Negotiating the balloon payment with BMWFS

Discussion in 'F80 M3 Saloon / F82 M4 Coupe / F83 M4 Convertible (2014-present)' started by Telfordboy, Mar 13, 2018.

  1. 13 Mar 2018 at 2:30 PM #21
    DeadEye

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    Your monthly payments were calculated from the GFV - however, like you say - they can have it back and sell at a loss or let you have it cheaper - give 'em a call!

    Although when does your term end if you're only 2 years in?
     
  2. 13 Mar 2018 at 3:10 PM #22
    Telfordboy

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    I'm a year or so from term so probably too early to call them. My options are keep the M4 (cheap option) or place an order for a 911GTS (not cheap). I would have to order the Porsche pretty soon to get a delivery in time, hence the reason I'm asking the question rather early.
     
  3. 13 Mar 2018 at 6:34 PM #23
    Dwaind

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    So I bought an M4 on 0% PCP with a village of 15kpa the (G)FV is 22k. As it was 0% the cost of finance didn't change but the final value dived. I thought that was good. Was I wrong ?

    I am doing about half that millage atm
     
  4. 13 Mar 2018 at 6:59 PM #24
    Jacko 11

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    Think you need to watch GFV as some can be higher than others. I have noted that Mercedes, BMW & Audi all tend to have highish GFV and BMWs depreciate a lot, as do most cars. A higher GFV means a higher payment at the end - although this could work in your favour if you have a diesel car and values suddenly plummet in which case hand the car back after a period of time.
    There is never any guarantee that you will have equity in the car on PCP deal. You could put a larger deposit with lower monthly payments and still lose money (reduced equity). Unless you wish to buy the car and keep it at the end I would chop it in for something else.
    An astute friend of mine always puts the minimum down and pays the monthly costs (RR Sport) as he knows that you will only lose money on cars. It might be an idea to try and save a bit extra each month to reduce the balloon payment\refinance at the end to own the car.
    I tend not to keep the car until the end of the term and change early.
     
  5. 13 Mar 2018 at 7:55 PM #25
    rsk21

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    Overpaying versus market value at the time is irrelevant here. When the punter signs up to a PCP he enters a binding contract and his monthly payments are calculated specifically on an end value that if he wants the vehicle at the end of term he has already agreed to pay. No finance house will negotiate on this I’m afraid.

    GFV and FV aren’t used anywhere in mass market auto finance. The new term which all the manufacturers very quietly slipped in instead is “optional final payment” meaning they have no obligation to underwrite a p/x value.
     
  6. 13 Mar 2018 at 8:13 PM #26
    jayukRS

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    In December mate I got £29.5k for my 14 plate light spec car against the CP:thumbsup:

    Yes, but you have to finish the term. I think you can also VT half way through the term and walk but unsure on specifics of this.
     
  7. 13 Mar 2018 at 8:52 PM #27
    CJPJ

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    I think you can walk away so long as you have paid at least 50% of the total cost of the finance agreement. So if you bought a car for £55k with a £5k deposit with GFV of £28k and 48 monthly payments of £600 ...... you would take the £55k add total interest charges - say £8k to make £63k - and then so long as 50% of this has been paid or £31.5k then you could walk away. In this example you would have to pay £31.5k less £5k deposit less 45 payments of £600. You could only walk away 3 months before the end of the PCP.

    I could be wrong but thats my understanding.
     
  8. 13 Mar 2018 at 8:53 PM #28
    jayukRS

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    Double post
     
  9. 13 Mar 2018 at 8:55 PM #29
    jayukRS

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    Yeah it's something like that if you VT. But if you run the term there's nothing to pay I believe if you don't pay the balloon which essentially is your GFV . I always chop in half way through and never really had to pay anything extra so wouldn't know the ins and outs. :thumbsup:
     
    Last edited: Mar 13, 2018
  10. 13 Mar 2018 at 10:02 PM #30
    FlipperMan

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    The financial services companies got wise to voluntary termination a number of years ago, they got pretty p*ssed off with the dealers in their sister companies (the National Sales Companies who import the cars) actually approaching customers and suggesting they VT the cars and buy new. I’ve VT’d my last 2 cars - there’s no final admin charge and it’s typically just over 3yrs in a 4yr deal (on the BMW’s I’ve owned). No FS company (of the ones I’ve done work for - MBZ, BMW, Leaseplan, Fiat, JLR, VW Group) will negotiate a balloon. They would look at refinancing for you but the RV (Residual Value) estimating is so good these days that they’re usually bang on. They accept, across their book, there will be wins and losses.
     
  11. 13 Mar 2018 at 10:14 PM #31
    ScottBacon

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    There is no chance to negotiate a RV on an existing contract. That is what you signed up for and that is what the payments on the whole term have been based on.
     
  12. 14 Mar 2018 at 5:13 AM #32
    charltjr

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    The reason the whole GFV/FV terminology is being dropped is they were worried about the number of people who thought they were being guaranteed to get that much in trade-in for their car at the end of the term.

    Optional final payment is clearer for joe public to understand. Doesn’t change how a PCP works, the final payment is still underwritten by the finance house so there’s no extra risk for the consumer.
     
  13. 14 Mar 2018 at 8:12 AM #33
    rsk21

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    This !

    It was also dropped over fears it left the industry massively exposed to claims of mis-selling and subsequent PPI style claims.

    It is frightening how many people still understand neither the mechanics nor the obligations of a PCP deal and several posts on this thread simply highlights that.

    I really don’t get how people sign up for such financial commitments with such little understanding of the product.
     
  14. 14 Mar 2018 at 8:35 AM #34
    SimonH

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    Jay,
    If you run the full term, the ballon payment does have to be paid, by either yourself, or the dealer who does the deal on your next car. The whole idea of PCP, was to structure a deal, whereby, at the end of the term, you would have some equity in the deal for your next car, after the balloon payment was taken into account.
    I think folks who have bought an M product, should always meet the final payment, with equity in their car, if you have put a decent deposit in. Its when we want to change early that the problems arise.It doesnt help financial deals, when BMW seem to offer big discounts, and when 0% apr deals come along, thats a real kick in the teeth for current owners.
    I have a 435d i simply cant/wont deal out of atm, due to a large Neg Eq factor, and that was with a 10k discount, and i put £5k in. BMW have made this car virtually worthless, with the deals they have offered since i bought the car for my wife. I have had 14 new cars from BMW in the last 10 years, and have been nowhere near the position i am in now, with any of the others.
    Ive heard even BMW dealers say, that there may come a point when these PCP deals are to become the new PPI fiasco.
    After saying all that, i personally dont think PCP deals are a bad thing, its just you have to understand how they work, and do the maths at the beginning for yourself. You must also buy a car, that you feel will hold its value. My435d is just a mainstream car, and BMW have mucked it up, by offering so many incentives to shift stock, but the longer i have the car, in theory, and hopefully, the neg eq will reduce, but i can see myself keeping it, to the point i can give it them back, which is usually around the 3 year mark in a 4 year deal, simply because i refuse to buy myself out of the deal.
    Apologies for the long winded chat here :D :thumbsup:
     
  15. 14 Mar 2018 at 8:50 AM #35
    pstevie

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    So as an example if I have a PCP with a 35k GFV and when it gets to the end of the term the car is only valued at 30k they wouldnt sell it to me at 30k?

    What would they do with it?
     
  16. 14 Mar 2018 at 8:53 AM #36
    jayukRS

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    Oh of course it does, the balloon will be paid by the dealer as the supposed equity if any will clear it. What I'm saying and how I've been told that If you run the term and don't want to keep the car (paying the balloon) you walk.....
     
  17. 14 Mar 2018 at 8:56 AM #37
    rsk21

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    It won't have a GFV.

    It will have an amount which you are obliged to pay under the terms of your contract if you want to keep it.

    if market value is less than this its is irrelevant. The dealer has no say in it.
     
  18. 14 Mar 2018 at 8:59 AM #38
    rsk21

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    Yes you walk, assuming the car is within the agreed mileage and condition terms you signed up to. If not you have to pay fees accordingly.

    Again forgive me but how can people not know this when entering into what for most is their second largest financial commitment and for some their first ??!!!
     
  19. 14 Mar 2018 at 9:17 AM #39
    jayukRS

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    I understand it mate as this is my understanding also :thumbsup:
     
  20. 14 Mar 2018 at 9:34 AM #40
    SimonH

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    lets be certain of this Jay,
    If your balloon payment is £25k at the end, and you run the full length of the term, and you want to hand it back to BMW, and they only see the car at £23k, then you will have to pay them £2k, before you do not have any further obligations under that deal. BMW FS, or any other finance company, want their balloon payment in full, from someone. The good thing here, as i was trying to elude to before, is that a BMW M4 should be worth more at the end, than the ballon payment. I cant see an M4 being only worth low £20ks at the end. Now if it was a BMW M3, thats a different matter, worthless !!!, oops sorry, did i say that out loud, lol, :p :p :muttley: :thumbsup:
     

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