BMW and M Power Owners

glen8 said:
When I applied for those loans, I usually got rejected. An hour later I'd get a call offering me it at 8.7%. Reading on forums such as money supermarket it's a common thing.
I'm a good earner with a great credit score.

5.9% pcp is still pretty good to be fair. My friend took out a pcp on the default 10% ouch!
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I bought mine on PCP initially to get all the deposit contributions and to keep the initially monthly payments down whilst I got used to owning a car again (I'd been a company car driver for the previous 16 years). I put £10k deposit down (which was basically the maximum BMW would permit) and I bought the car outright from BMW FS 14 months later with the above personal loan. If you can get the PCP finance at 3.4% I'd take that in a heartbeat. I doubt you'll finance such a large purchase st a lower cost if you haven't got the cash in the bank.
 
Havana_UK said:
I bought mine on PCP initially to get all the deposit contributions and to keep the initially monthly payments down whilst I got used to owning a car again (I'd been a company car driver for the previous 16 years). I put £10k deposit down (which was basically the maximum BMW would permit) and I bought the car outright from BMW FS 14 months later with the above personal loan. If you can get the PCP finance at 3.4% I'd take that in a heartbeat. I doubt you'll finance such a large purchase st a lower cost if you haven't got the cash in the bank.
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Thanks mate, the deal has been done. Dealer said car would just about be registered in time for March so cheaper Tax. Not got a delivery date yet, but ringing me back tomorrow. I do feel guilty though at buying something so expensive.

Final deal in all it's glory

M140i 5dr Auto in Mineral Grey
Drivers Comfort Pack
Privacy Glass
HK Speakers

£1,000 deposit from me
Dealer to pay £1,000 over top book value for my car in order to settle existing finance and reduce car to meet my monthly payment limit

47 x £333 a month

£14,178 GFV
 
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I'm sure that the tax will be cheaper after April 1st as the car is <£40k list (including factory options). I think it's £140/year if registered after April 1st, but £210 otherwise.
 
Scottland said:
That 6k difference doesn't include interest payable on a loan, which should be a similar amount assuming you're borrowing at around 3-4%. It also doesn't take into account that in both scenarios, should you part ex the car - it's worth the same regardless. So if it's worth 16k part ex, on a personal loan it'll 'cost' you £12k + interest. On a PCP it'll cost you £16.3K less ~£2k difference between the GFV and what you got part ex.
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Havana_UK said:
Most personal loans won't exceed £25k, so unless you have a decent chunk to put down you may not be able to afford the car with a personal loan. Also often the sweet spot for interest rate, depending upon your circumstances, is often in the £7.5-£15k range, so you may well end up paying a higher interest rate for a large personal loan. It's also worth mentioning that a lot of these deals are only offered when taking out the manufacturer's finance with often comes with a sizeable deposit contribution.

Another point to consider is that the monthly payments on a £25k loan over 5 years, even assuming you can get the best rates, will be ~£450, almost 50% more than the PCP payments. This may be unaffordable for some.
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Scottland said:
The point is though, on a new car if you're borrowing money (Loan, PCP, HP) the costs should even out. Where they differ is what happens at the end, and how the borrowing is structured. With a loan, you can sell the car whenever - with a PCP or HP the money is secured against the car and you need to clear it before you sell (or get the new buyer to clear it).

A better way to see the costs is to look at it from the point of view of total cost of borrowing and depreciation. If you're borrowing money on a new car, you're paying interest on the depreciation. Whereas if you're a cash buyer, you're only losing the depreciation alone.
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glen8 said:
Coast2Coast Price : £28,717

Deposit £1,000
47 Payments of £333.43 = £15,671.21
GFV £14,178.35

Total Paid on PCP at 3.4% apr = £30,449.56

Versus

Deposit £1,217
Tesco Loan of £27,500 over 4 Years
48 Monthly Payments £652.19

Total Paid on Loan at 6.7% apr = £31,305.12 (even those with 900+ credit scores like me will find it hard to get a £27,500 loan at 6.7%)
Total overall = £32,522.12

Now obviously there are pros and cons for each way of financing. The PCP has lower monthly payments, an upfront GFV and usually
at the end of the term you have a little bit of equity to use for your next deposit. Plus you have options such as giving the car back
throughout the term based on the level of equity either negatively or otherwise. The cons are, if you wish to keep the car you either
have to pay the GFV in cash, or refinance it at the time. If you chose to finance the remainder, then you are paying for your car over
many years, plus interest on the final value price.
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Thanks for the replies. I was wrongly under the impression that interest rates on personal loans would be lower than that.
 
Havana_UK said:
I'm sure that the tax will be cheaper after April 1st as the car is <£40k list (including factory options). I think it's £140/year if registered after April 1st, but £210 otherwise.
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Mmmmm yep you are correct. The first year is £800 (which dealer pays) then £140 each year after. Perhaps the dealer based the monthly payments on the March prices.
 
TS7 said:
Thanks for the replies. I was wrongly under the impression that interest rates on personal loans would be lower than that.
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They are. You can take a personal loan at under 3% now. This becomes more tricky if you are borrowing circa 25k or more but really if you need that level of borrowing to get the car you need to ask if it's the right car.

The reality is that youd probably stick some cash in anyway to avoid negative equity from day 1 and borrow 20k or so which you can do very cheaply.

Unless your credit rating sucks but again if that's the case perhaps lay off the 30 grand cars for a bit :p

PCP exists not because it's the cheapest method but because for many people it's the only method they can use, as the balloon at the end reduces the monthly payments the expense of total cost and many people prioritise monthly payment amount.
 
[TW]Fox said:
They are. You can take a personal loan at under 3% now. This becomes more tricky if you are borrowing circa 25k or more but really if you need that level of borrowing to get the car you need to ask if it's the right car.

The reality is that youd probably stick some cash in anyway to avoid negative equity from day 1 and borrow 20k or so which you can do very cheaply.

Unless your credit rating sucks but again if that's the case perhaps lay off the 30 grand cars for a bit :p

PCP exists not because it's the cheapest method but because for many people it's the only method they can use, as the balloon at the end reduces the monthly payments the expense of total cost and many people prioritise monthly payment amount.
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Interesting. Yeah that was where I was coming from in my post I.E not getting a loan for the whole amount and putting in a reasonable amount of cash yourself. But I suppose then you can't fairly compare that example to a PCP anyway as one involves a large deposit and the other doesn't.
 
bigger deposits may or may not be financially better depending on where your deposit sits. There are lots of banks offering between 3% and 5% interest.

purchase price £28,717

4yr 3% loan

0 deposit = £30,485.66
1000 deposit + £29,424.07 = £30.424.07
5000 deposit + £25,177.71 = £30,177.71
10000 deposit + £19,869.77 = £29,869.77
20000 deposit + £9,253.87 = £29,253.87
28717 deposit + £0 = £28,717

so someone who puts in a 10,000 deposit and takes out a 3% loan is saving £1,152.77 in interest payments. There is no real hard and fast rule since interest rates, savings rates, and dealer/manufacturer contributions muddy the waters. What works best for one person may not for another.
of course someone who has a big deposit may also chose a shorter loan term. The real kicker, is not many people will be able to get a £28,717 loan at 3% and with pcp deals running at 3.4% with good GFV why would you want to?
 
Scottland said:
Cool mine is due around the same time. What spec did you go for in the end?
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Estoril blue, 5 door, auto, pro nav, adaptive sus, HK, comfort pack inc front & rear sensors, heated seats & folding mirrors...think that's everything! How about you?
 
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