Lease Puchase Advice

cutmorecool

Hi

I signed a Lease Purchase contract on a 06 BMW. in November 07. With the massive drop in interest rates and the bottom falling out of the car market, do I have any rights to force BMW Financial Services, to re value the car or re finance the debt, or am I stuck with my lot. I bought it for 26K and had it valued 2 weeks ago for 13k.

I realise this has happening to everyone including housing. I wondered if there was any more flexibility in Lease Purchase as I can't even give it back with out being chased through the courts.

Hintza

I imagine your stuffed. How long has it to run and what is the balloon payment at the end?

From what I gather this is what you agreed to?

As with PCP, the RV is based on the type of vehicle and the suggested annual mileage covered by the vehicle. By deferring a lump sum to the end of the agreement, the RV reduces the regular monthly payments and makes more expensive vehicles far more affordable.

As a customer you will benefit from a slightly lower finance rate with a Lease Purchase product as, unlike PCP, there is no guarantee offered at the end of the agreement in terms of handing the vehicle back to the finance company. In other words, unlike PCP, Lease Purchase offers no option to walk away from the vehicle at the end of the contract.

It is your responsibility then to settle the final RV (or balloon payment) either though additional finance, cash or settlement by part-exchange.

cutmorecool

I am pay £320 a month and 11k final payment just under 24months left to pay.

People have suggested that the dealer may have an obligation but I'm not so sure. you have to assume they will be screwing 1000's of customers in similar situation maybe that's why BMW aren't selling any cars as they can no longer sustain there inflated values.

So I will just have to sit tight and wait it out.

P.S. I love the car...

Lemonade_Pockets

The short answer is there's no way out. You'll just have to swallow it.

If you ask them nicely they may adjust the figures for you (obviously your monthly payment would shoot up). But they are not under any obligation to restructure the agreement. However you might as well do this yourself by putting money away money each month to cover likely deficit.

Most lease companies try and structure the deal so that the final payment is approx +/- 20% of the expected trade in price. But as Hintza has pointed out you take the risk/reward on yourself come the end of the agreement.

If it was sold properly (assuming you were a retail customer) the risk and benefits of lease purchase vs CH or PCP will have been pointed out to you. Even if they weren't i'm sure the agreement that you signed would of made it explicitly clear.

+ I don't understand your statement regarding them screwing customers. They are not screwing anybody tis not their fault the market has collapsed.

cutmorecool

Well what I mean is that if you walk out of the showroom with a 60k car and then 6 months later its worth 30k your screwed. BMW sell there cars on the brand value hence they are able to price them higher than say Ford. If they can't sustain that value the Brand takes the hit, people stop paying the premium. And they fold. If your experience is that you are not looked after by the brand people stop buying the product, surely there is give and take, or is that a bit new age!

Conor_3

No give and take. All cars lose around 1/3 of their value in the first year - it's been like that for decades. They lose even more if they're high mileage (anything over 10-12000 a year). People who buy BMWs typically used to be people with a lot of money so didn't care about the depreciation. Sadly, nowadays it's people who can't afford a BMW but who can manage to get the credit who buy them.

You are not entitled to any price drops. High St loans and credit card rates don't change with theBoE base rate so why should your credit agreement? I bet you'd whine like a girl if it did when the BoE went up and so did the agreement but you, and those on fixed mortgages, seem to forget that bit.

If you were daft enough to buy a car at its peak depreciation and also a low MPG one at a time fuel prices were rocketing, then that's your fault for not doing your homework.

Lemonade_Pockets

cutmorecool wrote: »

Well what I mean is that if you walk out of the showroom with a 60k car and then 6 months later its worth 30k your screwed. BMW sell there cars on the brand value hence they are able to price them higher than say Ford. If they can't sustain that value the Brand takes the hit, people stop paying the premium. And they fold. If your experience is that you are not looked after by the brand people stop buying the product, surely there is give and take, or is that a bit new age!

New age?? !!!!!! are you banging on about.
If you were daft enough to buy a BMW on the sole basis that you thought it was going to have good residuals then yes you have been screwed but more by your own naivety than BMW.

Also it is worth noting that BMW's core brand value is not high residuals. It was merely a side effect which allowed them to expand their market share to people who wouldn't of previously been able to afford them. But guess what (ignoring the economic climate which BMW has little control over) volume goes up residuals go down.....the little known theory of supply vs demand.

So in the last few years BMW have sold record number of cars. In the last 6months the used car market has declined @ near record rates, hence !!!!!! residuals. What would you of done differently if you were Mr BMW? Only sold to cash customers and not to people taking unresearched risks on chucky??

hewhoisnotintheknow

why would they do this? they would make no money at all, someone had to loose some money, it wont be them as its their business to make money

Scuttsy

[If you put a deposit down there may be a possibility it is regulated ( borrowed under 25K in your persinal name and not a company) which means once half of the total amount financed is paid you can hand it back to us.]

Would this still apply to a lease purchase not a PCP????

cutmorecool

I just thought that there were different rules for car finance and personal loans etc... I just wondered if any one new what options I had with regards to reduce my out goings, one being was possible to renegotiate the payments on the car finance.

I had an audi before and bought that with guaranteed value at the end of the term. The car was worth so much more than the Guarenteed value, that I was able to afford a BMW and because the Audi held its value so well I didn't take the same option with BMW all though I believe it was offered. Then the CC came along and it looks like the will be a huge short fall in the value. I realise that it bad luck and bad timing and many people are in the same boat.

Hintza

You need to do some more research into the various car financing plans. You were on a PCP before but you are now on Lease Purchase and are a bit stuffed.

Your only option will be to pseak to the finance company but at the end of the day any figure they give you will be based on the value of the car. Don't expect a happy outcome.