[stupot]

Originally Posted by gIzzE

A guaranteed future value used to be a very good way of doing things, when BMW set the guarantees extremely high, however, at the moment they are setting them very low.

Our F11 520d with all the essentials was being given a GFV of £7500 after 48 months by BMW.

The interest rate was 10.9%.

The car was £33000 and with a £3000 deposit it was costing £646.84 a month.

However, we went with Lomnbard at 5.9% apr it was £633 a month over 54 months.


So pay for another 6 months and it is yours.

All car manufacturers are desperate for you to have a balloon to keep your business next time, but right now a GFV is worthless when the value is so low and the rates are covering their guarantee anyway, ion other words you are paying the guarantee over the loan term.


Don't get me wrong over the years I have been the biggest advocate of going pcp with a balloon, on a depreciating asset it makes perfect sense, but right now a few, like VW, Audi and BMW are really taking the piss with it and people are not stopping and doing the maths.



When I bought my 535d sport touring I paid £34500 for it at 9 months old, £52k car new, and the GFV after 48 months was £19k. The apr was 5.1% and the monthly payments were £380 a month.
That makes sense.

Paying extra just to cover the balloon is nonsensical.

Sounds like PCP isnt for you, it wasnt for me either, but it doesnt make it a wrong way to fund a car.

You noted in a previous post for the OP to consider Contract Hire. That is good advice. Contract Hire has its downsides too, but at the moment its the cheapest way to fund higher end BMW's.

[E902717]

Originally Posted by stupot

No. A different manufacturer.

Which one?

[davyk31]

What are the main downsides of contract hire for a private buyer? The fixed term would be the one that comes to my mind but are there others?

[stupot]

Originally Posted by davyk31

What are the main downsides of contract hire for a private buyer? The fixed term would be the one that comes to my mind but are there others?

Two reasons, you are spot on, the main one is indeed the fixed term. You need to be very fixed into your change cycle and very sure your circumstances aren’t going to change. If you try and terminate early they will try and take all the rentals still due and you need to try to come to some arrangement.

The second is that a private individual cannot take full advantage of the VAT benefits of contract hire. If you are VAT registered you can claim half the VAT back on the rentals making the payment even cheaper.

The reason this has become a good way to buy a high value Audi/BMW that the manufacturer is struggling to shift is most of the figures are hidden from the customer and the wider market. The manufacturer can discount the car heavily and also set aside a large amount to support the residual at the other end. If they were to lump all this support together and give it as front discount it would distress the product and cause residual issues.

[scottc]

BMW were offering me 9.0% when I was looking a month or so ago, I ended up going with Porsche and getting around 8.0% plus a very good GFV hence why I went for it.

BMW GFV was ok ish on a new X5 (£55k) after 3 years they were saying it would be only worth £21k which I thought was a bit low. Porsche were doing a great GFV on the Carrera S, infact it was higher than the standard Carrera and GTS which brought the payment down by over £100 a month

I have no intention of buying at the end so for me it was all about the monthly.

[gIzzE]

Originally Posted by stupot

Sounds like PCP isnt for you, it wasnt for me either, but it doesnt make it a wrong way to fund a car.

You noted in a previous post for the OP to consider Contract Hire. That is good advice. Contract Hire has its downsides too, but at the moment its the cheapest way to fund higher end BMW's.

I just did PCP on the X1, it was a 45% residual after 48 months at 6.4% so meant it was a sub £300 car, was worth doing.