Hire Purchase Agreements

stridernje

So just to clarify a couple of points. The residual value I referred to is indicated as a "optional final payment", or the car can be handed back in accordance with the terms of the agreement. But this is obviously a figure that the finance company deem suitalbe to recover any final costs after re-sale.
It is a "Hire Purchase Agreement regulated by the consumer credit act 1974" This is noted in the type of credit section.
Both the dealer I have been to see and the Dealer through CarWoW are BMW dealerships, but as stated the Carwow dealer may be using a different finance company, I shall look into and find out. The dealership are using BMW financial services.

bazzyb

Do you know what the balloon payment is on each offer? Or have you just been given monthly payments from the second dealer and no further info.

As they are both BMW main dealers who are quoting you on the finance, my suspicion is that the one who has offered the better price on the vehicle is quoting the finance at a higher rate to get a bigger commission to compensate for a lower profit. However you don't seem to have enough information to go on - it would be worth getting a full breakdown from each dealer - specifically rate and balloon payment. (Possibly a silly question but you have checked they are quoting over the same term and one isn't a shorter deal?)

If they are in fact both quoting from the same lender (Alphera) you could always go back to dealer number 2 and say dealer number 1 have quoted you X% and see if they will match it. As others have already stated above though I would ensure that PCP is definitely the right route for you as for many people there are often much better ways to finance vehicles - the best option depends on whether you intend on keeping the car or not.

Mercdriver

stridernje wrote: »

er... because we can??

Tarambor's point is that you can get £14k on a better rate and get a car that is 1-3 years old where you can extend the manufacturer's warranty (definitely useful on a BMW) and the car is still yours at the end of the term.

My annual mileage wouldn't work with PCP. I bought an 18 month old Mazda CX5 on 0% APR HP. In 2.5 years time, the car will be mine with no more to pay. I don't have to hand it back and have nothing left. I have extended the manufacturer's warranty by 3 years, so when I have finished paying I will still have 18 months left on that warranty. The amount I am borrowing is a few k below 14k as I traded in my E class.

I can understand the desirability of having a new car every 2-4 years. But don't assume because it is new that it will not have issues and that they will not be ruled as wear and tear.

Tarambor's position - and he is consistent on this - is why pay 14k PLUS your deposit to potentially have nothing at the end of it.

I work in an area that is feast or famine - in 3 years I could be in a situation where i cannot afford to keep paying a substantial amount each month. If I were on a PCP I would be up a gumtree. Yes I would still have to run my car, but I won't have a balloon payment or be left without a car at the end of the term.

I am paying £319 a month, not that much more than that quote of £300 a month, and I don't have that balloon waiting for me. I don't believe in tooth fairies so I don't assume equity in the car at the end of the term, and when discussing my mileage with salesmen, who at first said not to worry, until I insisted that if were to decide to walk away I didn't want to be left with a huge bill, my payments based on 22k a year were over £400 a month. My payments are substantially below that , and I still have the car at the end of the 3 years, if I decide to move on, I have the remaining value - which won't be huge to use. So I pay less and I have far more equity than at the end of a PCP deal.

stridernje

bazzyb wrote: »

Do you know what the balloon payment is on each offer? Or have you just been given monthly payments from the second dealer and no further info.

As they are both BMW main dealers who are quoting you on the finance, my suspicion is that the one who has offered the better price on the vehicle is quoting the finance at a higher rate to get a bigger commission to compensate for a lower profit. However you don't seem to have enough information to go on - it would be worth getting a full breakdown from each dealer - specifically rate and balloon payment. (Possibly a silly question but you have checked they are quoting over the same term and one isn't a shorter deal?)

If they are in fact both quoting from the same lender (Alphera) you could always go back to dealer number 2 and say dealer number 1 have quoted you X% and see if they will match it. As others have already stated above though I would ensure that PCP is definitely the right route for you as for many people there are often much better ways to finance vehicles - the best option depends on whether you intend on keeping the car or not.

Thanks, what I am trying to drill down to is that if the lender is the same and the APR is the same then either the end payment is being adjusted or the charges for the credit are different.
depending upon the dealer. But I will look into it further, thanks.

stridernje

Mercdriver wrote: »

Tarambor's point is that you can get £14k on a better rate and get a car that is 1-3 years old where you can extend the manufacturer's warranty (definitely useful on a BMW) and the car is still yours at the end of the term.

My annual mileage wouldn't work with PCP. I bought an 18 month old Mazda CX5 on 0% APR HP. In 2.5 years time, the car will be mine with no more to pay. I don't have to hand it back and have nothing left. I have extended the manufacturer's warranty by 3 years, so when I have finished paying I will still have 18 months left on that warranty. The amount I am borrowing is a few k below 14k as I traded in my E class.

I can understand the desirability of having a new car every 2-4 years. But don't assume because it is new that it will not have issues and that they will not be ruled as wear and tear.

Tarambor's position - and he is consistent on this - is why pay 14k PLUS your deposit to potentially have nothing at the end of it.

I work in an area that is feast or famine - in 3 years I could be in a situation where i cannot afford to keep paying a substantial amount each month. If I were on a PCP I would be up a gumtree. Yes I would still have to run my car, but I won't have a balloon payment or be left without a car at the end of the term.

I am paying £319 a month, not that much more than that quote of £300 a month, and I don't have that balloon waiting for me. I don't believe in tooth fairies so I don't assume equity in the car at the end of the term, and when discussing my mileage with salesmen, who at first said not to worry, until I insisted that if were to decide to walk away I didn't want to be left with a huge bill, my payments based on 22k a year were over £400 a month. My payments are substantially below that , and I still have the car at the end of the 3 years, if I decide to move on, I have the remaining value - which won't be huge to use. So I pay less and I have far more equity than at the end of a PCP deal.

If your paying £316.00 over 30 months a 0% apr then you borrowed around 10K. If I was going to buy a car for that amount then I would do the same. And you are buying to suit your circumstances. People say you don't make money on cars which I tend to agree with. The point you and Tarambor are making is that you save money because you will no longer be paying that monthly fee after a specific time frame. Therefore whilst I am still spending my £300 per month, you are saving yours. But that is how we chose to spend our money.