mkaiser1 said:
Guys, this is the latest PCP offer on the new Z4 on the BMW UK website, but based on the APR stuff you've all just said I don;t understand the numbers - they don't quite add up to me :? Also, I'm really hankering after the 35i
Model BMW Z4 sDrive 23i
34 Monthly Payments of £369.00
On the Road Cash Price* £28,650.00
Customer Deposit £4,000.00
Dealer Deposit Contribution £2,385.00
Total Deposit £6,385.00
Amount of Credit £22,265.00
First Monthly Payment £543.00
Optional Final Payment £14,145.00
Total Amount Payable £33,619.00
Contract Mileage 30,000
Excess Mileage Charge (per mile) 12.6p
Typical 9.5% APR
First thing to remember is that APR is simply a way of comparing finance deals where the amount borrowed is the same but the repayment criteria might differ - as a stand-alone it isn't especially helpful.....but as a guide, most independent PCPs are sub-10% APR. Its been yonks since I did this stuff but there are something like 20-odd inputs to an APR calculation, so its not straightforward.
I'll work it through and let a younger thrusting banker like CJ correct me if I'm wrong (the Exchange Control Act was still in force when I did my ACIB!).... :smart:
Car price = £28,650 less total deposit £6,385 = amount borrowed of
£22,265.
Total repayments = £543 + (34x£369) + £14,145, thats = £543 + £12,546 +£14,145, which = a total of
£27,234.
Deduct the amount borrowed (£22,265) from the amount repaid (£27,234) gives you
£4,969. Thats the total amount of interest over three years.
So if we divide that by three years, and then express it as a percentage of the amount borrowed, we get the %age flat rate, probably a more meaningful figure for most people. That sum works out to £4,969/3 = £1,656.....so then £1,656/£22,265 x 100 =
7.43% flat...........which is a pretty competitive rate for personal borrowing in the current climate, plus an 8.3% deposit from the manufacturer (discount effectively).
And the APR comes in when you consider the actual structure of the deal - for example, the APR on a deal where you pay monthly in advance would be different from one where you pay monthly in arrears..............in this example, I suspect its in advance, so you need to deduct the £543 from the "amount borrowed" to see that in fact you are only borrowing £21,722. But that only changes the APR; the flat rate is always that basic calculation above, i.e.
deduct amount borrowed from amount repaid, then divide that figure by the number of years, then divide that figure by the amount borrowed x 100 = Flat rate.
So I'd say not a bad deal at all. Of course you'd then have to find the GFV if you wanted to keep the car, and you'd normally refinance that, often at the same rate as the original deal, exactly as I've recently done. But even if you did that for another three years, its exactly the same as if you borrowed that £22,265 over six years at 7.9% flat, nothing lost or gained.
And the benefit of using manufacturers finance like this (assuming you need it) is that, unlike a bank, or other corrupt institution (
), they are looking for reasons to
do the deal, not refuse it, so your chances of getting finance are much better.
Funny though, I've just remembered why I've been in IT the last 18 years
Hope that all helps.....in fact I'd avoided coming into this bit of the forum since joining, now I'm wishing I hadn't...I can feel that old nagging again....hmmm, shiny new car....arrgghh!
Now ask me about the rule in Claytons Case....
The finance manager has stopped pestering me thereafter!
it's here nor there in 4 years whether I could have saved a grand here or there.. Luxury cars always cost you in the long run.. It's all about managing those costs the best you can.. Pcps are a way of completely controlling what the costs are.. Just like fixed rate mortgages you might pay snit more, but it's predictable which for ms works ok.
