RS4 Depreciation

[Iain]

To some degree from the lenders perspective, its guesswork. There is no hard and fast rule that guarantees a cars value. Those companies offerring PCPs with a guaranteed value for the car, cover their risk by charging high APRs or having temination penalites should you wish to end the agreement early.

The residual value is set by the lender, not us as a company. Residual values are also dependant upon how you stack up on a credit score. It boils down to exposure to risk for a lender

The APRs are between 6 and 7.5% dependant on the amount borrowed, therefore they aren't spanking anyone on interest charges relative to dealers APR

Lenders will not put an aritifically high balloon on a vehicle as it exposes them to risk should the vehicle NOT be worth that amount at the end of the period. They tend to work to 80-90% of the cars future anticipated market value. If you're a better risk, they will be less conservative with the residual value and steer towards the upper end of the cars anticpated future market value.

The finance packages arent restrictive in terms of being tied in or "front loaded with interest" Their are no financial penalties should you wish to change the car or your circumstances change.

I think Ive put myself to sleep now, so PM me for more details.

[gIzzE]

Iain, what residual is your comapny giving on an RS4 Avant with media and the essentials after 60 months based on 10k miles a year??

Thanks.

[JustinM]

Looks like 60% depreciation after 3 years.

Check this out http://www.whatcar.com/depreciation-index.aspx

A3 is only 40%

[Genocidalduck]

i've got a 25k residual on my car after 4 years with Audi finance

[ashleyadam]

We are getting residuals values off our funder of 30k after 5 yrs. This compares with only 22k on the new M5 after the same period.

PM me for more details.

Impressive quote can not see how possible to get such figures, less than 50% depreciation after 5 years. There must be some mistake in your quote.

[kam100]

No mistake, its based on your personal level of risk as iain mentioned above, it isn't accepted for everyone, you have to show a level of liquidity in your personal finances to get the finance.
The car probably won't be worth 30k after the 5 yr term, but how many of us are likely to keep it that long anyway? also these plans allow consumers to not put a high deposit in at the beggining and keep a relatively high balloon to still get comparitavely low monthlies. If you don't have to put in a high deposit to begin with, (some people mentioned 10k-15k in their quotes) and with this your looking at more like 3k down, who cares if the car is slightly in negative equity at the end, you haven't coughed up a large sum in the beggining, but may have to pay some at the end, and the money during that 5 years could probably be put to better use in your pocket rather then sitting out on your driveway in your depreciating RS4!

If you manage the car right and get out at the right time, you could even salvage most of the 3k if your lucky. With the way residuals are standing right now, and the low APR and there not being any front loaded interest/early settlement fees, more of your monthly installment goes towards the actual balance on the agreement instead of towards the charges the company creates for lending you the money.

I have changed cars before generally on 12 month cycles, and have been shocked to learn that my settlement isn't much less then i've borrowed in the first place and thats after 12 monthly installments have left my pocket, because ive been chipping away at high front loaded interest, and they have incorporated an early settlement fee somewhere along the line when requesting the settlement fig to get out of the car. Basically kissing goodbye to the generous deposit i placed into the deal to get my monthlies down in the first place. There are more intelligent ways of financing cars, and this seems to be it at this moment in time on the car money market. If anyone finds a better way, please feel free to tell all.

[kam100]

Looks like 60% depreciation after 3 years.

Check this out http://www.whatcar.com/depreciation-index.aspx

A3 is only 40%

what a pile of poo! rs4 one year old for 28k!!
you can hardly get a B5 RS4 for under 25k...

[bobjebb]

what a pile of poo! rs4 one year old for 28k!!

Sounds low to me too, got to be worth than that... However:

you can hardly get a B5 RS4 for under 25k...

There's a very good reason for that, they only made 400!

[GaryC]

I pay cash for my cars, and whilst laying down £50k for a car certainly leaves a hole in the bank account I just cannot see how buying the same car on finance can leave me better off.

If I financed £50k at 7% that would mean interest payments of around £300/month. For the £50k this would let me keep in the bank I would need to find an investment vehicle with *guaranteed* returns of around 12% per annum before tax (and if I could guarantee such returns I'd be running my own hedge fund and lying on the beach in Bermuda!)

A guaranteed future value value of £30k after 5 years is all well and good…if it really is 100% guaranteed and there's nothing in the small print? But what happens if you want to change your car after 18 months and the market value has dropped to £35k? You borrowed £50k so £50k needs to be paid back, irrespective of what you can actually get for your car. If residual values of the car you've bought drop (as they surely will with the RS4 as more flood the market and the novelty of the "latest toy" wear off) then this simply looks like a scheme for deferring payment of the depreciation?

Sorry for sounding so skeptical, but it really sounds too good to be true. However, I'd be more than happy to sell my RS6, bank the cash and jump into a new car if someone can illustrate how it really can be so financially painless!

Gary.

[kam100]

Well im 24, have spent exactly £175,000 on cars since Jan 2002, and my net cash cost to date is: £28k, which equates to a real time 16% loss, which is inclusive, all deposits/monthlies/settlements etc. Yes if i had wacked the £175k down as cash, obviously i would have got chunks of this back again when selling the car to put towards the next one, but the true fact of the matter is, i have instead invested cash into various businesses etc effectively putting the money to better use.

The £30k is NOT A GUARANTEED FUTURE VALUE, this isn't a PCP, if you want a guaranteed future value, then you would have to take out a PCP, and this value is likely to be £22k ish instead of £30k hiking payments up again. BP schemes mean lowest APR then any other finance package, and no tie ins so to speak. Yes as with all financed cars, you have to keep an eye on the market value of the car and ensure the balance is being paid off in proportion to the market value to remain in positive equity. (which this particular scheme does better then LP/PCP deals, as there is no front loaded interest so you're biting into the balance a lot sooner then on the other deals).

Its all a matter of choice, if you have £50k lying around to buy it outright then fair played to you, not saying there is anything wrong with that at all, just exploring various options here for would be RS4 owners or people about to take delivery and are thinking of various avenues for financing their new toy. My father always purchased his cars for cash previously, but he realised there were better things to do with the cash rather then put it into a depreciating car. For £60k, we could buy 4 flats!

[ashleyadam]

If the 30k is not a guaranteed value the only benefit is a reduced monthly figure, which is far from cost effective as you will not know how much money you have lost until you sold car. Early termination fees are in place so a lender does not lose too much if loan paid back early, the only way to be exempt from this is by way of insurance that is not offered by all companies.

[kam100]

why wouldn't you know how much money you are loosing? surely you can access autotrader at any point? take an average of market prices, deduct off a few grand and there you have the trade price. You the compare this to the settlement figure at that point in time against the finance, as long as this gap is positive or balanced, happy days.

Not sure what you mean by early termination fee insurance? Early termination fees keep you locked into the agreement, and if the car starts sliding in value, i.e. Bmw M6/Bmw M3 CSL, then you're screwed.
Whereas if you'd bought a new M5 on launch, you wouldn't have done badly at all, retail prices still high 50's a year and a half on from launch! i think finance can only be chosen wisely on the 'right' cars, and i consider the RS4 to be one of these cars at this moment in time, so its a calculated risk im willing to take.

[GaryC]

i think finance can only be chosen wisely on the 'right' cars, and i consider the RS4 to be one of these cars at this moment in time, so its a calculated risk im willing to take.

Ok, I think I see how it works now. You're basically paying interest on £50k of debt - with anything in excess of the £300ish per month you're paying in interest chipping something off the capital.

I would agree that you have to choose your car wisely - if you can quickly get into desirable motors pretty much at launch and out of them before their residuals drop off then I guess I can see how this scheme makes sense if you have the money but can use it better elsewhere.

But holding the car for any length of time I would expect it to be all too easy to fall into negative equity. For instance it would be pretty optimistic to assume that in a years time an RS4 bought today will trade at more than £40k max…which would mean quite a balance to make up on a £3k deposit and low monthlies. Presumably this is why lenders offering this scheme are somewhat selective and need to know you'd be "good" for any shortfall?

Gary.

[kam100]

exactamundo...
however i think you're looking at worst case scenario here on the RS4.
I purchased a range rover sport for £44500 and in exactly 11.5 months time, i sold it for £40k on the head, meaning i was neither up/down on my deposit as my balance had been chipped away to the same level that i had lost. Im hoping for about £47-48k for my RS4 in Jan/Feb 2007 when my next vehicle is due to arrive, and if this is the case i will be looking to break even on the car.

[david7m]

Kam, this is ace, gonna show my girlfriend this thread and see what she thinks instead of a new house .....

Dave