[lamborghini]

Originally Posted by amitverma

Price: 60 lacs on-road delhi
Down Payment: 25 lacs
Loan Amount: 35 lacs
Period: 4 years (80k mileage)

If I go with the buy back scheme,

EMI: 43k for 47 months = 20.21 lacs
Buyback Promise: 30 lacs (~29.xx actually)
Total cost of car if I decide to keep it after 4 years, 25+20+30 = 75 lacs

If I go with a normal finance,

EMI: 93k for 48 months = 44.64 lacs
Total cost of car = ~70 lacs

So, if I want to make sure I spend equal amounts of money in normal finance scheme, I should be able to sell this car for at least 25 lacs. But with 80k on the odo, I find it to be quite an uphill task. I don't think I'd even go for a Honda with that kind of mileage, let alone a BMW.

Being a petrol car, I don't think I can expect any favors in the resale space. Being a German with high odo readings is another thing that'll get away from me. So, a realistic value seems to be 20-25.

Now, also keep in mind 50k that I'm saving every month (which can be invested elsewhere or even kept in the bank, it'll still grow). I'd end up saving 24 lacs over the course of 4 years which can be used in a better way?

Any suggestions/information is welcome.

I have been thinking about this scheme for a while now.

1) Let's take the actual OTR value of the car to be 60L post discounts. If BMW is offering 50% of that value back to me at the end of 4 years, it seems to be above market pricing and therefore, it will nullify a chunk of the 5L difference between both options.
The reasons for it being above market pricing are simple : the existing car is 2 years old, which means in 4 years a new generation will be around the corner = heavy discounts on the G30 5 series in stocks + new gen coming in which will impact resale value. Case in point - the F10, W212, XF, etc. used car prices.
Second, as you said - a high run German generally sees a hit on the market value.

2) I save 50K/month upfront which offers me more flexibility if needed.
Even if I can afford the higher EMI & I reinvest the money into a 10% yielding financial instrument - I recover around 3.75-4L post taxes.

Points 1 & 2 combined offer me flexibility with no real monetary loss - makes sense even if I were to buy the car outright at the end of 4 years at Rs. 30L.

Working as such:

25L DP
20L EMI
30L Purchase after 4 years
=75L minus the 3.75-4L interest I would earn = Rs. 71L (vs 70L for outright purchase).

Or I could just give the car back to BMW, and repeat the cycle with an all-new gen 5 series.
In this case, the cost to me would be 41L.

If I were to buy the car outright however and sell it after 4 years, I could theoretically make a loss:
25L: DP
45L: EMI
Total cost = 70L, and resale after 4 years would be say 25L = total cost of ownership for 4 years working out to 45L (4L more than if I took this scheme).

If it is a company purchase & the higher interest can also be written off, it is just the icing on the cake.
There is a risk about the car meeting with a severe accident which would impact the resale value, so I would only recommend going for this scheme if you can afford the 93K EMI in the first place.

There is another option of buying a vehicle with a 5 year loan - rough EMI comes to around 73K with a similar down payment, you get to own the vehicle entirely, and it could be a good option if you plan to keep the vehicle for an extended period of time as you have full flexibility on servicing & insurance post warranty period, but if you plan to change in a few years then it would be better to go with this scheme.

[amitverma]

Originally Posted by lamborghini

There is a risk about the car meeting with a severe accident which would impact the resale value, so I would only recommend going for this scheme if you can afford the 93K EMI in the first place.

There is another option of buying a vehicle with a 5 year loan - rough EMI comes to around 73K with a similar down payment, you get to own the vehicle entirely, and it could be a good option if you plan to keep the vehicle for an extended period of time as you have full flexibility on servicing & insurance post warranty period, but if you plan to change in a few years then it would be better to go with this scheme.

Thats true, but it holds true even in the case of an outright purchase. A severe accident will destroy the resale. (assuming a luxury car buyer would do their homework)

The only downside to 360 scheme is the controlled mileage. What if I want to drive more than 80k kms in 4 years. Its Rs 20/km after 80k which is quite something.

The good thing is, if you have ~20 odd lacs to spare after 4 years, you could be driving the latest gen model with the (almost) similar EMI.

[lamborghini]

Originally Posted by amitverma

Thats true, but it holds true even in the case of an outright purchase. A severe accident will destroy the resale. (assuming a luxury car buyer would do their homework)

The only downside to 360 scheme is the controlled mileage. What if I want to drive more than 80k kms in 4 years. Its Rs 20/km after 80k which is quite something.

The good thing is, if you have ~20 odd lacs to spare after 4 years, you could be driving the latest gen model with the (almost) similar EMI.

Agree on the accident bit, but at least if you can afford the car brand new then you don't have as much of a worry.

The controlled mileage is a bummer, but more often than not people have a fair idea of what their mileage will be, and should factor a little grace period.

This scheme got me thinking, and I spoke to a bmw sales chap about it. Sadly the offer in Mumbai isn't as lucrative - mainly because for a 4 year old, 40Kkm car they are offering a buy back of 23-24Lakhs, which coupled with the higher road tax (assuming DP of 25L) works out to an EMI of around 75K.

At that rate, I would rather buy it with a 5 year loan with an EMI of 90K which works out cheaper.

[Vitalstatistiks]

Originally Posted by lamborghini

I have been thinking about this scheme for a while now.

1) Let's take the actual OTR value of the car to be 60L post discounts. If BMW is offering 50% of that value back to me at the end of 4 years, it seems to be above market pricing and therefore, it will nullify a chunk of the 5L difference between both options.

While I understand rest of your analysis/thought process, the above confused me a bit. "BMW is offering 50% of that value back to me"? The car maker is not giving any money back, this nomenclature of 'buyback' is misleading. The car maker just offers an additional amount which the buyer should pay at the end of stipulated period, for outright purchase.

In which case, the lower such an amount, the better it is for a buyer like you and me, right? Why should we be happy about car maker offering a higher than market pricing?

[smsrini]

Bear in mind that the buyer has to also pay road tax, insurance, registration charges over and above the down payment.

BMW typically offers a 30 month scheme with a 15000 kms / year, which i think is too short a time.

[lamborghini]

Originally Posted by Vitalstatistiks

While I understand rest of your analysis/thought process, the above confused me a bit. "BMW is offering 50% of that value back to me"? The car maker is not giving any money back, this nomenclature of 'buyback' is misleading. The car maker just offers an additional amount which the buyer should pay at the end of stipulated period, for outright purchase.

In which case, the lower such an amount, the better it is for a buyer like you and me, right? Why should we be happy about car maker offering a higher than market pricing?

Haha! I completely agree with you that it is not a buy-back in the sense the customer isn't getting any money back (barring the extra 24L + interest that is already accumulated in the bank account).
It is definitely misleading to think of it in that manner - point noted.

About the lower resale amount - well, yes - it would be better if the value was lower than market value, but then the EMI would be a fair bit higher (as is the case in the deal the Bombay dealer sent me - not really viable, unlike the deal OP got in Delhi).

Originally Posted by smsrini

Bear in mind that the buyer has to also pay road tax, insurance, registration charges over and above the down payment.

In the example I quoted, the price was 60L OTR Delhi.

[sgautam31]

Hi All,

I am planning to buy my first luxury car, and in general, I prefer to change the vehicle after 4/5 years. While speaking to dealers they encourage opting for an assured buyback plan (Star Agility or BMW 360), where I pay less amount towards EMI and can upgrade the vehicle after the tenure.

Has anyone purchased a car with such an option and can share their experience?

Also, can someone please suggest if these are good options to consider, in case I plan to upgrade the vehicle after the tenure and how it works?

Thanks in advance.

[PaceTraveller]

Originally Posted by sgautam31

I am planning to buy my first luxury car, and in general, I prefer to change the vehicle after 4/5 years. While speaking to dealers they encourage opting for an assured buyback plan (Star Agility or BMW 360), where I pay less amount towards EMI and can upgrade the vehicle after the tenure.

Has anyone purchased a car with such an option and can share their experience?

Were you able to get any answers to this? I am in similar situation to yours. Thinking from upgrading from a 9 year old Nissan Micra towards my first luxury car and contemplating if 360 plan is a worthwhile option. It seemed to me as Too good to be true (Which is usually the case when it looks so). Numbers that I could see are:

BMW X1 sDrive20i xLine
Down Payment: 4,35,000 (10% of Ex-showroom price)
Finance Amount: 39,15,000
47 Monthly Payments: 64,002
Term of Loan: 48 Months
Assured Buyback Amount: Rs. 21,75,000
Annual Mileage: 20000 KMs (I have used my old car at 42000 kms in 9 years, so I think this is pretty reasonable for me)

This all calculation is made on Ex-showroom price, who handles the rest of the costs? Are they expected to be paid in cash by the customer (assuming Finance amounts are shown only on ex-showroom price)

If expected to be paid in cash by customers
Registration + Insurance + Other Charges: Rs. 12,08,130 (From CarWale)
Down Payment: Rs. 4,15,000
47 EMIs: 64,002*47 = 30,08,094
Total Cost: 12,08,130 + 4,15,000 + 30,08,094 = 46,31,224
Assured Buyback: 21,75,000
Net cost after buy back: Rs. 24,56,224

This seems pretty reasonable to me considering its a luxury car after all. Essentially, I am paying 6.14 lacs per-annum to use BMW X1 to my heart's content (20k kms seem pretty enough considering my record so far) or Rs. 30/km excluding fuel.

Match that with Jeep Compass Trailhawk: 42,40,000 on road in BLR and resale value of about 26 lacs (2017 model - Longitude selling for 13.5 lacs on olx, so I assume max one could get is twice that). brings the cost of ownership to 16.4 lacs (8.1 lacs more over 4 years for BMW X1)

This all feels too good to be true to me. Why, a car otherwise selling at 55 lacs on road is available so cheap via BMW 360 plan? What's the catch?

[GokuTorqueRider]

Originally Posted by PaceTraveller

BMW X1 sDrive20i xLine
Down Payment: 435,000 (10% of Ex-showroom price)
Finance Amount: 3,915,000
47 Monthly Payments: 64,002
Term of Loan: 48 Months
Assured Buyback Amount: Rs. 2,175,000
Annual Mileage: 20000 KMs (I have used my old car at 42000 kms in 9 years, so I think this is pretty reasonable for me)

If expected to be paid in cash by customers
Registration + Insurance + Other Charges: Rs. 12,08,130 (From CarWale)
Down Payment: Rs. 4,15,000
47 EMIs: 64,002*47 = 30,08,094
Total Cost: 12,08,130 + 4,15,000 + 30,08,094 = 46,31,224
Assured Buyback: 2,175,000
Net cost after buy back: Rs. 24,56,224

This all feels too good to be true to me. Why, a car otherwise selling at 55 lacs on road is available so cheap via BMW 360 plan? What's the catch?

Let me try to explain what I researched about the 360 plan. In this plan, you are not buying a car on loan but rather leasing it for the pre-agreed period and mileage. In your case, you will be paying 64000 for four years as a lease amount and not as an EMI. At the end of tenure, the term buyback refers to you buying back the same car from BMW for the pre-agreed price which is 2,175,000. It is not BMW buying back the car from you but it is the other way around. You will be provided with three options:

Return the car:
You just leave the car back to BMW and come back empty hand. If there are any wear and tear than the agreed terms like driving more than 80k kilometres then need to pay a fine for the same.

BuyBack :
You need to pay the assured buyback amount to own the car by yourself.
Here you will be provided with two options - either pay the whole assured buyback amount in a single payment or convert it into a normal loan with EMI being paid (this is the original EMI where you pay to own the car).

Sell outside:
You can sell the car outside and pay BMW the assured buyback amount. Usually, the car will sell for a higher price than the assured value so you will get some money back. For example, if you sell the car outside after 4 years for 30 Lakh then you pay BMW 21 lakh and keep the rest with you.

Lease a new car:
In this option, you will follow the same old steps again right from the initial amount and agreement for new terms.

Currently, BMW is running an offer where they include the maintenance, insurance and registration cost in the lease amount.

The monthly lease amount that you will be paid is calculated as interest for the total on-road cost minus your initial amount and some charges for the wear and tear.

[PaceTraveller]

Originally Posted by GokuTorqueRider

It is not BMW buying back the car from you but it is the other way around.

Super thanks. I didn’t think of this in Leasing terms. This clarifies everything.

So this means, the total cost, in case I am to keep this car at the end of lease period would be
Initial Downpayment: 4,15,000 + EMIs: 30,08,094 + Buyback cost: 2175000 = ~56 lacs and the current on road price is 55 lacs.

Of course there would be time value of money INR 21,75,000 kept with self for the 4 years period earning investment returns.

If I want to walk away from buy back option and move on to next car: my max cost would be ~34.2 lacs and this could come down if I am able to get a better deal in open market (as you mentioned).

Once again, super thankful.

[GokuTorqueRider]

Originally Posted by PaceTraveller

If I want to walk away from buy back option and move on to next car: my max cost would be ~34.2 lacs and this could come down if I am able to get a better deal in open market (as you mentioned).

If you move out after 4 years without opting for buy back then your loss will be around 50 lakh as per your calculations and if I understand the fine print on the BMW website you need to pay out of pocket for the insurance from 2nd to 4th year.( I assumed that you will pay around 4 lakh for 3 years of insurance)
Registration + Insurance + Other Charges: Rs. 12,08,130 (From CarWale)
Down Payment: Rs. 4,15,000
47 EMIs: 64,002*47 = 30,08,094
2nd to 4th year insurance = 4,00,000
Total Cost: 12,08,130 + 4,15,000 + 30,08,094 + 4,00,000 = 50,31,224.

[Vitalstatistiks]

Originally Posted by PaceTraveller

So this means, the total cost, in case I am to keep this car at the end of lease period would be
Initial Downpayment: 4,15,000 + EMIs: 30,08,094 + Buyback cost: 2175000 = ~56 lacs and the current on road price is 55 lacs.

Originally Posted by GokuTorqueRider

If you move out after 4 years without opting for buy back then your loss will be ...... 50,31,224.

As an extension, if you opt to keep the car after 4 years, the cost will be 50.31 lakhs + 21.75 lakhs = 72 lakhs. And the current on road price is 55 lakhs.

As per my understanding, this buy back option works well for corporate entities, who need to claim high depreciation regularly. For individuals, all it does is reduce the down payment and EMIs during the lease period. The overall cost of the car will be more or less the same if you took a regular loan.

[Altocumulus]

Originally Posted by Vitalstatistiks

As an extension, if you opt to keep the car after 4 years, the cost will be 50.31 lakhs + 21.75 lakhs = 72 lakhs. And the current on road price is 55 lakhs.

As per my understanding, this buy back option works well for corporate entities, who need to claim high depreciation regularly. For individuals, all it does is reduce the down payment and EMIs during the lease period. The overall cost of the car will be more or less the same if you took a regular loan.

I am someone who changes his cars in 4-5 years if not earlier. So for such a person these plans if it also includes insurance and maintenance like I saw in Star Agility makes sense. Isn’t it ?

Also since I stay in NCR the resale price of a diesel will be even lesser. So in my mind for me the lease option seems lesser hassle than buying the car outright and trying to sell after 5 years.

[vinay.sathyan]

Do we have anyone who has actually made a purchase through Star Agility or BMW 360 and share us the experience?
My initial experience when they explained Star Agility was crazy and didn't make sense. But i may be wrong. Also these schemes often have a lot of hidden costs. Hence looking forward to hearing from someone with actual experience.

[vinay.sathyan]

So i did some exploring here. Specifically with Mercedes's star agility.
I'm Quoting GLC 300 (2023) as an example here. But the online tool is available on mercedes site and can be used a reference too.

Car on road cost is around 91,00,000
The Ex show room is 73,50,000
The Ex showroom amount is the maximum amount for which they will provide the Star agility scheme for.

Now, there are different versions of schemes available. Term wise and Kilometer wise.
Meaning there are 3yrs, 4yrs and 5yr schemes.
Each has 10k km, 15k km and 20k km per year options.

The interest rates are around similar to regular loan rates around ~8.5%.

The way the scheme works is, you pay for 60% of the cost of the car. At the end of the tenure, you either pay the rest 40% as the last balloon payment or leave the car as is and just walk out.
By leave the car and walk out, the used car valuator team will visit you 90% before expiry of the tenure, they will check the car for major damages. If they are major, you will requested to use the insurance and get it repaired.

if you decide to keep the car, they wont push for insurance, but you need to pay the 40% balloon amount.
if you choose to leave the car, then they will valuate the car and give you the amount. it may be more than the balloon amount in which case you are in profit if not, no need to pay anything extra leave the car.

The maintenance and insurance can be clubbed and the monthly payment will be bumped up accordingly.

Personal opinion - If you intend to keep the car beyond the tenure, then its expensive compared to regular loan. if you intend to do high down payment, then you are essentially letting go of the entire downpayment amount. Mind you, the road taxes are still a down payment you need to make.
This works only for people who have high liquid incomes and have ways of showing the car losses as losses for their taxes and for people who frequently switch their cars.

Hope this was helpful to anyone looking out for this scheme.

PS - BMW guys are ok to loan the OTR cost too not just the ex-showroom.