Browsing through online classified car adverts is one of life’s simple pleasures for a car enthusiast. It costs nothing and allows you to dream of cruising around in something a bit more exciting than the average Fiesta. Thanks to the wonders of broadband internet access, high resolution photos take no time to load and even using a smartphone, vast amounts of photos and data about the cars instantly appear in the palm of your hand. Thanks to the massive depreciation of used cars, and particularly the luxury and prestige varieties, you can pick up a lovely looking and shiny example of something that cost maybe £70,000 new for around £10k! Couple this with cheap interest rates and online finance applications, it’s all too easy for your innocent browsing to progress into a serious desire to buy such a vehicle.
There are a multitude of highly reputable dealers advertising such beauties as a 10 year old, low mileage BMW 7 series with ‘all the toys’ for around £11,000. In terms of finance payments, with just £1,000 deposit and payments over 5 years, it could be sitting on your driveway for just £250 a month! Sounds tempting, doesn’t it? Of course, for about the same price, you could buy a brand-new, mid-specification hatchback like the Hyundai i20. The Hyundai with its 5-year warranty, class-leading reliability, cheap road tax, cheap insurance and 50mpg economy can be yours for a similar deposit and £250 a month, and for just 4 years. But hey, they’re not very ‘interesting’ and are surely only meant for people that can’t afford anything better or have no real interest in cars other than as transportation!
Long Essay Warning!
Now, this is where you need to pay attention as there’s something very important to understand here that could save you from financial ruin and much distress!
A tale of two owners
Back in September 2009, the BMW 730D SE cost its first owner (a very wealthy solicitor named Edward who purchased it through his company) the thick end of £70,000. List price of the car was £58,000 but he went a bit crazy with the options catalogue and added about £12k of ‘extras’ including heated leather massage seats with upgraded leather, ProNavigation and surround sound system with 12, speakers, 19” multi-spoke alloy wheels with massive 255/35R19 tyres, automatic closing boot lid and adaptive Xenon headlamps. What a joy it must’ve been to pick that up from the BMW dealer on 1st September and be one of the new ‘59 plates.
The first owner didn’t really care about the cost of running and maintaining it. After all, he earned over £100k a year and it was just a ‘company expense’. It came with a 3-year manufacturer’s warranty so when one day when it was 18 months old the SatNav stopped working, he simply phoned the BMW dealer who collected it from his office, replaced the faulty SatNav unit (that cost £3,000) and then delivered it back again, fully valeted and gleaming again. When the first set of tyres wore out at 20,000 miles, he just drove to his nearest tyre centre and £1,000 later had a new set of Pirelli P-Zero’s fitted.
At 3 years old and with just 45,000 miles on the clock, he traded it in for a new Bentley – business had been particularly good and he felt that he deserved an upgrade! The Bentley dealer offered him just £26,000 for it in part-exchange but that was insignificant against the £162,000 that the Bentley cost so the deal was done!
For the next 6 years, it was lovingly cherished by a retired accountant called James who bought it as an ‘Approved Used’ car from a BMW dealer for just under £35,000. The dealer acquired the car ‘through the trade’ for £28,000 direct from the Bentley dealer that took it in P/X.
He only drove 6,000 miles a year so didn’t get through many more sets of tyres and only needed infrequent servicing which he had done by a trusted local BMW specialist. Although not as expensive as the main dealer (BMW charge £150 an hour these days!), the specialist was an ex-BMW technician who had the knowledge to keep it in tip-top condition without costing a fortune.
By 2018 however, he began to think it was getting a little difficult to park in Waitrose and a little expensive to run (being a 3 litre) so he decided to reluctantly trade it in for something smaller and more ‘sensible’. A local dealer who he passed most days on the way to the Golf club had a lovely looking Honda Jazz Automatic on the forecourt. Only a year old with just 6,000 miles on the clock, it had all the features he needed and was only £13,995. The first owner had paid close to £19,000 for it so it seemed quite a bargain to the shrewd former accountant. A deal was struck and he received £8,000 in part-exchange for his beloved BMW and after a quick debit card payment for £6,000 (no finance needed!) he drove away in his ‘nearly new’ Honda and now the dealer had a BMW to find a new home.
Now’s the time to introduce the car dealer (we’ll call him Terry) A very amiable chap who’s built a great reputation for treating his customers fairly, selling quality, well-prepared used cars and thanks to his relationship with a few finance companies, some very affordable rates. Unlike many of the shadier characters in the motor trade, Terry prided himself on the quality of the cars he sold and had many repeat customers. Although he was more used to selling more humble cars than this BMW, he figured that for the £8,000 he gave for it, there should still be a tidy profit.
After a good clean, he noticed a few defects that should be put right before a sale. All 4 alloy wheels had some slight damage and needed refurbishing. That’ll be £200 from his usual chap. He also noticed a little crack in the front bumper that he must’ve missed on his appraisal as it was raining. Never mind, that’ll only need a £100 ‘smart repair’ to sort out. Sitting in the sumptuous leather of the driver’s seat, Terry thought he’d try all the switches and buttons to make sure everything worked. He didn’t have a chance to test it all while the owner was there as it’s rather complicated and many of the functions are accessed through the iDrive, a little joystick and buttons on the centre console.
Scrolling though the menus for the servicing screen, it soon became clear that the previous owner had let the servicing regime lapse towards the end of his time and that the car was showing ‘Overdue’ for new front and rear brakes, oil service, cabin microfilter, fuel filter and air filter. That little lot would cost Terry a further £500, even at ‘mate’s rates’ using cheap aftermarket parts from his friendly local mechanic! It was starting to look like a little less a bargain but still, there’d be a profit in it for him! He knew it only had 4 month’s MOT left so put it in at his local ‘trusted’ garage for test, assuming it’d sail through. Unfortunately, it failed on a few worn-out items. A pair of rear tyres almost bald (they’re so wide that Terry didn’t even notice when he knelt down on the wet ground to check), and a couple of suspension joint dust covers split. Nothing too serious, although if Terry was to buy the same Pirelli tyres as the now bald ones fitted, he’d be looking to lose another £500 so he managed to find some Chinese budget branded tyres of the same size, but for just £60 each. The suspension joints were only £50 from Euro Car Parts for some aftermarket parts and for another £250 it now has a year’s MOT. The car now owes Terry around £9,000 so all gleaming and with a fresh MOT and new tyres, it’s on the forecourt for £10,995. One of Terry’s finance partners is even prepared to offer ‘Sub Prime’ at £250 a month for 5 years with a £500 deposit and an APR of just over 29%! With a big finance sign in the windscreen and a lovely advert on Autotrader, it soon catches the eye of its soon to be third owner who we shall call Darren.
Darren is 29 and works for a well-known DIY store where he’s recently been promoted to assistant manager. He has a partner and they have two young children. He earns around £25k a year and has a reasonable credit rating, although he does still owe £20,000 on various credit cards which he manages to pay the minimum each month and has never missed a payment. His partner works part time and they rent a flat through a housing association so whilst not wealthy, can afford to live quite comfortably but with nothing left over for savings or emergencies. He’s currently driving a 15 year old Focus which is clearly on its last legs. It barely scraped trough the last MOT with 9 advisory items, it drips oil on the road and is going to need a new clutch soon which at around £500 isn’t something he can realistically afford. His recent promotion however means a pay rise of around £300 a month ‘takehome’. Still on a high from his last salary payment, Darren’s feeling flush and after a chat with his ‘significant other’ about how he needs a new car and that being ‘management’ he deserves something a little better than a rusty old Focus, he sets his heart on the BMW he saw on Autotrader.
Terry’s delighted to get a call about the 7 series as it’s been on the forecourt for a few weeks now with barely a sniff. It’s not easy shifting a big old luxury car where the road tax is £290 a year and it costs £110 to fill it with Diesel!
Darren duly arrives and after the hour’s drive in his old banger, the feeling of serenity and inner joy that comes from wafting around in a luxury saloon (even for just 10 minutes) is enough to make him want to do a deal with Terry. After some minor haggling, they agree on £10,750 with a 12 month warranty and £250 for his old Focus in P/X (which Terry knows he’ll just scrap as it’s no use to anybody). As Darren has no savings, he’s going to need finance and so Terry completes an online proposal. Darren’s decent enough credit rating see him pass the checks and after some ID checks and some more forms to sign, he’s able to collect the car in a couple of days.
Driving home in the BMW, Darren feels like a real millionaire. After all, he’s driving a £70,000 luxury car. With the DAB radio blasting out his favourite tunes, his iPhone connected to the BlueTooth and the cruise control set and the driver’s seat toasty hot and massaging his back gently, things couldn’t be better!
Now, after enduring over 1800 words of my waffling, you might think that I’m going to end the story here as a tale of what you can achieve if you really want something badly.
Unfortunately, that isn’t always the way and in my next instalment, I’ll let you know how Darren gets on.