Is this a good PCP deal or am I being daft?

[10mmspanners]

Brand new M car..

OTR 81995 with dealer contribution
Deposit 30k
24 x 328
GFV 49k

Never done PCP so never really know what to look for etc. APR was low, think around 4%.

Basically when I come to sell independently (not hand back), will I have much of my 30k to show? I know the GFV is well off as equivalent cars are going for 65k plus now..

[AudiMan9000]

£30k is an eye wateringly big deposit. But it’s all relative I suppose. If you don’t mind me asking, what job do you do to afford that?

[Mandat]

10mmspanners said:

Brand new M car..

OTR 81995 with dealer contribution
Deposit 30k
24 x 328
GFV 49k

Never done PCP so never really know what to look for etc. APR was low, think around 4%.

Basically when I come to sell independently (not hand back), will I have much of my 30k to show? I know the GFV is well off as equivalent cars are going for 65k plus now..

If you keep the car for the full term, you will have spent £86,872.

How much of that you will get back will depend on what you can sell the car for at the time.

Assuming that you can sell if for, say £65,000, you will have £21,872 of your equity back.

ETA: Brain fart moment.

Edited by Mandat on Saturday 18th March 12:18

[Mandat]

AudiMan9000 said:

£30k is an eye wateringly big deposit. But it’s all relative I suppose. If you don’t mind me asking, what job do you do to afford that?

The bigger the deposit, the smaller amount to borrow, and thus less overall interest to pay.

[samoht]

Since the B of E base rate is 4%, a PCP on 4.x% seems like a decent rate per se, it looks like a favourable manufacturer provided rate to help sell new cars.

I doubt you could finance that specific car at a lower rate anywhere else, so the only potential alternative would be to buy a different car whose manufacturer is keener to shift metal, but that would probably not be the car you want.

Or to buy outright if you have the £82k to hand.


But yeah, it doesn't seem like a terrible deal, you're paying ~£5k in interest in exchange for borrowing £50k of the asking price for two years, and having a floor of £49k of how far the value can fall.

[rudester]

2 year old M4's, assuming that's the 82k M car, are already below 58k retail, which probably equates to 53k trade. I would only assume that that price will fall further as more of the new model hit the market, especially when customers on 36 month PCP's start handing back their cars. I can't imagine you'd see much of your 30k deposit at the end of 2 years.

Edited by rudester on Friday 17th March 22:08

[raspy]

10mmspanners said:

Brand new M car..

OTR 81995 with dealer contribution
Deposit 30k
24 x 328
GFV 49k

Never done PCP so never really know what to look for etc. APR was low, think around 4%.

Basically when I come to sell independently (not hand back), will I have much of my 30k to show? I know the GFV is well off as equivalent cars are going for 65k plus now..

Surely there are better places to "invest" £30k for 2 years with a better return, rather than this deal which aims to get low "monthlies"?

[worsy]

10mmspanners said:

Brand new M car..

OTR 81995 with dealer contribution
Deposit 30k
24 x 328
GFV 49k

Never done PCP so never really know what to look for etc. APR was low, think around 4%.

Basically when I come to sell independently (not hand back), will I have much of my 30k to show? I know the GFV is well off as equivalent cars are going for 65k plus now..

Barking.

[pb8g09]

On that particular car and on those particular sets of numbers and assumptions it’s an alright deal.

But if I wanted an M car and had £30k cash already I’d be buying a used one outright and holding back my £300 a month for servicing and maintenance.

[Denno B]

As I guess I’d say you may see £15k of your deposit back selling privately after the 2 years, so overall cost of ownership for the 2 years potentially could be £22k+.

[rudester]

Denno B said:

As I guess I’d say you may see £15k of your deposit back selling privately after the 2 years, so overall cost of ownership for the 2 years potentially could be £22k+.

Not a chance. If you go onto the BMW finance site, the GFV of an M4 after 2 years is 43k. Obviously retail will be higher, but a private sale would need to be listed lower than retail.

[Andy665]

Mandat said:

10mmspanners said:

Brand new M car..

OTR 81995 with dealer contribution
Deposit 30k
24 x 328
GFV 49k

Never done PCP so never really know what to look for etc. APR was low, think around 4%.

Basically when I come to sell independently (not hand back), will I have much of my 30k to show? I know the GFV is well off as equivalent cars are going for 65k plus now..

If you keep the car for the full term, you will have spent £86,872.

How much of that you will get back will depend on what you can sell the car for at the time.

Assuming that you can sell if for, say £65,000, you will have £21,872 of your equity back.

Incorrect, if you were to sell for £65k (unlikely) you'd get £16k of initial £30k back, so it would have cost £21,872 in total

[trashbat]

Where have you got £86,872 from?

Anyway I don't get it, but perhaps I'm being dim. If the GFV was right, your £30k deposit has paid for almost all of the depreciation. The rest of your payments, 24 x 328 = £7872, must therefore almost all be going on the interest for a loan of approximately £52k for two years.

If we consider it like an interest-only mortgage, that's like 5.5% interest, is it not? Not 4.

Edited by trashbat on Saturday 18th March 09:21

[Andy665]

trashbat said:

Where have you got £86,872 from?

Edited by trashbat on Saturday 18th March 09:21

£30k deposit

£7872 in payments

£49k of GFV

Total - £86,872

Interest % is calculated based on the fact that GFV is a non-reducing balance

[maz8062]

I wouldn’t do that deal unless you’re 100% certain that’ll you buy it at the end of the term. If not sure, lease it:

https://leasing.com/car-leasing/bmw/m4/?term=23&am...

Better still, lease a 911

https://leasing.com/car-leasing/porsche/911/992-ca...

Costs will vary depending on mileage. PCP does sometimes work but not always.

[SWoll]

maz8062 said:

I wouldn’t do that deal unless you’re 100% certain that’ll you buy it at the end of the term. If not sure, lease it:

https://leasing.com/car-leasing/bmw/m4/?term=23&am...

Better still, lease a 911

https://leasing.com/car-leasing/porsche/911/992-ca...

Costs will vary depending on mileage. PCP does sometimes work but not always.

Need to know what M4 model his quote is for first. If it's an x-drive model (and would hope so for £82k with discount) you're looking at £46k over the same term, so nowhere near as good a deal.

https://leasing.com/car-leasing/bmw/m4/coupe/m4-xd...

[Soupdragon65]

I always rationalise this by thinking that the cost of the interest to you is what you are paying for the insurance against the value in three years being less than the GFV.

You should put as much spare cash into the deal in the form of a deposit as possible surely as you are effectively ‘earning’ the interest rate tax free on that amount you ‘invest’ with zero risk. That’s hard to beat.

[Deep Thought]

4.9%, assuming its BMW Finance.

Also, £5.5K deposit contribution from BMW, plus whatever else the dealer is giving you off.


Assuming its worth £55K at 2 years old (private sale might be tricky at that price), and the total cost is £86,872, then it will have cost you around £32,000 to drive it for 2 years, or £1,328 a month.

So for your £37,000 or so in (including deposit and payments) you'll be getting around £5K back.

Edited by Deep Thought on Saturday 18th March 14:56

[maz8062]

SWoll said:

maz8062 said:

I wouldn’t do that deal unless you’re 100% certain that’ll you buy it at the end of the term. If not sure, lease it:

https://leasing.com/car-leasing/bmw/m4/?term=23&am...

Better still, lease a 911

https://leasing.com/car-leasing/porsche/911/992-ca...

Costs will vary depending on mileage. PCP does sometimes work but not always.

Need to know what M4 model his quote is for first. If it's an x-drive model (and would hope so for £82k with discount) you're looking at £46k over the same term, so nowhere near as good a deal.

https://leasing.com/car-leasing/bmw/m4/coupe/m4-xd...

£3k over 24 months is still cheaper. I don’t get why folk PCP instead of leasing unless there’s a px to take into account. The lease tends to come with the option to extend and to buy at the end of the term.

[SWoll]

maz8062 said:

£3k over 24 months is still cheaper. I don’t get why folk PCP instead of leasing unless there’s a px to take into account. The lease tends to come with the option to extend and to buy at the end of the term.

If it's an X-Drive model, as seems likely for the overall cost with a £5k dealer contribution, then there is no way the £46k lease is the cheaper 2 year deal. The lease is more expensive, and by a significant margin as well (£10-15k or 30%+)

Edited by SWoll on Saturday 18th March 15:53