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Agility finance

Discussion in 'General Mercedes-Benz Related Discussion' started by skyeceltic, Jan 23, 2011.

  1. hawk20

    hawk20 Senior Member

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    You really don't have to plead poverty. You don't have to want finance. I have bought plenty of cars outright and have always got a good discount. Try this: at the moment they are offering £5,000 towards the deposit oon an E class Avantgarde 220cdi. Bet you can get that as a discount by offering to buy for cash. If you can't I can get it for you.

    It is not right to say dealers only want to sell finance. They get up to 15% gross margin on the cars. They really want that!
     
  2. wi-fi

    wi-fi Senior Member

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    Correction maybe Right to buy !!!:D
     
  3. lwbnick

    lwbnick Senior Member

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    They're *exactly* like an interest only mortgage, you pay rentals for 3 years, and then are faced with buying the car at it's market value, or walking away.
     
  4. lwbnick

    lwbnick Senior Member

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    How much do they earn out of the finance/leasing packages?
     
  5. gizze

    gizze Senior Member

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    Lombard have nothing to do with the dealers, they are just a lender, when buying private they don't get a kick back from the private seller.

    They simply lend based on the rates they have borrowed the money at. They lent it to me at 2.5% above LIBOR, at the time LIBOR was 1.9%, this is the same rate Mercedes UK would buy at, so Mercedes have the opportunity to lend at these rates too, they just choose not to and try to make more money on the finance than the product.

    They are all the same. Someone from Ford said, Ford are now a finance company that happen to make vehicles so they can sell their finance product.
     
  6. gizze

    gizze Senior Member

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    Depends on the rate, look at my post above.


    We get you don't like finance.

    But if it is cheaper than buying cash you would have to be a stubborn twat to not use it really, as many are.

    For me overall cost of motoring vs pleasure is how I work it out.

    Buy a 5 year old car for £20k cash, sell it for £10k 3 years later.
    It does 30mpg at £380 a month and costs me £50 in warranty. It costs me £707 a month.

    Buy a new car on finance, now the finance is costing me £350 a month compared with £277 on the 5 year old one, but I am now getting 40mpg with more modern tech and the same power, plus no warranty. So fuel is now £300 a month. I do have to add in the £1600 deposit though.
    It costs me £694 a month all in, plus I am in a new car with all the added benefits that brings me.

    What about of you want a 7 series, or S Class? Stupid deals that are only available to those that hire them.


    Financing is not for everyone, but for many it works well.

    I get £500 a month company car allowance, if they gave me £35,000 lump then I might consider buying, but only if the maths made sense.
     
  7. Rory

    Rory Senior Member

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    No, but I didn't say that. They get a kick back from Mercedes. They call all the finance houses and leasing companies with offers every quarter. When they finance a car they claim a rebate from MB. Happens in my industry (IT) too.

    You said 4.4% APR. Flat rate is roughly half of that. If you were right about it being APR then it's simply not feasable that they lent to to with a 0.3% margin.
     
  8. Rory

    Rory Senior Member

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    I get an allowance too, and I make a significant amount on the mileage as we pay the full HMRC rates.

    However I buy cash as the allowance could end at any moment. In fact when I got my Merc I was all set to get another company car but we started being messed about and were pushed to opt out. It was obvious the decks were being cleared and sure enough we were taken over and the division I worked for was shut down a few months later. I didn't want to be in a position of having outgoings of several hundred pounds per month with nothing coming in.

    As it happens, we formed a company out of the old division and basically just carried on as we were but the business depends on a few big contracts and it could all go tits up with, in most cases, a couple of months notice. So I'd rather know were I am. I've got the money, so I might as well use it and be done with it.


    It was interesting buying my daughter's Golf last year, from an Inchcape owned dealership, who also own our local (and many other) MB dealerships. Various levels of sales people spent nearly 2hrs trying to get us to buy on finance culminating in the sales manager, after we'd shaken hands and signed the order form (on a deal I was pretty happy with - new VW Golf Mk6 from stock for £13K) offering to give me money back if we signed up for VW's PCP. The stupid thing was they wouldn't give us a written quotation (which I think is illegal) yet still acted with utter dismay that we wouldn't take finance.

    It may have settled down now, but last year Golf Mk6 was on very long lead-times and on VW forums some dealers were reported as refusing orders if people didn't want finance.
     
  9. gizze

    gizze Senior Member

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    Lombard may do on a brand new car, but Mercedes want to finance it themselves so not sure why they would.
    I understand they do from many industries that do not have finance houses themselves.


    I never work in flat, means nothing to me, surely that is the old method used when everything was front loaded?
    APR is the only way to tell what it really costs you, and know what it will cost if you want to settle early.
     
  10. gizze

    gizze Senior Member

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    I agree with you, it is not for everyone, if you are not certain about what is round the corner, or if you don't have funds to carry on while you sell it, finance is a stupid idea, but many do.

    You can look at it in another way, if things go wrong you sell up and walk away, and you still have your £30,000 sat in the bank.

    We all see things differently.


    And, just to let you know, I have just sold my E350cdi estate, and I will be buying something cheap. More because I am sort of bored of cars at the moment.

    I totally get the thoughts from both sides of the fence, the only thing I don't get is when someone is so stubborn that they pay seriously more cash to buy one just because they refuse to consider credit.
     
  11. wi-fi

    wi-fi Senior Member

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    That is why pcp is not correct for certain cars,last year mercedes-benz offered finance 1% yes one percent to buys a new sl!!!!not to mention the contributions!,now i been buying cars for few years some out right some hp but could not compete with this one?? even against 2 years old with£20 k less :shock:
     
    Last edited: Aug 27, 2012
  12. hawk20

    hawk20 Senior Member

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    Sorry to say that almost everything you have said is wrong here.

    For example PCP is just not like an interest only mortgage. Not even remotely. With an interest only mortgage you pay only interest and the total debt remains -you still owe the full cost of the house however long you go on paying the 'interest only'. By complete contrast with a PCP you are paying interest on capital tied up while it is tied up AND you are paying all the depreciation that occurs over the three year term. After three years with MB you have typically at least halved the amount owing. All that is left owing is the guaranteed residual and that debt is covered by the return of the car.

    Try asking a mortgage company or bank for a guaranteed future value for the house in a market where house prices are falling -like we have now! Then when you have negative equity, and having paid only interest, tell them you want to give the house back and owe nothing! With a PCP you get a guarantee for your future value and the GFV covers the remaining debt after only 3 years. No negative equity.

    Second you are wrong to say that, after 3 years, you are faced with buying at market value or walking away.

    You can actually buy the car at the Guaranteed Future Value or Option to Purchase price which may be very different from market value.

    And you don't only have the alternative of walking away. You can part ex for another car -either new or secondhand and may be offered more than the GFV. Or you can sell the car privately and settle the finance separately.
     
  13. Jamboo

    Jamboo Senior Member

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    I'm still confuddled..:D
    The off putting thing for me on the PCP is the final value of the car, just don't think there will be enough to put down to start again.

    Looking at the E200 CDI SE from MB Edinburgh...my car as deposit, Circa just over £4k, £331 a month for 3 years based on 20k miles.

    GFV is £11,375

    If you hand the keys back then you have no car and no deposit to start again, I guess I want my £4k ish deposit back on the GFV but can't see that happening.

    2 services were thrown in as well.....told dealer I would call him this morning but I may look at lease deals today
     
  14. wi-fi

    wi-fi Senior Member

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    Deposits paid on pcp predominatly to reduce the monthly payments ,ie for every £1000 equates roughly to £30 a month so for example you paid £1000 so called deposit on the E class your monthly payments will be approximately £400 a month.also on the other hand on completion the term on pcp if your car is only worth for example £9500 you do not have to worry a bout the sum difference,you just hand the keys simple!!.you can also shop around for your car ,you do not need to buy it locally if they not giving you a good deal or at least they probably match it!
     
  15. Rory

    Rory Senior Member

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    Exactly - so I don't think it's reasonable to say "complete contrast". If the GFV of a car on a PCP is 50% of its initial value, then it's a '50% contrast'. :)

    I think you're being somewhat pedantic here - a PCP is half way between a repayment and an IO mortgage. I think it's more similar to IO as you still owe something at the end. A repayment mortgage is the same as traditional HP.

    That's true. You're often faced with buying it for more than market value or walking away.
     
  16. hawk20

    hawk20 Senior Member

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    You've got it. The safe assumption is that the GFV will be at or around what the car is worth. So sensibly you save for a deposit on your next car. However, you may be lucky and find that the part ex value of your car at the end of a PCP is worth a grand or two more than the GFV and then you have something towards the deposit.

    Always bear in mind that it may well be worth buying the car at the end of the PCP -you can refinance if you need to. You know the car and how it has been cared for. And you can buy it for the GFV figure which is often well below dealer prices for the car and closer to part ex prices.
     
  17. hawk20

    hawk20 Senior Member

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    Oh Rory. You write so much on this topic and most of what you say is misleading. I have already explained why you were wrong to say that you are faced with buying at Market value or walking away. I hope you now accept that statement was wrong.

    Now you are equally wrongly saying you are often faced with paying more than market value or walking away. You never have to pay more than the GFV at the end of a PCP and you don't even need to pay that if you prefer some of the other choices I set out in reply to your earlier posting.

    Of course it is possible that market values may fall below the GFV but then surely the man with the PCP will be delighted that he did not buy for cash or do HP. He can now hand back his PCP car and buy another like it, for less than the balance owing. Nice one Cyril.
     
  18. Rory

    Rory Senior Member

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    The dealer really ought to do everything possible to get people into another PCP - after all, the main point of them is to keep the factories busy building new cars - but I haven't seen any evidence (in terms of boosted p/x values) that dealers see PCPs as anything other than one-off deals.
     
  19. Rory

    Rory Senior Member

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    Exactly, so if the GFV is more than market value it's Hobson's choice.

    Yes, because everyone's got £K's in their back pocket for another deposit. ;)
     
  20. hawk20

    hawk20 Senior Member

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    Time to change your dealer. All the cases I have seen have been offered good deals to buy another car. Why on earth wouldn't a dealer want to do that? They are in the business of selling cars.

    Try this. Phone a dealer and say you have a C class just coming to the end of a PCP and want to know what sort of deal they will give you on , say, an E class. You will be offered some great deals. I tried it for a friend recently.
     

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