Advice (Experience) with BMW Finance

motorguy

Trebor16 wrote: »

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.

APR includes the cost of fees?

staffie1

mrshultz wrote: »

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.

The way these PCP agreements usually work is that you don't own the car until you make the final 'balloon' payment. You will have 3 options at the end of the 48 mths:
Hand the car back and have nothing further to pay;
Pay the 'balloon' payment at which point you will then own it;
Trade it in for another new car and start a new agreement (if the car is valued at above the 'balloon' figure, that amount will be given as a discount off the price of the new car.

TradePro

Trebor16 wrote: »

Not necessarily, as dealers do make out of finance deals

They don't @ 4.9% APR.

gilbert_and_sullivan

Certainly not my area, but have you looked at Lings Cars to see how much a simple lease plan would be to compare.

Hmm this BMW will be 4 years old and you'll still be paying £8k balloon for it, that seems awfully expensive for an Astra sized hatch, thats not meant harshly it just IS a lot of money for a small car.

If you do proceed with the BMW deal and after 10k miles are still serious about buying the car when the time comes, i suggest you get interim oil changes done to the car during your tenure, it might only come up for change every 20k as it is but if its a Diesel then BMW turbos are not exactly long life items, giving it some fresh oil at sensible intervals could be a prudent investment.

Trebor16

TradePro wrote: »

They don't @ 4.9% APR.

And you can state that with 100% certainty?

TradePro

Trebor16 wrote: »

And you can state that with 100% certainty?

Yes. It's common sense really - the 'flat' interest rate here will be around 2.5%, which financial institution would pay a commission for the sale of that?

The 4.9 (and similar deals) are usually SUBSIDISED by the dealer/manufacturer to make the sale of the car easier (more attractive), there are no fat commissions paid. At best, though this is unlikely, the dealer may earn a £50 admin fee or something, there are certainly no big payouts.

Trebor16

TradePro wrote: »

Yes. It's common sense really - the 'flat' interest rate here will be around 2.5%, which financial institution would pay a commission for the sale of that?

So you don't know for certain then. If you did you wouldn't be saying "it's common sense really", you would be backing your claim up with some facts.

Tradepro wrote:

The 4.9 (and similar deals) are usually SUBSIDISED by the dealer/manufacturer to make the sale of the car easier (more attractive), there are no fat commissions paid. At best, though this is unlikely, the dealer may earn a £50 admin fee or something, there are certainly no big payouts.

A rate of 4.9% is not far off what Clydesdale Bank will charge on a loan of over £7500, so it is entirely reasonable to assume the level of subsidy is non existant at a rate of 4.9%.

It would appear you are guessing with your comments, unless you have some hard facts you are holding back to present at a later point.

TradePro

You cannot compare the finance offers on new vehicles with a bank's 'headline rate'.

If you look at this link http://www.cbonline.co.uk/personal/loans/personal-loan/

You will see many disclaimers, basically, only some select customers are going to obtain the 5.1% APR loan, it is offered as a 'loss leader', and the bank will make it's money on all of the 'sorry, we couldn't quite get to that figure for you' customers...Also, no commissions will be paid to a third party on these loans either, will they?

The vehicle finance offer is fixed for everyone (except buyers that fail the criteria due to poor credit ratings, naturally - they will not be offered a higher rate by BMW Finance).

2.5% means £25 interest per thousand pounds borrowed - what proportion of that can the dealer expect then?

Tiddlywinks

mrshultz wrote: »

Hi all,
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.

If it is a PCP (and this sounds like it is) you do NOT own the car until the final balloon payment is made.

This fact needs to be reflected in your insurance and you must declare that BMW Finance is the owner and you are the registered keeper only.

The car is not yours to sell within the finance period without the consent of the finance company.

Trebor16

TradePro wrote: »

You cannot compare the finance offers on new vehicles with a bank's 'headline rate'.

If you look at this link http://www.cbonline.co.uk/personal/loans/personal-loan/

You will see many disclaimers, basically, only some select customers are going to obtain the 5.1% APR loan, it is offered as a 'loss leader', and the bank will make it's money on all of the 'sorry, we couldn't quite get to that figure for you' customers...Also, no commissions will be paid to a third party on these loans either, will they?

Of course you can compare a bank rate with that being offered by a dealer. You will also see disclaimers in the so called deals being offered by car dealers, with the same "sorry, you don't qualify for this rate" patter used by the banks and credit card companies.

TradePro wrote:

The vehicle finance offer is fixed for everyone (except buyers that fail the criteria due to poor credit ratings, naturally - they will not be offered a higher rate by BMW Finance).

No it is not, they often have the same issues that you get with the "representative" rates offered by banks, not just for those with poor credit ratings.

TradePro wrote:

2.5% means £25 interest per thousand pounds borrowed - what proportion of that can the dealer expect then?

If they get a rate of 2.5% and borrow over one year. If they borrow for longer then the interest paid will increase. The fact is dealers will get some reward for doing all the work in setting up a finance agreement.