Browsing through the online classified car adverts is one of life’s pleasures for a car enthusiast. It costs nothing, yet allows your mind to wander and imagine the endless joy of cruising around in something a bit more exciting than whatever’s currently on your driveway. Thanks to the wonders of broadband internet access, high resolution photos take no time to load and even using a smartphone, numerous pictures and data about the cars instantly appear in the palm of your hand. In terms of price, thanks to the massive depreciation of used cars, and particularly in the luxury and prestige marketplace, you can pick up a lovely shiny 8 year old 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 ‘pre-loved’ executive cars like an 8 year old, low mileage BMW 7 series with ‘all the toys’ for around £11000. In terms of finance payments, with just £1000 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, £250 a month, and for just 4 years. But hey, they’re not very ‘interesting’ and are surely only meant for people that 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 2010, the BMW 730D SE cost its first owner (a very wealthy solicitor named Edward who purchased it through his company) a few pounds short of £70000. 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” multispoke alloy wheels with massive tyres, an automatic closing boot lid and some dazzling adaptive Xenon headlamps. What a treat it must’ve been to drive home from the BMW dealer on September 1st,one of the new ‘61 plates’ on the road.
The first owner didn’t really care about the cost of running and maintaining it. After all, he earned well over £100k a year and it was just a ‘company expense’. Besides, it came with a 3 year manufacturer’s warranty so when one day, at 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 £3000) and then delivered it back again, fully valeted and gleaming again. When the first set of tyres were getting rather bald at 20,000 miles, he just drove to his nearest tyre centre and £1200 later had a new set of Pirelli P-Zero’s fitted.
At 3 years old and with just 40000 miles on the clock, he traded it in for a new Bentley – business had been particularly good that year and he felt that he deserved an upgrade! The Bentley dealer offered him just £26000 for it in part-exchange but that was relatively insignificant against the £162000 that the Bentley cost so the deal was done!
For the next 5 years, the BMW was lovingly cherished by a retired accountant called James who bought it as an ‘Approved Used’ car from his local BMW dealer for just under £34995. James was chuffed that he’s paid just half of the new list price and that someone else had lost £35000 in depreciation! After all, with just 40k miles under its belt, it was barely run-in and would provide him with executive transport for the price of a mid-range ‘lesser’ BMW. The dealer had acquired the car ‘through the trade’ for £28000 direct from the Bentley dealer that took it in P/X so they too made a handsome profit.
As James only drove 6000 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, it still had a fairly low mileage of 70,000 but he was finding it a bit harder to park in the narrow spaces at Waitrose and he’d been advised by his mechanic that a few things would need doing soon, so he reluctantly decided to say goodbye and 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 6000 miles on the clock, it had all the features he wanted and was priced at £13995. The first owner had paid close to £19000 for it so it still seemed quite a bargain to the shrewd former accountant. A deal was struck and he accepted just £8000 in part-exchange for his beloved BMW and after a quick debit card payment for £6000 (no finance needed!) he drove away in his ‘nearly new’ Honda and once again, the BMW needed to find a new home.
Now it’s time to introduce the car dealer, whom we shall call Terry. A very amiable chap in his mid 50’s who’s built a great reputation for treating his customers fairly, selling quality, well-prepared used cars and, thanks to his great relationship with a few finance companies, some very affordable rates. Unlike many of the shadier characters in the motor trade, Terry prides himself on the quality of the cars he sells and has many repeat customers. Although his ‘bread and butter’ cars are rather less fancy than this BMW, he figures that for the £8000 he gave for it, there should still be a tidy profit in it for him, plus he can waft around in it for a few days! After a good clean, he notices a few defects that will need to be put right before sale. All of the huge alloy wheels have some slight kerb damage and will need refurbishing. That’ll be £200 from his usual chap. He’s also noticed a little crack in the front bumper that he must’ve missed on his initial 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 becomes 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 manages 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 that’ll do the job and for another £250 it now has a year’s MOT. The car now owes Terry around £9000 so all gleaming and with a fresh MOT and new tyres, it’s on the forecourt for £10995. One of Terry’s finance partners is able to offer £250 a month for 5 years with a £500 deposit and an APR of just over 29%, even for applicants with a less than perfect credit rating! With a big sign in the windscreen and a lovely advert and walkaround ‘virtual tour’ video on Autotrader, it 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 several 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 currently drives 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 ‘take home’. 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 now being ‘management’ he deserves something a little better than a rusty old Focus, he sets his heart on the BMW and gives Terry a call.
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 driving 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, the cruise control set and the driver’s seat toasty hot and massaging his back gently, things couldn’t be better!
Now, after enduring 2000 words of my waffling, you might think that I’m going to end the story here with a happy tale of how to achieve motoring nirvana on a budget!
Unfortunately, that isn’t always the way and in the next instalment, I’ll let you know how Darren’s joy soon turns to despair!