Advice (Experience) with BMW Finance

mrshultz

Hi all,

First post so I will begin with a friendly hello!

I am looking at purchasing a new car, in particular a BMW 1 series. I've been into my local BMW dealer and they have given me some figures on their BMW Smart Finance. My understanding of the Smart finance (please correct me if I'm wrong), is that that I own the car and I make, in my instance, 47 monthly payments. I then have a final payment, which in this instance is around £8k. I have the choice to either sell the car and that selling price should cover the final payment and some, I can part ex the car back to BMW to take out a new one, or I can hand the keys back and walk away (assuming millage is ok and such...) My understanding is that the 8K is guaranteed value, so I'm not in danger if the car market falls over, of having to fork out thousands to pay this off.

I wanted to know if anyone has been through this experience themselves, any advice or cautions? Just to give you some numbers, the car value is £24K. They want a £4000 deposit (I will sell my car privately as I was unhappy with the amount they gave me), they want £300 a month for 47 months and the final payment. At any time I can sell the car and pay the finance off, however this is only really viable at about the 2.5 year point because of depreciation.

What do people think, am I just throwing money into a bottomless pit, would I be better off getting a bank loan and buying the car outright or looking at one thats a year old?

A

motorguy

mrshultz wrote: »

Hi all,

First post so I will begin with a friendly hello!

I am looking at purchasing a new car, in particular a BMW 1 series. I've been into my local BMW dealer and they have given me some figures on their BMW Smart Finance. My understanding of the Smart finance (please correct me if I'm wrong), is that that I own the car and I make, in my instance, 47 monthly payments. I then have a final payment, which in this instance is around £8k. I have the choice to either sell the car and that selling price should cover the final payment and some, I can part ex the car back to BMW to take out a new one, or I can hand the keys back and walk away (assuming millage is ok and such...) My understanding is that the 8K is guaranteed value, so I'm not in danger if the car market falls over, of having to fork out thousands to pay this off.

I wanted to know if anyone has been through this experience themselves, any advice or cautions? Just to give you some numbers, the car value is £24K. They want a £4000 deposit (I will sell my car privately as I was unhappy with the amount they gave me), they want £300 a month for 47 months and the final payment. At any time I can sell the car and pay the finance off, however this is only really viable at about the 2.5 year point because of depreciation.

What do people think, am I just throwing money into a bottomless pit, would I be better off getting a bank loan and buying the car outright or looking at one thats a year old?

A

Sounds like it has been well explained to you.

I take it that there is a sizeable discount off list price in this equation? You should be aiming for 8-10%.

Check on BMW's website that there are no deals on specific models that might work better for you, eg, my wife got a z4 with a list price of £35K for £3K down and £300 a month - probably wont suit your needs but there might be other deals that might.

Despite what people say, you're probably going to be getting a better deal on a new car than say a demo or 6 month old one, because of the way PCP deals work.

Trebor16

What is the APR they are offering on the finance?

neilmcl

OP, you may wish to have a look at the BMW forums on babybmw.net (1 Series specific) and bmwland.co.uk.

Also, are you planning on keeping the car or handing it back? Have you considered contract/lease hire as an alternative?

Apples2

I'm not one to comment on finance deals, the logic just goes right over my head.

I'd rather buy a 4 year old one for £8k than buy a new one for £16k then have to hand over another £8k after I have driven it for 4 years.

mrshultz

Hi all,

Thanks for the really quick and helpful replies

The APR is 4.9% which if im not mistaken is probably cheaper that most bank loans a the minute?

With regards to the discount, they would only give me £500 off the car because they were trying to sell me one in stock, rather than factory built. I know there is room for more money to come off the price, and I'm going to a different BMW dealership this week to see if they are prepared to offer a better price, not being funny they either want to sell me a car or not, so I'd like to think I could get £2k off the price.

It's nice to have the option to trade in the car, however I would probably like to keep it in all honesty.

I agree about the value, however I think the appeal with the new car is I know the exact history, I don't get any surprises and I get perks like free servicing, they guarantee the paintwork etc which makes it more sellable.

I'm also exploring the idea of buying it outright with a loan, as much as the APR is higher, I have no milage limitation and I also get the car at the end. If a bank loan is only going to cost me £120 a month extra, over four years, I would pay an extra £5.2K rather than the 8 or 9 they want for me to keep it and again I don't get the milage penalty.

I think I will also ask about getting some prices on one thats 6 months old or so, I can see used ones on the BMW website that have done 5000 miles for £18k, at least I wouldn't be lossing as much; but there is a certain feel good factor about driving a new 13 plate car away...

Has anyone got any horror stories about car financing?

A

NeverEnough

The horror stories about car financing usually get posted on these forums when the purchasers have gone into arrears /haven't kept up the payments as per agreement.

My BMW is financed via BMW finance and they have been absolutely fine, good administration, no hassle, but then the account is up to date - I have had several cars via Close Finance and Black Horse in past years and again, no issues. Most finance houses are fine if you keep your account in order!

The deal from BMW sounds a good one- just the depreciation on new cars that gets me, I usually buy used for that reason.

motorguy

mrshultz wrote: »

With regards to the discount, they would only give me £500 off the car because they were trying to sell me one in stock, rather than factory built.

A

That would be more reason to give you a BETTER discount!

Check https://www.broadspeed.com - they are a broker who will put you in touch with the main UK dealer who will supply the car at that price. Ask your dealer to price match their price OR you'll give them a ring and get the car through their dealer.

Trebor16

mrshultz wrote: »

Hi all,

Thanks for the really quick and helpful replies

The APR is 4.9% which if im not mistaken is probably cheaper that most bank loans a the minute?

With regards to the discount, they would only give me £500 off the car because they were trying to sell me one in stock, rather than factory built. I know there is room for more money to come off the price, and I'm going to a different BMW dealership this week to see if they are prepared to offer a better price, not being funny they either want to sell me a car or not, so I'd like to think I could get £2k off the price.

It's nice to have the option to trade in the car, however I would probably like to keep it in all honesty.

I agree about the value, however I think the appeal with the new car is I know the exact history, I don't get any surprises and I get perks like free servicing, they guarantee the paintwork etc which makes it more sellable.

I'm also exploring the idea of buying it outright with a loan, as much as the APR is higher, I have no milage limitation and I also get the car at the end. If a bank loan is only going to cost me £120 a month extra, over four years, I would pay an extra £5.2K rather than the 8 or 9 they want for me to keep it and again I don't get the milage penalty.

I think I will also ask about getting some prices on one thats 6 months old or so, I can see used ones on the BMW website that have done 5000 miles for £18k, at least I wouldn't be lossing as much; but there is a certain feel good factor about driving a new 13 plate car away...

Has anyone got any horror stories about car financing?

A

It's a good APR but factor in if they charge up front and end of loan admin fees which all add to the cost.

Although it is a nice feeling driving off in a brand new car if you can save £6k on the list price of the car you want to buy one that is a only a few months old then that is worth serious consideration. Put it another way that is 75% of the amount you would have to pay back at the end of your loan period to pay off the car. There are loans out there for 5.1% at the moment (Clydesdale Bank) which would be a negligible difference to the 4.9% you are being offered by BMW Finance.

mrshultz

Thanks for that website, that quotes come in about 4k cheaper so that gives me some ammo

I think your right with the payments, I've obviously done a bit of background digging and the common theme seems to be people that have been made redundant and are then unable to make payments resulting in repo and court cases etc...

I will take a look at Clydesdale bank, do you think it would give me more discount power if I could go to the dealer and buy it outright?

A

Trebor16

Not necessarily, as dealers do make out of finance deals, but remember with dealer finance that you have the right to withdraw from the agreement within 14 days of signing any agreement and all they charge is interest for the days they lent you the money.

It is something I did when I bought a BMW motorcycle lasy September. BMW Finance were putting in a £800 deposit contribution so I signed up, picked up the bike and then withdrew from the agreement. It cost me £5.30 in interest and I still had the deposit contribution in my pocket.

So that is another possible scenario.

Best thing to do is now you have a quote from Broadspeed is to try two or three dealers and see what they can offer you.