BMW 360 plan explained | Lower EMI but at what cost?

[@pranayk37]

Make a copy of the Google Sheet below to tinker with it and evaluate for yourself. To make a copy, click on File -> Make a Copy! docs.google.com/spreadsheets/d/1AOurJzV6OL-7a966GX5sjvhOL5Aqa7NvH_sjonnGKDY/edit?usp=sharing

[@ziddiaa7165]

Excellent presentation mate. Love how intellectual and mathematical your videos are.

[@hiteshbabani]

The plan also targets the emotional quotient. Cash flow for the first four years is lower than the loan option which means a person opting for a Tiguan can opt for X1 for similar EMI and within the BMW range, someone opting for X1 on loan can also look at X3 with buyback as the EMI will be similar. Basically, target the segment upgradation itch. Same for Mercedes.

[@akshatvaid]

Very useful video. Your content continues to be insightful.

[@pranayk37]

Glad you found it useful! Thank you

[@amlendu123]

You should probably do a split of the screen share with your own picture. It was creating a lot of distraction , the frequent flip between the excel and your narration video.

[@pranayk37]

Ok

[@gauravarora3194]

@@pranayk37 Try using loom for recording videos with face over screen.

[@chandanbansal2004]

@@pranayk37 i agree, but great calculations

[@cbrcoder]

Great Video.Mercedes has similar plan called "Star Agility". End of the day, I think normal bank loan is better because you are not locked into fixed valuation driven decision at the end of 5 year term. Also most business users get Interest deducted from tax so even better deal.

[@pankajkanal1157]

Very informative....and the 360 plan actually also makes sense if you want to have lower cash flows.Superb Share

[@abhisheksrivastava8479]

BMW 360 plan helps people play "The Status Game".

[@pranayk37]

Low EMIs do make it more accessible

[@dromlakhani]

Pranay this is very good What about the taxation? This also changes the picture

[@animeshsinha9570]

Essentially the 360 plan is renting the car for 5 years and then giving it back to BMW, with the added worry of accidental damage and higher than prescribed annual mileage (similar to actually renting a self drive car). Doesn’t make sense in my opinion, for people who keep their cars for a longer term.

[@animeshsinha9570]

I always wanted to understand the catch behind these financing schemes when I repeatedly configure a 330li and see digestible EMIs. Great video Pranay!

[@pranayk37]

Thank you, please share with prospective buyers who might find it useful!

[@prakashrbiyani4487]

I have spoken to BMW and they have said that they will evaluate the value during last phase of emi and even if the condition of the car is excellent but market value is lower then they will recover the remaining amount

[@PrathamNebhaani]

Appreciate the video. Thanks

[@yashpatil3367]

Great explanation man. Can you also consider making a video about these cars which the brands will sell later as official refurbished? Would love to know about those scenarios as well.

[@varunwagle]

Loved the video! Doesn't the 360˚ Finance Plan also include service cost for 4 years? If we factor that in, the 360 plan would save about an extra lakh rupees, is that a fair assessment?

[@pranayk37]

Good point. Though Service and Maintenance package can be purchased when buying through a regular loan and you can negotiate to get it at a low price

[@harshasblr]

But you can drive only 10k kms per year with the 360 plan. I calculated before buying the X5 and bank loan seemed much better because at the end of 4 years or 5 years you will have to clear the rest of the car amount if you want to keep the car. If you do that you will save a little but if you consider to keep the car and continue the loan for the balance amount, you will lose a lot of money.

[@pranayk37]

@@harshasblr Beautiful car, congrats! And that's what my analysis shows as well -- 360 plan turns out to be slightly more expensive with the set of assumptions I've taken

[@mok2569]

In case of 360, you pay a lower monthly outflow. What if we invest the balance between 360 and regular loan at an estimated 12% yearly return for the next 5 years, we would end up with over 41 lacs in collected amount which can actually be used to pay off the buyback if one decides to keep the car.. what are your thoughts?

[@vineeth9258]

Nice one! ! Changed one assumption that the sale value is same as the buy back value (I feel that makes the comparison more equal weighted), and the difference between loan and buy back is 1.5 lakh, so basically you are paying a 1.5 lakh as premium for have the buy back guarantee and also for the work required for selling it back. And regarding one time payment, it directly boils down to the difference between loan interest rate and the assumed discount rate.

[@pranayk37]

Glad you played with the google sheet! The intent is to let everyone work with their assumptions and arrive at a decision that they’re comfortable with

[@dr.ryanpereira4687]

Hi Pranay, your final opinion is correct, that is normal loan is better than 360 , however there is a higher difference in the interest payments made in 360 compared to normal loan. Please calculate that and see.

[@pranayk37]

Even if one is paying more interest in a scenario, how does it matter? As long as the overall outlay is lower

[@abe4985]

I have leased a car in North America and this is exactly how it works. Buyback is like leasing a car for a contracted residual value at the end of lease

[@pranayk37]

What do people in the US do? Assuming majority take buyback

[@sameerdeshpande]

Will be interesting to see for how much does a 5 year old X1 sell in the second hand market.

[@sagars9755]

Never go with these schemes , even for a small scratch at the of 3 yrs they wl make u paint the whole door (if the scratch is on the door) and then take it back , like in the mini condition how u bought it brand new :) biggest scam ever :p

[@mahipdeva3543]

Hey Sir! Regards! Super amazing video, loved it, thanks! Need help w a doubt! Got 10k AXIS ATLAS MILES - do I transfer them to Accor before 20th Dec(that damn Rs199+GST) or do I wait for Axis Bank/Accor to have some promotional offer wrt point transfer!? Would sincerly appreciate your help, thankyou tons!

[@pranayk37]

I think you can transfer now. The calendar also resets on Dec 31st so might as well transfer to not have this impact your next year's transfer limit

[@mahipdeva3543]

@@pranayk37 Oh yes, I just missed that calender reset and the limit, thankyou, you always prove to be a seasoned advisor in all the terms, grateful sincerly!

[@vineeth9258]

As an extension, would be great to see a video regarding comparison of the full payment vs loan for a car around 10 - 15 lakh including the other charges and pros and cons.

[@pranayk37]

Thanks for the suggestion

[@apdlhloon]

Have an X5 2020 got m340i in march

[@pranayk37]

Nice!

[@varun3829]

Can you please share the financing on m340i

[@apdlhloon]

We got a normal bank loan from hdfc at 8.75

[@jayysetiya9231]

@@varun3829the interest rate on M340i is upwards of 11% if u take the 360 plan but regular banks offer much less rates, i got a M340i at 7.4% interest rate from regular bank , so the difference is huge

[@soumyajitdas7162]

Thanks a lot. Exactly what I was looking for. Also, how does company lease policies fare against the 360 plan? Saving on taxes might make it the most lucrative deal, thoughts?

[@pranayk37]

The tax benefit of 30% should be higher on a higher sum of EMI. Hence with a company lease, my hunch is that regular loan will be more beneficial since it has the higher monthly emi. But worth checking with someone who might have taken a lease car on a buyback

[@soumyajitdas7162]

@@pranayk37Thanks a lot. Yeah, the higher EMI helps on saving few bucks but comes with a higher interest rate too. Need to do some math now 😁. Great content. Keep up the good work and best wishes buddy.

[@SarthakGupta-l5d]

Your discounting factor is off by few basis points. Second if you take into account the difference of normal EMI vs 360 EMI. You need to factor the expected return generated on that differential amount and discount that back to get the true picture of cost of ownership.

[@pranayk37]

Return generated is the discounting factor.. instead of taking everything to future value, I've pulled it back to present value. It's the same thing.

[@manoouu]

I was waiting for someone to make this type of NPV calculations and spoon feed me why not to buy a luxury car. 😂

[@pranayk37]

😂😂😂

[@drbjee]

Just makes sense !

[@adityatripathy8868]

G Do they have a similar plan on x5?

[@wwe39rko65]

Isnt there 3 option? One to return the bmw,another to buy a new one in exchange of old one or the preferred of all three is to keep the bmw by paying the extra?

[@adityatripathy8868]

Do I get depreciation on the full value of the car

[@11Subham]

5,401,610 mehhhh. Would've purchased all cash, sadly falling short by 1000 🤣

[@shriram855]

I’m curious ,if we can buy the car from the 360 plan after someone completes 5 yrs. If someone wants to buy a second hand car, I think this would avoid the hassle of looking in the outside market . What are your thoughts on this??

[@pranayk37]

Sure go for it if you find someone looking to sell

[@abdulimran3805]

Dezire ya Brezza ki buy back scheme hai toh batao.

[@edwinlawrence7694]

Each model has a different percentage of buy buy and it’s according to the millage and the downpayment the video is good for people who want to buy the x1

[@pranayk37]

Correct. This is a framework to evaluate. You can change your assumptions in the Google sheet and make your own decision

[@ritinv25]

This is essentially leasing marketed under a different name!

[@sagars9755]

Exactly bmws r not selling normally so thats the bait 😂

[@pujithmarodia]

Great video, Pranay. I'm keen on hearing your opinion. Does it almost always make more sense to buy used for these types of cars, seeing how the increased taxation has made them quite unreasonable for what you get in return?

[@pranayk37]

Depends on the deal you're getting, no thumbrule

[@bivinmathew6186]

Hi Pranay, I think you should do a calculation including the applicable taxes, insurance expenses for the years after the first and cost of repairs/maintenance packages for the duration of ownership. Please correct me if I am mistaken, but I understand that the 360 plan includes all of the above, while the same expenses would be additional to the amount that is considered by you for a regular loan. As such, would you think it’s likely that that the 360 plan works out better?

[@pranayk37]

Hi, not sure that Service and maintenance package is included, I checked their Terms again. But even if we assume it is, you can buy a service and maintenance package. It costs 88K for an X1 as per their website. One can try negotiating and bringing it down, but yes you're right - it will make BMW 360 slightly better. With the current assumptions, BMW 360 is worse by 1.48L and it will then be worse by ~60K

[@bivinmathew6186]

@@pranayk37​​⁠ The quote you received from BMW considers a “total” insurance cost of INR 82,980 while a single year’s premium for a zero-depreciation policy for the X1 could be much higher. And we need to multiply that amount by 5 times (for 5 years) if the vehicle is bought without the 360 plan. For calculation’s sake, let’s say 1.5 lakhs per year (it could easily be even higher!), this itself adds another 6.7 lakhs to expenditure over five years. The RTO charges on the quote also seem to be noticeably lower than charges paid when purchased ordinarily.

[@rsrdubsteps752]

You are essentially financing the depreciation of the car , looks good on surface. Go for a pre-owned car, best value for money.

[@pranayk37]

Not always, but I see your point

[@litanmohanta7138]

Whats the logic for 10% discount rate ? What id the right approach to decide % it in this case

[@pranayk37]

Whatever you are confident of earning on that money

[@rohit50848]

Great analysis. Though, shouldn't the total cost of ownership also include cost of maintenance (~1 lac per year if done at bmw, a total of 5 lacs) and cost of fuel (assuming 50k km, 16 kmpl so a total of 2.8 lacs)? Would be the same in all three scenarios

[@shrenictejawat6425]

Shouldn’t the loan amount decrease in the bmw 360 program since bmw is going to buy back at 25L so the loan amount required becomes 26L (51L-25L). Thus decreasing the emi amount

[@pranayk37]

The emi amount used is as per their quotation, so it's based on actuals

[@cbrcoder]

The way BMW looks at it is if they are financing the depreciation!

[@yogensachdev]

Question: What exactly is Zerodha's larger network i.e zero1 ?

[@pranayk37]

zero1byzerodha.com/network

[@Chets]

Bro just get the zeiss duravision platinum coat dont go for blueguard or blueprotect. My recommendation to you. You will have almost no lens reflection glaring when making videos.

[@pranayk37]

😂 this is some zeiss lens only

[@Chets]

@@pranayk37 yep i figured it out by seeing them that is why i recommend u dvp coating rather then dvbp or dvbg. i am optometrist from Pune.

[@eshanjain]

Superb Video! Although with the diverse investment plans and the way stock market has been playing, 10% Discount Rate feels a bit conservative. Thanks to your excel, i could see that if i increase it to 20%, the bmw 360 seems to be the best plan, second being the regular loan followed by the downpayment.

[@pranayk37]

10% post tax is almost 14% pre tax. It's not conservative at all IMO. Glad you found the Google sheet useful

[@eshanjain]

@@pranayk37 My bad! Forgot to account for the taxation.

[@rishabh7824]

Reminds me of my costing class...

[@pranayk37]

😂😂

[@anurag-kumar20]

Is the market resale value including inflation-adusted or as of today?

[@pranayk37]

Today

[@miza007iphone]

I bought BMW 320ld but I choose not to go buy back plan. I took bank loan N I feel it's better. 10,000 km / year is far less as I go 15000 / year.

[@RohanJitSingh]

I thought balloon scheme was better cuz you can invest the down payment of 7/8 lacs as a lumpsum and then see the calculation as per how much the money has grown over 5 years.. Your thoughts?

[@pranayk37]

That's what we've done indirectly. The discount rate of 10% assumes that you'll be able to grow the money at 10%. I've just looked at present value instead of future value. Which are two sides of the same coin

[@Adhionyt]

If i buy a second hand car like 2021 bmw 2 series for 40 lakhs do I want to pay luxury tax and road tax for that,from my state(kerala)

[@JewelTalkwithKkunal]

Just one thing. I am confirm that i will use car only 5 years then upgrade. In that case In 360 plan 65k emi Normal 1L I am getting 35k extra cash flow for my business per month That is 4.20L extra cash for businesss which makes me 25% PA. M I right?

[@pranayk37]

Change the 10% to 25% and you'll see buyback will become better

[@abdulimran3805]

BMW ka mileage kitna hai

[@pranayk37]

Kaafi

[@bsr4u1985]

Did you consider the Value of Servicing and Insurance cost for coming 4 years in BMW 360 Finance vs Taking a loan from a Bank.

[@adityatripathy8868]

Please tell me if I have to pay tax on the money i get from bmw at the end of 5 years.

[@akashdash6023]

I think there's a similar Balloon Financing scheme by Mercedes.

[@pranayk37]

It's called mercedes agility plan, yes

[@akash4043]

Question can we purchase that 5 yr old car from bmw for 25 lacs

[@pranayk37]

Pretty sure they'll make a buck on it

[@aslamremeez640]

Luxuary vehicles are good to keep as second car not the primary car in india.

[@pranayk37]

If that's the case, limit of 10k Km in a year probably should be ok

[@thiyaga7174]

only concern is that 10000kms/year..! owning a BMW and not driving 10k KMs in a year isn't worth buying ..! i bet buying used BMW is much more worth it

[@pranayk37]

They have a 15K km option too.. but I get your point

[@ggautham7537]

What do you mean isn’t worth buying? If you can afford it and like the feature and luxury it offers, how does how many kms you ride matter?

[@ashishshetty1926]

Why was the road tax 0 ??

[@pranayk37]

Didn't notice. Just picked up the actual quotation

[@aditya7955]

as a fellow goolger pls dont let him buy an x1, way too overpriced and has 134bhp, 134bhp?????? thats a joke

[@pranayk37]

He has bought, and enjoying it

[@armangodara2267]

You didn’t consider car discounts though

[@pranayk37]

Discount is considered. It's there in the quotation

[@proxieddomain]

1. Don't buy what you can't afford. 2. If you can afford it then don't sell it till you really need to. 3. If you sell it don't buy what you can't afford.

[@pranayk37]

Golden

[@rohangarg5924]

hey man- something seems off. Why would anybody buy this car with a regular loan then? everybody would go for the 360 plan since the difference in total cost of ownership is negligible and ofc EMI is much lower in the 360. I guess the catch is the 10k limit on mileage in a year. BMW finance division must be making a loss here as comapred to a regular bank, no?

[@rohangarg5924]

or the buyback price must be higher than the ~29L residual value of the car and not 25L. I get that you have taken the 25L number from the official quote, just saying that this doesn't seem like a good deal for the BMW people although it's a good way to boost sales

[@DTruth-m4z]

Dude...ur all wrong...buy back price is what you pay if you want your car back after 5 years...simple as that

[@rohitsharma-gd8ft]

Agreed

[@mand121994]

What about the opportunity cost of money you would have saved by paying a lower emi with BMW BB plan? Looks like both you and your friend are from science background. 😋

[@pranayk37]

That's what the 10% is.. the higher you make it, you'll see buyback plan becomes better

[@Y_man0]

so it only makes sense if you have a monthly expendable income of X Rupees as EMI and plan to upgrade to another car. so this is more for affluent enthusiasts who would like to try out a new car every 3 to 5 years depending on their monthly expendable appetite :) it still is very tempting...just need to convince the wife :D

[@Y_man0]

@pranay: would you go for it personally? what factors would you consider?

[@pranayk37]

Personally I like money in the bank more than a luxury car :) It's something I've often thought about - what's the fine line between "YOLO" and "Money for the future".. and I've made my peace with not spending more than what my portfolio generates in a year. Another way to look at it is spending not more than 5-10% of net worth on a car. Unless of course your net worth is like 100Cr

[@Y_man0]

​@@pranayk37 for sure! That makes a lot of sense😇 Thanks for replying.. Means a lot❤️

[@vinayaksrivastava]

Best senerio is that don't waste your money into luxury cars which are basically money pit.

[@pranayk37]

Fair. Though some people work hard and earn money just to be able to pursue their dream of owning a particular car :)

[@18hourgaming66]

X1 not even xDrive more than half a crore - complete loot.

[@pranayk37]

I blame it on the taxation more than bmw

[@soumyajitdas7162]

@@pranayk37that is so true.

[@sideprince69]

When you go electric car you will end up using or traveling a lot

[@udayanchabukswar]

Buying a bmw with so much calculation is a waste. If one has to do all these calculations then dont buy. Because India is unpredictable and anytime someone can ramp into your vehicle/ anything can happen and then all calculations fall apart. Best case scenario is when one can buy a car with no tension.

[@mukundipad2]

Paisa zero karne ka scheme

[@pranayk37]

That stands true for all luxury cars

[@vineetgupta4391]

very misleading video but good point u made the full disclose abt how Excell sheet can be misleading....Ankur wariku excel compounding sheet only works in excel sheet not real life

[@pranayk37]

Why misleading?

[@sidgupta1957]

This is not misleading. Pranay is not talking about company stock/mutual fund returns which don’t compound consistently every year. It is a car loan/buy back cost benefit analysis which would exactly look what the excel sheet is showing.

[@sunshinelife7055]

Can you review hondas buyback options offered on elevate ,amaze They are advertising 3rd year to 8 th year buyback scheme

[@pranayk37]

You can use the same framework and google sheet to evaluate it. The underlying principle doesn't change