32-35k, thats what you get cash in your bank to spend on something else, noting you still having £621 to pay/month. Comparing to the above, after 4 years, even though you still have 12 months at 621 to pay - there is NO final payment at all. You own all the value, say £24k, left in the car. It costs £180 more a month than the offer above, but to be honest if you can't wear this then can you really afford a £53k car? (Is it an E92 M3 by the way? Yes, you say so)

Alternatively, get a nearly new one, with under 5k miles, for around £45k (private sales are now appearing around £49k with only 1200 miles on them, so its likely they are now swapping hands around the mid 40s). With your £21k deposit, you need only borrow £24k, and this would cost £466/month. This is nearer your monthly target, and what I'd recommend - there are loads of these cars around, and the new price over 50k is a bit steep even for a 3er, even a magnificent one like the M3 - they should start to look much better value 2nd hand soon.

[gIzzE]

I agree, throwing £21k into a depreciating asset on a PCP type deal is madness.
You need an agreement where you are in full control, if the car is still worth £45k in 2 years time but looks like prices are about to tumble, you want to be able to take advantage of that situation, get out, clear the finance with no penalties and start again.


The PCP deal works like this.....

£53500 less £21000 = 32500 to finance.
Interest on that (at the rate you have been offered) is £13070 over the 4 years.

This is added on to the 32500 giving an amount borrowed of £45570 repaid at £445 a month over 48 months and a final payment of £23500.

This is a flat rate, so it takes you 29 months to get back to the £32500 that initially borrowed.

So two and a half years down the road you have lost your £21k, you have paid £13000 in interest and you are back to what you borrowed.

Absolutely the worse way to finance a car!!


Balanced lease payments is a far better way to do it......


£53500 less £21000 32500 to fiance.

£435 a month over 48 months and a balloon of only £18500 at the end.

However, more important is you are paying off capitol from day one.
After 29 months you would only owe approx. £23k, so you are £11500 better off.

As I say, you need to speak to a broker.