[Zed]

Now that BMW is trying to attracting younger buyers with this seemingly mouthwatering option I was wondering how many enthusiasts searching for the 'ultimate driving machine' will be swayed to make a decision that stems mostly from the heart but parades as a decision from the mind on the basis of the EMI scheme.

Though Ive never owned a BMW Ive used 1, 3 and 5 series cars as rentals. While all three cars are great to drive with build quality to rival military tanks, it did dawn on me that Id rather have a slightly more comfortable car minus the razor sharp handling considering that I was spending a lot of time on the road. The mercs and the audis (minus their Sports package suspensions) are so much easier to drive at city speeds (less steering effort) and the softer suspension makes Highways \ Autobahns seem less stressful even to my average Indian frame.
When I think of road conditions in India I can only imagine the discomfort will be a bit worse unless BMW has considered our bouncy and bad roads into its suspension \ steering equations. All of the above is my personal observation and may not be aligned with general perceptions and perhaps the X1 is sprung softer than its sedan siblings.
Just wanted to toss my two cents if there are any potential buyers in here.

[ACM]

Originally Posted by drmohitg

Ok this doesn't sound quite right unless there is a downpayment involved too.

For 7 years:
Each year 11 EMIs of Rs 15,999 comes to a total of 12.3L for 7 years.
Each year 1 EMI of 1.2L comes to 8.4L for 7 years.

In total you pay up 21L for 7 years which is less then the Cost of the car I guess. So I am assuming there is also a downpayment of around 10L at the start?

Yep so that implies

Cost of this specific model/ car varient = Rs. 28L BMW X1 OTR. 2.0D
Downpayment = Rs. 7L
Loan at 0% interest = Rs. 21L
Per month Effective EMI = Rs. 16,000 + 120000/12 = Rs. 26,000 (for 7 years)

Do note that assuming the correct warranty and service packs are bought there would still be an insurance cost of about Rs. 50K per year on an average in addtion.

I feel a person with an annual income of about min Rs. 50L could go for this vehicle though it would be a bit of a stretch and with an Income of 75L / year can do it comfortably.

For those who are self employed there would be the question of using this extra money in ones business itself (to make more of it. ) rather than on a depreciating purchase. For those employed the person needs to figure out how safe the job situation is as well as to work out if one has saved enought for tough times incase something goes wrong.

That said one needs to also consider aspects of stage of life, number / absence of children etc while making this decision.

The offer of 0% finance though it may seem attractive one can be sure that if one want with cash / external finance one can get possibly even upto Rs. 4L off on this offer for a 2011 vehicle ( works out to 10-15%).

As mentioned by many here even some one with an annual income of about 35L could end up considering this vehicle but that would be a bit of thin ice walking and if all other parameters on the responsibility front are taken care off (earlier or by relatives) this may work for him/her. but for most this would make sense beyound 50L / annual income. (for the base model only for higher models the ideal annual income figure could be even higher)

These kind of temping offers including some zero downpayment and 2-3% interest loans is what got the US and many other economies into a soup during the last recession. They are out to tempt individuals but it us upto us to resist that and take the right call.

[prakash_ajp]

It sounds more like a trap to me. When I first saw the advertisement, I was pretty much sure there was a down payment involved. And looking at some posts, looks like it is the case. Besides another point one has to consider is, apart from the EMI, can one really afford the fuel and maintenance bills.

Simply put, the scheme probably makes it a bit easier for those who can afford an 25+L car. But I don't think others should fall for it.

[supremeBaleno]

^^^Why would you think there was no down-payment involved ? It would not be very intelligent of BMW to have people roll away X1s by just paying the 1st installment of 15K and cheques for the rest.

For those tempted by this offer, do look at the overall cost of ownership to get the full picture. The annual insurance itself will come to ~60K. Depreciation would be another killer - in around 2-3 years, the car would easily loose 10L or so. Maintenance exp needs to be factored in - I have read here about services costing close to 1L. So, it is not like you pay 11 EMIs of 15K which is easy and the 12th EMI of 1lakh (again covered by the annual bonus) and live happily ever after. Not to discourage anyone, but so that we are aware.

[GTO]

Originally Posted by aseem

The point here is in laymans term that 7 years down the line the value of 100 Rs is probably going to be 50 Rs.

True. But don't forget that the car is a depreciating cost center. The Rs. 100 you spent on the car will be worth Rs. 30 at best (if not Rs. 20). That BMW is going to depreciate quicker than the note you throw at it

Very true if you dont factor cost of money into it. In reality if interest rate is 0% or at least less than inflation and the cost of money, than its better to pay 1 Rs now and 99 Rs later.

Well, if you have to bring in cost of money, then it's time to look at the opportunity cost of the 10 lakh rupee down payment, 3.xx lakh (road tax, insurance, octroi etc.) and the 3.xx lakhs a year you are paying BMW.

Again, my point is, buy a 28 lakh car when you are at that financial point in life when you can buy, own & drive a 28 lakh rupee car. Not because of some gimmicky 16K EMI scheme which falsely makes a BMW look supremely affordable.

[black12rr]

How about instead of 21 lakh investing up front , could have been invested in some real estate of some other kind off thing . The returns at the end of this 7 years could be 4-5 times of 21 lakh . This could also be for ppl who have the money but still don't want to shell out up-front .

[gjiyap1]

Originally Posted by ACM

Yep so that implies

Cost of this specific model/ car varient = Rs. 28L BMW X1 OTR. 2.0D
Downpayment = Rs. 7L
Loan at 0% interest = Rs. 21L
Per month Effective EMI = Rs. 16,000 + 120000/12 = Rs. 26,000 (for 7 years)

Isn't the Corporate Leasing works better in such case. i.e. the EMI you pay on company lease is deducted from your taxable income - which means 30% tax saving.

So, the interest paid (5-7% for premium car - is it right ?) is way low.

Also, think of value for Money. 7lac invested in FD for a year+days is now 9.5% (66,500 - post TDS around 50k). I shall as well relax & enjoy my life.

As mentioned by many (& GTO insisting the Rs.100 again & again) - You really need to make a call on 'What is the need' vs 'What is the deal' !.

[honeybee]

I fail to see how this becomes a 'bad practice' or the law has to be called lame. In India the principle of "Buyer Beware" prevails, which means the buyer has to make a reasonable effort to make sure he understands what he is buying and what are the stakes. If a graduate fresh out of college and into a job bought a BMW, I am not sure I would be blaming BMW.

Secondly though the EMI is mouth-wateringly low and the advertisement doesn't tell you about the large sack of money you have to part with at the end of the year, nobody at BMW would be selling you a car without making sure you have a reasonable chance of paying those instalments. So that's not exactly a malpractice.

It's more of a convenience option to those who may not want to spend a lot of money upfront. I remember a few years back there was an EMI scheme where the EMI started low in the first year and year on year it went up, on the assumption that the borrower would progress in his job and earn more and more salary. Are such innovative products "wrong" ?

It's finally what GTO said: Never forget it's still a 28 lakh rupee German engineered imported(?) car. Find out if you can afford its running, including occasional repairs. If you can, go for it. If not, well, there are lots of options.

[nitinbose]

Alright Bhpians,

I'm going to be show stopper here! This offer is available at the cost of the car being the list price, while if you're shelling out money own your own/finance without this scheme, there are much higher discounts, especially for corporates. So the 0% is at some few percentage extra interest!

[shortbread]

Originally Posted by GTO

Again, my point is, buy a 28 lakh car when you are at that financial point in life when you can buy, own & drive a 28 lakh rupee car. Not because of some gimmicky 16K EMI scheme which falsely makes a BMW look supremely affordable.

Aaah...such a thought process wont help BMWs cause of shifting more X1s, would it??!! It is a very enticing bait for the 'new money' gullible types!!

The 16k EMI bluff would excite a Civic/Corolla buyer who otherwise would not even look in the X1's direction. Now all of a sudden for a supposedly similar EMI he gets to own a BMW and that too a SUV (coff..coff).

The scheme makes people think that X1 is an option as well, the BMW marketing team have done their job brilliantly. Its upto people to open their eyes and read the fine print as is the case with any vendor customer transaction.

[honeybee]

Why should it be called a bluff, or why the buyers be named "gullible" ?

Is BMW cheating on its promises, or hiding the 12th month EMI ? I doubt.

Are people really going to queue up outside the BMW showrooms waiting to spend their monthly salary cheques on the X1 ? Fat chance!

Can we stop calling this scheme anything other than what it is: an innovative financing option and stop treating buyers of automobiles as innocent chickens who will follow the first creature they see as soon as they open their eyes?

I would much rather we discussed the pros and cons of this financing scheme as against the regular ones.

[vinit.merchant]

There is a difference between owning a car and comfortably owning a car.
When you don't need to think twice for sending your car to the A.S.S. for any small/big repairs, for the scheduled service, you are comfortably owning your car.

But when, most of the times,
you start planning resources for the upcoming regular schedule,

You delay any small / big repairs for arranging vitamin M.

You are not comfortably owning it. The ownership is pinching you.

Such will be the case where one can comfortably own a corolla but instead stretches himself after feeling he can afford 16k for the BMW.


PS:- when I was looking for changing my car, my father told me two things.
1. What I listed above
2. That the cost if the car should not be more than 20% of your net worth.

I adhered to point two only then, though now after 4 yrs. I can adhere the point 1 as well !

[CtrlAltDel]

Originally Posted by vinit.merchant

There is a difference between owning a car and comfortably owning a car.
When you don't need to think twice for sending your car to the A.S.S. for any small/big repairs, for the scheduled service, you are comfortably owning your car.

Spot on Vinit!

Even if your income level makes the deal affordable, you still have to consider the running cost and the cost of spares. And not to forget the annual insurance cost.

A few months ago I came across an immaculately maintained Merc E-Class (the rectangular headlamps walla) from the early 90s that someone was selling for around 6 Lakhs only. I had made up my mind to buy it when my wise dad brought me back to earth.

He made similar points as above and said that even though I may buy it for 6 lakhs it'll equal a 40 lakh car to maintain (service, spares etc). I dumped the idea and discovered new virtues in my Vista

[drmohitg]

I am not sure how this discussion has shifted from the scheme on offer to the pros and cons of an EMI. EMI options are there to make things easier for you. Ofcourse its your fault if you do your maths wrong and go for a car thats well beyond your budget, EMI or otherwise. The finance schemes are not applicable to those people.

You have to look at the other side too. I know of many a businessman ( my dad's colleagues etc.) who can easily afford a X1 but have over the years developed a mental block that BMW is only a rich man's car and they will never be able to afford one. This scheme is directed at that segment of people according to me. A 30L rupee car is no longer a luxury according to me. I don't see people talking about expense and cost of ownership when it comes to buying a Jetta HL or Superb or a laura L&K. These cars also easily touch 20L which is not peanuts. But suddenly whenever a german car comes into the contention everyone is quick to jump off the guns and label it as a luxury purchase. It is not the case.

I currently pay around 32k/month for my Altis as EMI. So honestly this is not that big a deal.

[DudeWithaFiat]

Originally Posted by drmohitg

A 30L rupee car is no longer a luxury according to me.

.

Coming back to the topic, the Rs.15,999 EMI plus the Rs.1,20,000 on the 12th month would calculate to around Rs.24,700 per month. Taking into account the inflation and a hopeful increase in purchasing power, an amount of Rs.24,700 per month would not be actually as heavy as Rs.24,700 now after 3 to 4 years. Which makes the bullet scheme a good scheme for a person who can afford to pump out Rs.10L as initial payment and who can afford Rs.25,000 EMI. The total amount that we will be paid at the end of the 7 year term would be less than most of the car loans too.

P.S:- Personally, I don't like the idea of paying full-cash for expensive cars since if you invest that much amount on other traditional investments like real estate, it would be definitely offset the extra amount paid as interest on EMIs and in most cases, it would return us more money.