BMW and M Power Owners

Belloni

Belloni

Belloni

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17 Feb 2009
Posts
3,000
Belloni said:
I need a new car, but don't want to spend too much as it will only really be used on weekends to golf mainly(!). I have a budget of around £9k and found a couple of 2013/14 BMW 520d M Sport estates with circa 100k mileage with professional media package. Am I am idiot for looking at this?

https://www.autotrader.co.uk/car-de...romSavedAds=true&advertising-location=at_cars

https://www.autotrader.co.uk/car-de...romSavedAds=true&advertising-location=at_cars
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Or is this option? https://www.autotrader.co.uk/car-details/202104151421337?body-type=Estate&sort=relevance&make=BMW&radius=1500&model=5 SERIES&include-delivery-option=on&transmission=Automatic&year-from=2013&price-to=8000&advertising-location=at_cars&postcode=sg111pt&onesearchad=New&onesearchad=Nearly New&onesearchad=Used&page=2
 

[TW]Fox

[TW]Fox

[TW]Fox

Man of Honour
Joined
17 Oct 2002
Posts
159,599
turbot1984 said:
Been on PCP for 20 years now. Current 6 mth old 5 series would have cost me £1150/mth on 4yr loan, its £450. Cashflow is king! ;)
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This doesn't make much sense (Actually it does, it's why people PCP, but it gives away a fundamental error in the understanding of funding cars).

You cannot and should not compare the 'monthly cost' of two completely different products. It's like me claiming my 12 month old 5 Series had a monthly cost of £0 a month - technically true from a cashflow perspective but utterly meaningless in terms of appraising what it actually costs.

That £1150 a month 4 year loan would have got you a car you owned outright and which, at 4 years old, would have had a residual value of circa £20k. It's also not what you would have had to pay anyway to get the car as presumably £1150 is the cost of a loan to the list price of a 530d, just over 50k, whereas the reality is that there are 5 figure discounts on brand new 530d so the real price is about £40k. Plus of course the reality is that few people buying a car like that new would be doing so from a position whereby they have no money and therefore need to borrow the entire value of the car, so very few people end up paying £1150 a month on personal loans to buy a 5 Series.

The only cost that matters is overall cost - PCP makes people think they are paying less whilst in reality ensuring they pay more. If you are buying a brand new car, have no or little deposit and need to borrow then a PCP can work well as manufacturers often offer very low interest rates, but outside of this specific scenario it's generally a more expensive way of obtaining a car. On used cars, it's very much a different story - used interest rates can be quite ridiculous.

The bottom line is that cars a) cost money and b) lose money and the more you borrow to get one the more you'll spend. Because neither the manufacturer or the finance company are in it to lose money but the purchaser very much is!
 

turbot1984

turbot1984

turbot1984

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6 Jan 2012
Posts
5,502
In answer to the above, yes I know overall PCP is more expensive but BMW finance interest rates roughly same as bank rates? With a bank loan I could only afford a 20 odd grand car, or opt for a very long payback period.
 

turbot1984

turbot1984

turbot1984

Soldato
Joined
6 Jan 2012
Posts
5,502
[TW]Fox said:
This doesn't make much sense (Actually it does, it's why people PCP, but it gives away a fundamental error in the understanding of funding cars).

You cannot and should not compare the 'monthly cost' of two completely different products. It's like me claiming my 12 month old 5 Series had a monthly cost of £0 a month - technically true from a cashflow perspective but utterly meaningless in terms of appraising what it actually costs.

That £1150 a month 4 year loan would have got you a car you owned outright and which, at 4 years old, would have had a residual value of circa £20k. It's also not what you would have had to pay anyway to get the car as presumably £1150 is the cost of a loan to the list price of a 530d, just over 50k, whereas the reality is that there are 5 figure discounts on brand new 530d so the real price is about £40k. Plus of course the reality is that few people buying a car like that new would be doing so from a position whereby they have no money and therefore need to borrow the entire value of the car, so very few people end up paying £1150 a month on personal loans to buy a 5 Series.

The only cost that matters is overall cost - PCP makes people think they are paying less whilst in reality ensuring they pay more. If you are buying a brand new car, have no or little deposit and need to borrow then a PCP can work well as manufacturers often offer very low interest rates, but outside of this specific scenario it's generally a more expensive way of obtaining a car. On used cars, it's very much a different story - used interest rates can be quite ridiculous.

The bottom line is that cars a) cost money and b) lose money and the more you borrow to get one the more you'll spend. Because neither the manufacturer or the finance company are in it to lose money but the purchaser very much is!
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Yes i get that, its just that i want a new 530d touring (last one was 535d) every 3 or 4 years. Although its not the cheapest way of motoring it suits me and its better now than early 2000's when interest rates were high. In 2003 my £40k M3 was over £600 mth!
 

dlockers

dlockers

dlockers

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Joined
21 Jan 2010
Posts
22,178
turbot1984 said:
Been on PCP for 20 years now. Current 6 mth old 5 series would have cost me £1150/mth on 4yr loan, its £450. Cashflow is king! ;)
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Cashflow is king if you are using it to affect future earnings, i.e. investing in something that delivers a greater return than the cost of financing the car. Otherwise, you are actually distinctly worse off overall. At a bad 'new car rate' (what Jaguars were available on 6 years ago), you would be paying £5k interest over 4 years for a £28k car.

I got out of the PCP cycle just last year, and I hate to think what I spent in the 10 years I was in the game. Luckily my maths worked because I was getting huge discounts on the cars I bought thanks to privilege discount.
 

cuke2u

cuke2u

cuke2u

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Joined
27 Feb 2006
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3,956
Location
Lincolnshire
turbot1984 said:
In answer to the above, yes I know overall PCP is more expensive but BMW finance interest rates roughly same as bank rates? With a bank loan I could only afford a 20 odd grand car, or opt for a very long payback period.
Click to expand...
BMW PCP APR on new cars in 2.4%, at least it is with mine, pre-owned it is anything from 6.9 to 8.9 depending upon age.
 
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