[NFS]

The e90 is the first new car I have ever bought (long line of company cars) and I learned a fair bit when I went through the buying process.

I think I did OK, but I also expect that some of you guys will have done better. So why not share all of our collective wisdom here, so that next time we buy the BMW dealers will have no opportunity to relieve us of any excess cash.

So my contribution is this:

1. Start off by sorting out your part exchange price.

Do not get distracted into talking about other things at this stage. The rest of the deal can be sorted out afterward.

Talk to brokers. They will tell you what the book value is. You can also get a specific valuation on the AA's website here:

http://www.theaa.com/cbg/Manufacture...=fullValuation

If they are not offering 'book' value walk away and start again another day or with another dealer.

I got led into some fruitless discussions with some dealers thinking I could make back this shortfall on the purchase price or finance. In hindsight, I think this is a dealer trick to try to complicate things. Just get this bit agreed on it's own and park it.

2. Finance

This was the most frustrating bit for me. Decide yourself which type of finance you want - do your research outside and DO NOT take your dealers advice. They will probably lie and try to sell you something which is better for them and not for you.

Once you know what you want, you need to think about the best rate. I looked at the personal loan rates on moneysupermarket.co.uk and used that as my 'target'.

The dealer will lie, cheat, evade, distract - in fact do anything possible to persuade you that you will not get the APR you want. You need to prove to him that you can get it.

If you are going for straightforward HP get a loan offer and put it on the table in front of them. A good tip I was given was to speak to Lombard who will lend to private individuals on higher value cars.

Lombard agreed to match the lowest APR on moneysupermarket.com within 10 minutes, then also checked that I was getting above book for my trade in (great guys).

Despite having told me it was completely impossible 1/2 an hour before, when I went back to my dealer and told them my finance was sorted and I wanted to agree a purchase price they IMMEDIATELY offered to match Lombard.

3. Purchase Price.

Do not piss about on this. I got quotes from 'Drive the Deal', 'Autobytel' etc and asked the dealer to match them. They will refuse obviously, but then just explain that anything you pay above the broker quote is the price of the convenience of buying the car from them (trade in and p/x sorted). It is a real cost, you will get more for your car privately and anything BMW finance can offer will also be available on the open market.

Ask them why you should pay more than a couple of hundred pounds for this convenience.

In conclusion. My experience is that the dealers want to extract as much money from you as possble. They do not want to do a good deal for you.

One tactic they tried with me was to offer stupidly expensive figures then persuade me to get a cheaper car, so they could still charge the earth, but make me feel that they had 'done a deal'.

I'd love to know how the rest of you have approached things.

[- Paul -]

good advice and I'll look it up when I get round to upgrading. For me it was a case of walk in and buy the car - that was it. I will NOT be doing that again!

[Raggie]

Al lI can add is use the Silence..

Salespeople are trained to overcome objections.. lets extend the term of the loan.. or free mats.. etc..

The tick in selling is to get all the reasons out of the way for not buying the car in advance so when the deal is presented the customer has nothing more to do than sign...

They are also trained to stay quiet to close the deal.. this is why the buyer must stay quiet longer..

Say all you want before your final offer goes in.. after that say nothing...

The more the customer feels the need to fill the silence the weaker their position becomes..

If the buyer states his price and then walks.. its gives the sales person nothing to go on.. in fact lesser sales people will cave in and start to fill that silence long before you walk...

You also need to state clearly YOU ARE BUYING TODAY.. if not here somewhere.. (Imply the last bit)..

My favorite line before my final offer goes in is.. (serious face shaking head a little) "you know its a shame.. your a nice guy... I think we could have done business together.. we are so close to a deal.. its a shame to let it fail for something so trivial.. don't you think... I'll tell you what.. £<enter value here> and I buy today what do you say?"..

just my way.. but do whatever works for you....

[Ted]

Originally Posted by Raggie

Al lI can add is use the Silence..

Could be amusing, like trying not to blink when staring out a cat. I used to sell cars for a living, we were trained to stay silent, damn, we'll even go and do something else and leave you sat there while you 'think things over'.

On a more serious note, if you want the best deal for your part ex, sell it privately, you probably know this already but if money's tight it's what you gotta do. If you really can't be bothered then it's always going to be a case of either giving you more for your part exchange or discounting the new car, you won't get both unless you have a very retailable part exchange that they know they can shift.

If you think you're closing in on the deal that you want don't be afraid to get your credit card out and wave it around, do it before they ask you for it, it'll put you more in control and shows your serious about doing it there and then.

And finally finance, never ever ever accept a deal based around a PCP Personal Contract Plan, Personal Lease or finance with a balloon. You will always pay more and in the case of a PCP it ties you to that dealer as you have to hand the car back to them or buy it off them, which of course is when they sell you a new one. You want regular hire purchase and know what rate you can get elsewhere before you go in. Should be looking for a flat rate of 4-4.5% on a new car, used car finance will always be higher but go armed with your banks personal loan rate.

Ed

[NFS]

Originally Posted by Ted

And finally finance, never ever ever accept a deal based around a PCP Personal Contract Plan, Personal Lease or finance with a balloon. You will always pay more and in the case of a PCP it ties you to that dealer as you have to hand the car back to them or buy it off them, which of course is when they sell you a new one. You want regular hire purchase and know what rate you can get elsewhere before you go in. Should be looking for a flat rate of 4-4.5% on a new car, used car finance will always be higher but go armed with your banks personal loan rate.

Ed

Interesting advice on the silence from Raggie and yourself.

My dealer had a 'super silence' sort of arrangement which they used to great effect when dealing with the finance. They have their 'business manager' sitting in a booth and the salesman has to trott over to him to work our any finance options, leaving you sitting there like a lemon for 5 minutes on your own.

So when you have to keep sending him back (and I must have done so 10 times) it drags on and on and on. I think they are deliberately trying to lengthen the process so you get bored and settle for their offer.

I don't agree on the 'finance with a balloon' comment though. In effect that's lease purchase - which is what I have signed up to. The rate is the same as I had for straightforward Hire Purchase, so the interest cost is actually very similar. However the advantage is that setting a baloon payment at the end reduces the monthly payments. I have no intention of keeping the car until the end of the term, so financially this works well for me.

The problem with PCP is that they are designed to remove risk for the customer. This is all well and good, but you end up paying for the risk anyway !

I also doubt you can get 4.5% APR at the moment. The cheapest personal loan rate on moneysupermarket.co.uk right now is 6.3%.

[Raggie]

NFS.. a flat rate of 4-4.5% roughly equals an APR of 8-9%..

not strictly true . but for rough maths take the flat rate and double it to get the APR..

This is where I get flammed by the finance people out there.. but for us poor salesmen its the way to go..



on the subject of PCP and ballon payments..

Last Year we traded in my wifes freelander for an X3..

Calculations based upon the Freelander as depost + 36 monthly payments of £X.. worked our overall as less than the depreation suffered by the freelander in the previous 3 years.. that I had bought cash on the hip.. so even walking away at the end of the PCP we would IMHO been a few quid better off.. :rocks:

In our case the PCP works..

[shimshimhada]

Announce to them that you only have 30 mins to buy a car, and if they take longer than that, you'll walk.

[Ted]

Originally Posted by needforspeed

Interesting advice on the silence from Raggie and yourself.

My dealer had a 'super silence' sort of arrangement which they used to great effect when dealing with the finance. They have their 'business manager' sitting in a booth and the salesman has to trott over to him to work our any finance options, leaving you sitting there like a lemon for 5 minutes on your own.

So when you have to keep sending him back (and I must have done so 10 times) it drags on and on and on. I think they are deliberately trying to lengthen the process so you get bored and settle for their offer.

I don't agree on the 'finance with a balloon' comment though. In effect that's lease purchase - which is what I have signed up to. The rate is the same as I had for straightforward Hire Purchase, so the interest cost is actually very similar. However the advantage is that setting a baloon payment at the end reduces the monthly payments. I have no intention of keeping the car until the end of the term, so financially this works well for me.

The problem with PCP is that they are designed to remove risk for the customer. This is all well and good, but you end up paying for the risk anyway !

I also doubt you can get 4.5% APR at the moment. The cheapest personal loan rate on moneysupermarket.co.uk right now is 6.3%.

You will pay more on finance with a balloon and here's why. On regular HP you pay interest on the balance that you are yet to pay off, like your mortgage. With a balloon you continue to pay interest on the full amount of the balloon element as you never pay it off until the end. You will pay more in interest charges for the same amount borrowed with the same rate. The advantage is that yes it does reduce the monthly payments and if you can't afford the finance any other way then yes it does make sense as it is your only option. I stand by my comment that it will cost you more, I used to be the annoying business manager that your salesman went running to.

From my experience a PCP is designed to tie a customer to a dealer as you must go back to them at the end of term, they are also a very convenient way of disguising the interest charges and allow the dealer/finance house to charge for excess mileage, I would avoid.

You should be able to get a FLAT rate of 4.5%, this is not an APR. The APR is calculated from the flat rate, the term and the amount. You should be discussing flat rates with your dealer not APR's as they are misleading.

Ed

[NFS]

Originally Posted by Ted

You will pay more on finance with a balloon and here's why. On regular HP you pay interest on the balance that you are yet to pay off, like your mortgage. With a balloon you continue to pay interest on the full amount of the balloon element as you never pay it off until the end. You will pay more in interest charges for the same amount borrowed with the same rate. The advantage is that yes it does reduce the monthly payments and if you can't afford the finance any other way then yes it does make sense as it is your only option. I stand by my comment that it will cost you more, I used to be the annoying business manager that your salesman went running to.

I do agree that you will pay more with a balloon, my point is that it may be worth doing so. In your first post you said 'never ever accept' this sort of deal and I think that is perhaps a bit strong.

You reminded me of a loan calculator website that others may find really useful:

http://www.dynamic-webs.co.uk/inform...alculator.html

On a £30k loan at 6% APR over 36 months you would pay £ 2,777.97 in interest and your monthly payment would be £ 910.50

If you have a 35% baloon payment (£10,500) you would pay £ 3,645.62 in interest and your monthly payment would be £ 642.93

So over 36 months you would pay an extra £ 867.65 in interest (equivalent to £ 24 per month).

Since I don't want to own the car at the end of the term and I am spending a monthly company car allowance paying that £24 a month lets me have a much nicer car than if I went for a straight HP deal. In that case I consider it to be money well spent rather than a 'bad deal'.

Originally Posted by Ted

You should be able to get a FLAT rate of 4.5%, this is not an APR. The APR is calculated from the flat rate, the term and the amount. You should be discussing flat rates with your dealer not APR's as they are misleading.

Apologies I misread your post and didn't realise you were talking about a flat rate.

Incidentally I think dealers throw in comments about the 'flat rate' to try to confuse customers. I know mine did.

The thing about APR's is that they allow universal comparison.

In my first example of the £30k loan above 'flat rate' would be (2777.97/30000)/3 = 3.09%

My experience is that you should be able to get very close to the best APR's on unsecured personal loans.

In which case at the moment you should be able to get a flat rate around 3.5% or APR around 7%

[Ted]

Originally Posted by needforspeed

In your first post you said 'never ever accept' this sort of deal and I think that is perhaps a bit strong.

Agreed, it was a little strong, try to avoid would be more accurate, I've seen a lot of people stitched up by these sorts of agreements when they don't know what they are getting into.

[NFS]

Originally Posted by Ted

Agreed, it was a little strong, try to avoid would be more accurate, I've seen a lot of people stitched up by these sorts of agreements when they don't know what they are getting into.

What I find difficult is that people don't explain what these agreements are doing in simple terms.

So .. from a purely financial direction it costs you more to go lease purchase.

But that's obvious really ... you are 'paying' for the ability to park a large part of the loan and not pay it back until the end of the term. That's not going to be free.

Then with PCP - you are doing the same, but paying even more because you are buying your way out of any risk that the car's value will be less than the final payment. What bothers me about PCP is that the finance company doesn't take this risk either. They apply stringent finance penalties and very low GMFV's to make sure that they are covered. Yet they still charge you a premium in terms of the rate.

I think the advice should be to be sure that you understand what the finance is for and the reason why you are signing up for it.

Getting back on topic - since you used to be the business manager in the box - can you help us out with some more tips?

How do these guys approach it? It seemed to me that they were just messing me about with very high rates at first trying to convince me that I was wrong about the market. Presumably, they were hoping that I would believe them and sign up to an 9% apr.

[mjh93sa]

Good advice guys.

I should be looking to change this year so I'll be bearing all of the above in mind.

I think that the best deal I've done was actually for my sister. Not having the emotional "I want that car" feeling and because the only aim was to do well for her I pushed harder and further than I ever have for myself. Lesson learnt there

[Ted]

Originally Posted by needforspeed

I think the advice should be to be sure that you understand what the finance is for and the reason why you are signing up for it.

Getting back on topic - since you used to be the business manager in the box - can you help us out with some more tips?

How do these guys approach it? It seemed to me that they were just messing me about with very high rates at first trying to convince me that I was wrong about the market. Presumably, they were hoping that I would believe them and sign up to an 9% apr.

Undoubtedly good advice.

As for what they are up to:- The salesman gets paid on the deal of the car, the business manager gets paid on the finance. The higher the rate above base rate, i.e. the rate at which he is actually borrowing the money, and the balance that you are financing, dictate how much commission the Business Manager earns. So big balance to finance at a high rate is good for the business manager, understandably he will try and get you to borrow as much as possible with as high a rate of interest as he can get away with.

So really he was just doing his job but sounds like he may have underestimated you and the research you had done beforehand, most people don't understand, don't bother or are too trustworthy. Sometimes it can actually be a good idea to finance the car even if you don't have to, if you can borrow money from them for a lower rate than you can invest your money elsewhere.
For example, I financed my entire balance on my 335 and even had them pay back my deposit as I could borrow their money at a better rate than I am currently paying on my offset mortgage due to interest rate rises, my savings are better off being offset against my mortgage than against my car in my case. If you have cash lying around then look at what you could invest it in elsewhere but bear in mind you will probably have to declare in your tax return and be taxed on interest from savings and profits from investments etc, unless it's tax-free such as an ISA.

Another thing to bear in mind is that the finance deal you can get on a new car is different to that on a used car.

If you’re buying a new car then the manufacturers chosen finance house will normally offer a better base rate as they have a vested interest in you buying a new car, a used car sale will benefit the dealer but not the manufacturer, in addition, the more you finance the better rate you should be able to get.

Used cars under finance will have a higher base rate as there is a greater risk involved for the finance house, should you default on the loan and they have to repossess then there is a greater risk that they will not be able to sell on the vehicle at auction and cover their losses. The higher rate offsets this risk.

So a big balance on a new car will get you the better finance deal, a smaller balance on a used car will attract a higher rate, the older the car the higher the rate.

Another thing going on in the background you won’t be aware of is that the business manager will have a portfolio of different finance houses he can borrow the money from, some of these will have incentive schemes running whereby the business manager will benefit the more business he places with them, they will normally have a higher rate of interest as they have to finance these incentives somehow. In their portfolio they will also have a cheaper lender, no incentive to place business but a lower rate of interest, he would use these in the instance where he has to deal as low as possible to secure the customers business but will typically only use this as a fallback.

Ed

[miopyk]

Don't forget that another way of reducing the monthly cost of a PCP deal if you not going to keep the car to the term of the contract is set the annual mileage as low as you can. This can save several hundred pound over three years

Miopyk

[NFS]

Originally Posted by Ted

Sometimes it can actually be a good idea to finance the car even if you don't have to, if you can borrow money from them for a lower rate than you can invest your money elsewhere.

Great advice Ed - thank you. Very interesting to see how it works, especially the fact that they have different lendors to go to and that new cars can lead to a better rate.

I think the bit quoted above applies to me. I could have laid down £10K of my own money and just had straightforward HP on the balance. This would have saved me some interest. But...

My APR is 5.6% and the 'extra' interest is only very slightly higher than the I could earn by sticking the money in the building society instead.

Plus ... I can get to my capital if I need to.

If interest rates were higher the gap would be more significant, but in the current climate for me it is better to borrow and keep my savings.

As an aside, I wish I had gone for an offset mortgage, but I locked myself into a 5 year fixed rate 3 years ago because I thought that rates would rise.

[Art Man]

I find that there are a couple of things that are stacked against me when I buying a car from a dealership.
1. The salesman is an expert; they have been trained to negotiate a good sales deal, I’m an amateur.
2. It’s emotional purchase, I want the car and they know it.

So I try and minimise my exposure as much as possible by knowing:
1. What my car is worth, both from a trade-in and private sale. I use Glass’s – www.glass.co.uk.
2. Getting an idea what discount I will get, and
3. Finally what the difference between the 1 and 2 is, the cost to change. This I believe is the key figure, as I will get a variety of figures from dealers on price and trade-in, but if I calculate the cost to change, I can see straight away which one is the best.
4. I try and conduct the initial negotiations via emails. I have to say I was surprised how many dealers quoted a reasonable deal at this point, enough to bash other dealers who initially wouldn’t quote to join in. I was lucky, I managed to get a quote that topped my local dealer and the one thing I found out is a dealer doesn’t like to loose a local sale to an outside dealer.
5. When I finally do visit the dealer, I take everything to “show” I’ve done my homework, but don’t tell/show them anything.

This is where it normally breaks down for me . I know you should keep your mouth shut when it goes quite, but I get so involved and like the sound of my own voice, so I forget.
But by change I came across a solution. When I looking to buy a motorbike, I forgot to print everything off in time, so I transferred it all to my PDA and took that with me. When the guy went off to “talk” to his manager, I got my PDA out. And when he came back with “This is the best I can do”, I would ask him to wait, so I could check everything. Whilst updating my PDA, I realised:
1. I wasn’t talking and more importantly,
2. the salesman didn’t know what to do. Finally he asked “how did they compare” and that was it, game, set and match to me.

So did it work for me on a BMW? Well I got 11% discount, but lost £200 on the trade-in, I was happy and I felt I couldn’t do any better and that’s the important thing .

[NFS]

Originally Posted by Art Man

So did it work for me on a BMW? Well I got 11% discount, but lost £200 on the trade-in, I was happy and I felt I couldn’t do any better and that’s the important thing .

Good advice. I think this is why I am determined to agree the part exchange first at the right figure then park it.

Can anyone who has worked in the trade advise how it works with a part-x?

Presumably if we are talking about something that they are going to put on the forecourt it should stack up as a deal on it's own. So in theory it shouldn't be linked to the purchase price of your new car - except that dealers do link it to give them more 'wriggle' room/

[rjs]

Originally Posted by Art Man

2. It’s emotional purchase, I want the car and they know it.

That may be true, but it's still a business deal You might really want the car, but you can always go to another dealer to get it if they don't give you the deal you want.

They want your purchase as well remember They'd rather sell you a car with a discount than not sell you one at all.

I should be commencing negotiations with my dealer soon I'll let you know how it goes.

[Ted]

Originally Posted by needforspeed

Good advice. I think this is why I am determined to agree the part exchange first at the right figure then park it.

Can anyone who has worked in the trade advise how it works with a part-x?

Presumably if we are talking about something that they are going to put on the forecourt it should stack up as a deal on it's own. So in theory it shouldn't be linked to the purchase price of your new car - except that dealers do link it to give them more 'wriggle' room/

As long as you are part exchanging a car then it's always going to be linked to the deal. As mentioned earlier the important part is the cost to change. They can give you over the odds for your part-ex or more discount off the new car. It's always slightly better to accept less for your part-ex and a larger discount as both you and the dealer end up paying less VAT. People are often obsessed with getting as much for their part-ex as possible when really you should be looking at the whole deal.

As for the value of a part-ex, it depends on the car, as a rule of thumb a main dealer will only put on their own forecourt a car less than 3 years old and less than 50'000 miles. If you are trading in the same brand, i.e a BMW at a BMW dealer then they will already know what it's worth and if they can sell it, if it's a desirable car then you get a better price for it.

If you are trading in another brand that can still retail off a main dealer forecourt then they will offer it out to other dealers who will all bid on it assuming they want it. Obviously the dealer takes the best offer and this becomes the true value of your part-ex.

If the car is too old or high mileage to go through a main dealer, but still retailable then there will be trade dealers who the dealer will offer cars to and bid on as above.

And for the really old cars then that's when the dealer takes a risk at auction, this is when Glass' guide is typically used as at that reflects the value of cars sold this way.

And as you know you can normally get more for your car if you sell it privately.

Ed

[silverbmwz3]

I had a BMW dealer quote me 'glass's guide' at the weekend - about 3k less than another dealer offered just a few months ago...definitely worth shopping around. I'm currently trying to maximise both p/x and discount. I don't see why if a dealer can't offer 10% with no p/x why they can't give you a decent p/x and offer it - as long as they can still make money on the p/x.... which as long as as it is less than they want to retail it for (including any cost for warranty etc.) should be fine?! Never works out that way tho.....

[silverbmwz3]

So if I look on that AA powered by glass's guide and it says 17,050 for my car in 'average' condition (trade-in). Would you expect a dealer to give me that if they were also giving a damn good discount on the new?

I was offered 14,450 against an 'average' discount at the weekend

[NFS]

Originally Posted by silverbmwz3

So if I look on that AA powered by glass's guide and it says 17,050 for my car in 'average' condition (trade-in). Would you expect a dealer to give me that if they were also giving a damn good discount on the new?

I was offered 14,450 against an 'average' discount at the weekend

This is why I would push to deal with and agree the part exchange first.

With my 530d it worked out that the finance owed was roughly equivalent to the book value.

I know the dealer made some money on the part-ex. I bought the car for £24,000 plus some freebies (ipod connection, mats etc..) and then sold it 6 months later for £20,500 (book value was £20,300). Dealer put it straight back on the forecourt for £23,750.

Personally I would say a dealer offering £2500 below book value for a part exchange is just stashing away money in the deal so that he can offer you a better discount at the end of the process. The problem is it isn't a better discount, it's the 'cost to change' that matters.

Out of interest I got a discount of 7% on my 330i. I only got 2% (£500) off when I bought the 530d second hand.

I had one dealer who offered by £18,000 for the 530d and would not budge on a price of £32K for a 6 month old 330i. It would be funny if it was not so annoying.