S
SP33DYV
Guest
The future value guarantee is just another way to say balloon payment!
-
Read the WELCOME ALL BMWFANATICS post.
F30 320i for R4799 p/m - Sales invite from BMW!!
- Thread starter Coisman
- Start date
ASH
New member
Hi Cois
Trouble is with a balloon payment, when the time comes to trade-in, the settlement value with the bank will be very high, should one wish to trade-in before 5 years. You therefore will have a trade-in with not much cash in it (book value of car less settlement ). On cars that lose value quickly, it is very risky.
In essence, if the guranteed buy back value of R181K = balloon payment, that value is extremely high, virtually half the
car, some people like to own their cars after the contract period is over instead of keep on financing, keep on repaying the bank again.
I'd repeat and say proceed with caution.
Trouble is with a balloon payment, when the time comes to trade-in, the settlement value with the bank will be very high, should one wish to trade-in before 5 years. You therefore will have a trade-in with not much cash in it (book value of car less settlement ). On cars that lose value quickly, it is very risky.
In essence, if the guranteed buy back value of R181K = balloon payment, that value is extremely high, virtually half the
car, some people like to own their cars after the contract period is over instead of keep on financing, keep on repaying the bank again.
I'd repeat and say proceed with caution.
Coisman said:
Sabretooth tiger
///Member
J1gga said:
Some people see it as a Bank slave, others see it as a business transaction they can live with comfortably. Each to his own:thumbs:
pimpassdaddy
Well-known member
Sabretooth tiger said:
It has never been a business transaction that anyone can live with comfortably. All it does is stroke your ego, get you ever indebted, and make you poorer in the long run.
Such financing makes no sense, whichever way you look at it.
Why do you think such financing is not available when buying a home? This scheme is only geared at making the bank richer off a depreciating asset.
Also, being a base model 320i, these cars have THE WORST trade in over the years historically. No one wants them.
Sent from my iPhone using Tapatalk
Sabretooth tiger
///Member
pimpassdaddy said:
No why do you have to get all aggro about it? Remember what you saying is merely your opinion, same as what I said above is my opinion. To me spending R7000 a month on a car including insurance is a financial transaction I can live with comfortably, and its not about my ego. I have small kids, and to me car choice includes their well being. I am mechanically challenged, so instead of buying a older car cash, I rather buy a newer car on finance.
Its my choice and it does not make me poorer.
Now I respect someone who choose to buy a older car, don't see why my choice should not be respected and labeled as a ego driven decision. I can afford it, its my money I worked hard for and has nothing to do with ego.
If everyone made the same choices we would not have the car market we have.
ASH
New member
I could not agree more here.
I've owned a variety of 3series BMWs during my time on earth.
E30 318i
E46 323ci
E46 320i At Sport
E90 320D At Sport
E92 325i At Sport Excl.
I can tell you that just because the car is old, does not mean it is crap. My E30 was purchased with 198 000km on the clock, ok the exterior of the car needed some attention as it was owned by a person who wasn't a fanatic about cars, but the feeling that car gave me could not be matched by the others from a driving point of view. It was as solid as a tank, which can not be said about the 3series that have come out afterwards, which are shake, rattle and rollers though had better technology and faster. The E30 only rattled or squeaked when it was put into the wrong gear, other than that it felt like a tank, and this was a car that already had 198K kms on the clock. If I where to compare the interior durability, it was only the seats on the E30 that had worn out, on the newer type BMWs I've seen many cars with trim peeling, scratches on dash and door paneling. Also paint on the newer BMWs is absolute rubbish, I have never seen any new BMWs with a completely smooth paintwork finish, they all have have this dimpled paint finish which is pathetic. The paintwork is also prone to easy stone chipping, have a look at the front on any new BMW with 100 000 kms, the fronts usually need a complete respray.
To wrap up, just because a car is cheap or old, dont degrade it, its still a BMW, in fact some older models are better quality than these new mass produced and more expensive BMWs.
I've owned a variety of 3series BMWs during my time on earth.
E30 318i
E46 323ci
E46 320i At Sport
E90 320D At Sport
E92 325i At Sport Excl.
I can tell you that just because the car is old, does not mean it is crap. My E30 was purchased with 198 000km on the clock, ok the exterior of the car needed some attention as it was owned by a person who wasn't a fanatic about cars, but the feeling that car gave me could not be matched by the others from a driving point of view. It was as solid as a tank, which can not be said about the 3series that have come out afterwards, which are shake, rattle and rollers though had better technology and faster. The E30 only rattled or squeaked when it was put into the wrong gear, other than that it felt like a tank, and this was a car that already had 198K kms on the clock. If I where to compare the interior durability, it was only the seats on the E30 that had worn out, on the newer type BMWs I've seen many cars with trim peeling, scratches on dash and door paneling. Also paint on the newer BMWs is absolute rubbish, I have never seen any new BMWs with a completely smooth paintwork finish, they all have have this dimpled paint finish which is pathetic. The paintwork is also prone to easy stone chipping, have a look at the front on any new BMW with 100 000 kms, the fronts usually need a complete respray.
To wrap up, just because a car is cheap or old, dont degrade it, its still a BMW, in fact some older models are better quality than these new mass produced and more expensive BMWs.
moranor@axis said:
im not trying to be funny but the only loans that make sense are for a HOUSE or a BUSINESS otherwise you are just spending more for the same thing...
maybe its just the way i was brought up but no one in my family takes out finance on a car because its a waste of money save up for the car you want and if you have a bond use that as a holding account so you can save on interest in the mean time...
im 100% sure my dad could easily afford to finance and audi R8 if he wanted to, but instead he would rather buy an A4 cash...
debt is the devils work and its easy to get caught in the cycle...
maybe its just the way i was brought up but no one in my family takes out finance on a car because its a waste of money save up for the car you want and if you have a bond use that as a holding account so you can save on interest in the mean time...
im 100% sure my dad could easily afford to finance and audi R8 if he wanted to, but instead he would rather buy an A4 cash...
debt is the devils work and its easy to get caught in the cycle...
Sabretooth tiger
///Member
moranor@axis said:
Excellent way of thinking, I like that. but remember we all make different choices for different reasons.
I can probably afford a brand new 335i, but I chose a 16months old 320d e90, for the same type of reasons.
When I bought my house I paid a 20% deposit, some people might call that dumb, that's all cool, its their opinion, for me it made a lot of sense, my money my choice. Last year I sold my very scarce and rarely well kept Sabre to use on house improvements, used up all the money, once again, my money my choice.
Also, between my wife and I we make good money, all debt we have is the one car and the house. :idea:
All I am saying is we should respect eachother's choices and not go on a labeling crusade.
buying a house always makes sense soon as you can afford it because rent is a huge waste of money and gets you nothing...
home improvements also make financial sense because when you sell you get that money back as long as you have not over invested on improvements and the area can get the price you need...
not trying to label anyone but trading a perfectly good e46 that is almost paid off for an F30 makes not financial sense at all...
the only reason to do that is if you really want the F30 and the financial loss is worth it to you...
home improvements also make financial sense because when you sell you get that money back as long as you have not over invested on improvements and the area can get the price you need...
not trying to label anyone but trading a perfectly good e46 that is almost paid off for an F30 makes not financial sense at all...
the only reason to do that is if you really want the F30 and the financial loss is worth it to you...
pimpassdaddy
Well-known member
Sabretooth tiger said:
I wasn't being aggro, i was getting a point across, sorry if it sounded that way.
Either way, I still stand by my point. Residual/balloon financing is completely about the ego, whichever way you try an cover it up. Your argument is based on substituting an older BMW for a new one. That is flawed. Why are you basing your decision on BMW being the only vehicle that can be owned.
You make a good point when it comes to your children. If R7000 incl insurance is perfect for you, then why not buy another brand that will give you ownership of the vehicle when the contract ends? Why not buy a Corrolla, Honda Accord etc? That's because BMW appeals more to your ego, than the other brands I've mentioned, to a point where you are willing to pay a heap of money for a vehicle that you don't own after 5 years, and have to incur additional interest if you refinance to own it.
A BMW has in NO WAY a better outcome for the well-being of your children as say, a Honda Accord etc.
I suspect that we are arguing 2 different points however. I have never said financing a car is wrong, it is the type of financing that I have an issue with. A normal installment sale agreement takes into cognisance affordabilty etc, and ultimately you will be able to buy what you can "afford". A balloon/residual payment finance is ego ego ego, because depending residual percantage you take, you in effect buy what you cannot afford now, so you can comsume now, and worry about debt later.
That's the problem we have in SA. In what BRICS country does a 2 bedroom apartment in a decent area cost as much as a BMW 335i? None. SA is ego and status symbol driven. That's why BMW doesn't bring cars like the 3 series convertible in 320i format.
Cars are more important to some, than where they live.
Coisman, just my 2c worth. To take out 10 percent deposit on a car with a residual value is crazy. What they mean by guaranteed future value is the following:
The car has to have less than a certain amount of kilomteres, if you have exceeded the mileage limit the guaranteed future value changes
If there are any comments on the car or there is a fair amount of recon involved in order to resell the car, so the R181500.00 future value will drop
You as the current owner will be responsible for that shortfall. To refinance this putting more money into the banks coffers!
I cannot comment on how the insurance premium is calculated but what i can almost guarantee that it most certainly double thereafter.
Hope this helps. PM me if you need additional assistance
The car has to have less than a certain amount of kilomteres, if you have exceeded the mileage limit the guaranteed future value changes
If there are any comments on the car or there is a fair amount of recon involved in order to resell the car, so the R181500.00 future value will drop
You as the current owner will be responsible for that shortfall. To refinance this putting more money into the banks coffers!
I cannot comment on how the insurance premium is calculated but what i can almost guarantee that it most certainly double thereafter.
Hope this helps. PM me if you need additional assistance
Sabretooth tiger
///Member
"unsubscribed" I am now really not going to justify my choices to anyone I don't ask to help pay.
pimpassdaddy
Well-known member
moranor@axis said:
I disagree with you there. It's only a waste of money for people that bite off more than they can chew.
If you earn a modest salary, saving for the car you want is almost impossible. The rate of increase in car prices, far outstrips the ability of the savings to keep up with inflation. Depending on the car you choose, you need the car now, and not in the future. You are merely making your point because perhaps your family is able to do so. If your argument held, then why not save up for the house you want then as well?
Thing is, debt is not altogether bad. It is how far and how you twist it, that is.
I personally dont owe my vehicles (business and personal), bikes or my house. It wasn't always like this, but I used debt in smart way, that would eventually create cash flow that would service the debt itself.
Nothing wrong with debt or financing, just watch the ego and know exactly where it will put you financially.
In the end though, it's all personal choice. Thats why banks have so much money, some people are quite happy being enslaved to them.
pimpassdaddy said:
my 1st car was a fiat uno and if i was not in a position to buy my next car cash i would still drive the uno...
yes if you need a car and if the only way you can get it is a loan then its the right thing to do, but as you said in a previous post you dont NEED to drive a bmw...
simple a loan on anything that does not appreciate or make you money is a waste of money...
by saying you used debt as a tool to make money i assume it was the business that allowed you to be debt free now right? not a loan on a personal car...
Doomsdaya
///Member
In a way residual isn't that bad because initially you not paying interest on it, only on the portion thats financed which is the vehicle cost less deposit + residual. The only time you do pay interest is when the baloon payment is due which "hopefully" by then you saved up enough money to pay it off, otherwise re-financing is shooting yourself in the foot.
pimpassdaddy
Well-known member
moranor@axis said:
Indeed I agree... But also remember, you base your point on actually having had a car, the Uno in your case.
Many friends of mine I graduated from varsity with, had no cars throughout varsity, and their first jobs paid them enough to afford a new small car. That's what I meant.
pimpassdaddy said:
i took out a lone from my dad which i had to pay back with interest hence i chose a cheap car... so pretty much started in the same place...
J1gga said:Coisman said:imp:
So to sum up...
I am an idiot if I finance a 320i on this deal.
I am an idiot if I sell my E46 on this deal.
I am an idiot if I wax my scrotum... :mmm:... Never mind that one... :mmm:
:roflol::roflol::roflol::roflol:
Not at all :biglol::biglol::biglol:
Not at all what??? the 320i deal, the E46 deal, or the scrotum part... :mmm:
