GTPNewsWire
Contributing Writer
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This is the discussion thread for a recent post on GTPlanet:
This article was published by Andrew Evans (@Famine) on June 4th, 2019 in the Car Culture category.
YouTuber Modifies Financed BMW M4, Now BMW Wants Its Money Back
- Thread starter GTPNewsWire
- 51 comments
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- 205
- United States
It's not 100% clear from the article whether he borrowed money to purchase the car, or was leasing it, but it sounds more like a lease. The distinction is important because in the former situation, you do own the car even whilst paying it off, while in the latter you do not. Modifying a leased vehicle is stupid, because it really isn't *your* car at all.
Anyway the article is confusing because it seems to conflate the two related but separate concepts of leasing and borrowing to purchase.
Anyway the article is confusing because it seems to conflate the two related but separate concepts of leasing and borrowing to purchase.
Corsa
Premium
- 2,104
- United States
Agreed it had to of been leased.
People modify financed vehicles all the time and if they are repossessed the bank just ships it to auction sells low and you owe the difference.
Lease on the other hand is done through the car manufacturer and they are very picky.
I got into a brawl with Chrysler Financial over a leased Dodge Ram years ago for my business.
Yes you can buy out your lease at the end for a ridiculous balloon payment, but the lesson for me was just finance to buy.
If you can't afford that then go used with the bank.
I will never lease anything again, honestly leasing should be reserved for corporations and government entities.
People modify financed vehicles all the time and if they are repossessed the bank just ships it to auction sells low and you owe the difference.
Lease on the other hand is done through the car manufacturer and they are very picky.
I got into a brawl with Chrysler Financial over a leased Dodge Ram years ago for my business.
Yes you can buy out your lease at the end for a ridiculous balloon payment, but the lesson for me was just finance to buy.
If you can't afford that then go used with the bank.
I will never lease anything again, honestly leasing should be reserved for corporations and government entities.
- 86,710
- Rule 12
- GTP_Famine
Not really - I mention the car finance provider "BMW Financial Services" (part of BMW) quite a lot, specifically lay out what "car finance" is in the first three paragraphs, and don't mention borrowing money at all anywhere. I don't mention borrowing money because "car finance", in the UK where this happened, is a specific area of (three-party) lending that doesn't involve liquidity transfer from lender to client, with specific regulations - although it can take a few forms.
When you say "lease" you seem to be talking about what we'd call contract hire; you rent use of the car for 2-3 years, and basically pay the car's projected depreciation plus interest. The finance company still owns the car throughout and at the end. There's also hire purchase, where you pay a deposit at the start and literally pay off the car's entire new value (depreciation isn't a factor) and when you've paid it off you own it. The finance company still owns the car throughout and you own it at the end.
The most common option in the UK is a mix of these, called PCP (personal contract purchase). You pay a deposit, then pay the projected depreciation plus interest and then you can buy the car with a lump sum value at the end. The finance company still owns the car throughout, and you can give it back or buy it at the end.
In all three cases, while you're paying the finance, the finance company owns the car. You'll have all sorts of restrictions, including how and where it's serviced and how many miles you do, because of the future value of the car.
You can, of course, get a loan from a bank and buy a car. This isn't "car finance", and typically the rates are a lot worse. On the upside, you'd own the car and can do what you like with it.
I'll have a look at perhaps making this even clearer so it crosses the Pond intact. Edit: mild jiggle on the second sentence. Is that clearer?
Seems harsh - he simply seems to have fallen into the trap of thinking "his" car is his, and got caught because he made a load of videos about it and has a decent following. There'll likely be a bunch of kids out there taking finance out on their first cars and putting nicer wheels, or better speakers, or a different exhaust on who'll be making the same mistake - and while it looks like he can hurl money at cars, they won't be able to and they'll end up owing loads to a car finance company for a car they don't even have any more.
It's worth getting that message out there, so good on him for making the video.
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- 1,690
- Connecticut
- GroupB
In the US, financing a car means you are buying it on a monthly installment plan, either through the manufacturer’s own finance arm or an outside bank. The car is yours unless you default.
Leasing, on the other hand, means the car belongs to the manufacturer and you are just paying to use it for a specified term, usually 3 years. There are agreed mileage limits and the car must be returned to the manufacturer in original condition. There are significant financial penalties if those stipulations are not met. At the end of the lease term, the customer may either turn the car in or buy it out.
Leasing, on the other hand, means the car belongs to the manufacturer and you are just paying to use it for a specified term, usually 3 years. There are agreed mileage limits and the car must be returned to the manufacturer in original condition. There are significant financial penalties if those stipulations are not met. At the end of the lease term, the customer may either turn the car in or buy it out.
Famine,
That is exactly the case. At least here in the USA, you get a loan from a bank to purchase the car. They own the title to it until you pay it off but it is essentially your vehicle. This is what we call "Car Finance"
When we basically rent the vehicle with an option to buy it or turn it in at the end of the term, that is "Car Lease". The vehicle belongs to the leasing company (usually the manufacturer) and has all kinds of stipulations on it such as mileage, condition of the vehicle, and (as mentioned in the article) usually no modifications.
It's just a difference in vocabulary across the pond..(color vs colour, etc.)
Either way, poor guy....you should always read what you sign....
- 205
- United States
Okay, then I guess it's clear to British English-speaking audiences. In US common usage the word "finance" is equally applicable to loans for purchase or leases, and is more often used in reference to a loan. But from context it is apparent enough that the article is discussing what we would call a lease.
Veinz
Premium
- 5,169
- Ontario
That car would be 5000 down and roughly a 1000 per month on lease here, 1500 a month if financed. IMO, If you have to lease because you can't afford to finance it, maybe you shouldn't get that vehicle. But I get the impression he mostly bought this so he could make content for his youtube channel.
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- 303
- Hannover
- TheNaketWookie
Well... play stupid games, win stupid prizes.
If you don't read what you sign, it is your own fault.
I don't get the fuzz...
The 2nd (!!) sentence: "Leasing a car this way allows you to..." should be info enough. I am german.
If you don't read what you sign, it is your own fault.
I don't get the fuzz...
The 2nd (!!) sentence: "Leasing a car this way allows you to..." should be info enough. I am german.
- 40,750
It's amazing how editing the article after all of those comments were posted in response to that confusion helped better explain the context.
This also is the case if the "bank" is GMAC or Chrysler Capital or whatever. As long as you keep up with the note they don't care, and the title is in your name (with a lein).
- 86,710
- Rule 12
- GTP_Famine
- 205
- United States
Yes, I think it's clear to all audiences now.
- 230
- Germany
- TAU_PS
Also only buy what you can afford...leasing a car as private individual (i.e. without the tax break) just to be able to drive something brand new always seemed like a super dumb financial move to me - especially when said individual goes on bragging how he/she/trans/self-identified/ actually owns the car
- 12,870
- Cambridge
- Moglet85
- Moglet
I don't agree with not purchasing a car because you can't afford to finance it but can afford to lease it, leasing is a very common thing in the UK and it works well for people who like having a new car every 3-5 years and can afford the payments. I've got plenty of friends who lease cars but would never finance one outright. The main thing is figuring out what your budget is and sticking to it.
Regarding the video itself he seems to be confused as to how some things work (comparing a mortgage to a financed car, for example) and it has turned around and bitten him but fair play to him for owning up to it and making a video on it. It may help some younger viewers understand how car financing/leasing works and what you can and can't do.
- 230
- Germany
- TAU_PS
Some manufacturers offer special conditions for popular enough YouTubers as they see it as advertising. In Germany for instance Mercedes offers AMG models at company car conditions to YouTubers, meaning they pay 1% of the chosen vehicle's sale price every month and even get maintenance thrown in. Not sure about BMW's rebates, but wouldn't be surprised ig they had a similar initiative.
- 303
- Hannover
- TheNaketWookie
- 205
- United States
If you want a new car every 3 years, leasing can often work out better financially than purchasing a new car, then selling it and buying another after 3 years. Assuming, of course, that you can live with the mileage limitations and don't plan on modifying the vehicle.
But obviously you don't have to have good financial literacy to be a YouTuber.
But obviously you don't have to have good financial literacy to be a YouTuber.
Danoff
Premium
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- Mile High City
It can work out better, but it also can be worse than just buying and selling every 3 years. It depends on the parameters you negotiate for the lease, and how regularly you intend to buy/sell. To be an optimal candidate for a lease you have to be pretty sure that 3 years is your MO. Because if you'd rather do 5 years, buy/sell will save money vs. a lease.
Even if you're sure that 3 years is just the perfect fit, you've got to get those lease terms just right.
I knew of one person who was sure that 3 years was too long for him. He wanted a different car every year. So what he would do was buy out leases that had one year left on them from people who wanted a car for only 2 years and were looking to dump it before their lease was up.
Mostly, this is a rich people game. Few peasants can really afford a brand new ride every year, 2 years, or even 3 years.
- 47
- Lübeck
- NightRaven27720
This is Embarassing.
This Guy with over 200k Subscribers makes Youtube Videos about Cars, but he doesn't how (or is not capable of reading Contracts) how leasing works and what you shouldn't never ever do, such as modifying Cars that you don't even own?
Jesus Christ.....
This Guy with over 200k Subscribers makes Youtube Videos about Cars, but he doesn't how (or is not capable of reading Contracts) how leasing works and what you shouldn't never ever do, such as modifying Cars that you don't even own?
Jesus Christ.....
- 205
- United States
For some definition of "rich people", perhaps. At least in the US where I live, lease rates on normal, non-exotic cars are well within the means of a consumer with the median income. Most people would probably rather spend the money on other things, but if getting a new car every 3 years is your thing, you can probably afford it.
Obviously the same may not be true if you live in, say, Venezuela, or large areas of Africa.
Personally I prefer to buy and keep a car for 5+ years, but to each their own.
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- 86,710
- Rule 12
- GTP_Famine
Well, he is at least owning his mistake (unlike the car).
There's a few things we don't know though. I mean... yes, it's foolish, but if he was in a Hire Purchase agreement, he may have been planning to buy the car at the end of the term, and thus considered it "his" from the start. It's just unfortunate that he's been caught out by a pretty common mindset.
From the money thrown at modifying it (the exhaust system alone is £4k), he can probably afford the penalty even if it may sting quite a great deal. It's good that he's using this error to remind his fans and subscribers that they don't own their VW Polo either, and slamming it onto skateboard wheels will land them the same fate - which they almost certainly won't be able to afford.
- 269
- WyldAnimal_
Always read the Fine print on any contract. if you Don't understand it, Ask what it means, or hire someone who can explain it to you.
An example is you take out a mortgage on a house.
then you RENT it to a 3rd party.
in the fine print, you are in violation of the contract and the Bank or Lender, can demand full payment Immediately.
You do NOT own the house, the Bank or Lender does, and you have to abide by the contract which your entered in to.
Cars are the same, always read the fine print. Till you have paid for it 100%, it is NOT yours.
An example is you take out a mortgage on a house.
then you RENT it to a 3rd party.
in the fine print, you are in violation of the contract and the Bank or Lender, can demand full payment Immediately.
You do NOT own the house, the Bank or Lender does, and you have to abide by the contract which your entered in to.
Cars are the same, always read the fine print. Till you have paid for it 100%, it is NOT yours.
- 3,769
- London, Ontario
- voodoovaj
@Famine Not to nit pick, but mortgages work a little different than you mention. Either way, it is a valuable lesson for everyone on what it means to "own" something that is financed in some way.
I've been saying for a while that they should teach the fundamentals of finance in school so people are better prepared for the real world, and the pitfalls in the fine print of finance contracts.
I've been saying for a while that they should teach the fundamentals of finance in school so people are better prepared for the real world, and the pitfalls in the fine print of finance contracts.
- 205
- United States
Not sure if things are different where you are, but in most places, in your mortgage example, you do own the home, and the lender holds a lien to secure their intetest. Per the terms of your loan agreement, you may or may not be permitted to rent the home to a 3rd party. People get mortgages to buy rental properties all the time, but usually the interest rate is a little higher than on a primary residence. This is because there is more risk in lending on a rental property, because if the borrower finds themselves in a bad financial situation, they are naturally going to prioritize paying for their primary residence.
Danoff
Premium
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