[JRT]

Has anyone done the BMW smart financing?
Here is how it all breaks down, please tell me if you have any experience with this and if it is a smart idea or not.
It is basically a balloon payment type setup where at the end of 5 years I would owe 15k on the car.

I can order a 2009 dressed up like this;
Montego/Saddle
Sport
Premium
Step w/paddles
Heated seats
Logic 7 w/ iPod adaptor

The terms are like this, the car is $50,775 (that is MSRP and he wouldn’t drop any off) with about 5k extra rolling into the loan from my Mustang.
I can get 2.9% financing on $55,775 at around $785 for 5 years owing about 15k at the end.
Because of Virginia laws on balloon financing they have to let me refinance the remaining 15k at the original 2.9% interest rate.
These numbers are with no money down and if I put cash down then of course it will be different, but at 2.9% why take my cash out of the bank?

Is this smart financing?
Has anyone done it?
In 3 years if I want to get rid of the car am I screwed and still in negative equity?

Thanks for the help gentlemen!!

[bavarian19]

At the end of 5 years, you would still owe 15k


I will say to each their own, but it sounds like this is just a really bad financial decision.

[PNF]

not a good deal... unless it is 0.9% financing of 0% financing or even 1.9% financing... it would never make sense to borrow money to spend on cars.. (unless you NEED a BMW to go to work or to work or something)..

borrow to invest = good decision
borrow for pleasure = not good decision.

To each's own. Plus, you're still oweing $15K after payments?! Thats a lot of payment and a lot can change in 5 years!

I wouldnt do it. If I were you, I'd just lease it, at a longer term, say 5 years/60 months.

[JRT]

Thanks.
I don't like the idea of 15K at the end either.
I am wondering if anyone has done it yet?

I am thinking about leasing as well and even just keeping what i have now.
I have even thought about a 135i, which is a nice car itself, but not a 3 series.

[Fraxum]

Be smart. Keep the Stang until you are not upside down. It's a fun car. The economy will be down for a while. Good deals will abound. And with the Camaro SS coming up it is a much more sensbile choice than a $50+K 335. And faster too in a straight line and at the track.

If you want to lease a BMW assume one. Many people are giving incentives to take over thier lease. Imagine that, getting a BMW and a check.

[E46X2]

I think what you are referring to is what another member did here on an M3: http://www.e90post.com/forums/showth...54#post3507354

[scollins]

Assuming that $55,775 is your "out the door price", it breaks down like this:
$785/mo x 12 mo x 5 years = $47,100 total of payments
$47,100 + $15,000 residual = $62,100 total cost of car.
So, $6,325 is paid in interest over the 5 years of the loan. This assumes you don't finance that last $15,000 and just pay it off.

If you finance the remaining $15,000, even at 2.9%, you'll pay another $700 in interest (assumes 36 month deal). Let's just call it $63,000 to buy a $50,000 car. Ouch.

You will be upside on this car until the day you pay it off, because you are rolling an extra $5,000 into the cost of the loan to cover the shortage on the Mustang.

Keep the Mustang until you aren't upside down, or try to sell it on your own to limit the shortage. Trading it in will have the higest difference between what its "worth" to what you owe.

[JRT]

Yes sorry it is called "BMW Select Financing."

It is true the Stang is a lot of fun.
I love the sound and power, especially with the 93 octane torque tune.
I just want something more luxurious these days with some performance.

The problem is my mustang has deprecated its value so much that it will be good while before I am in positive equity.
It really pisses me off that the sticker on this car was 31k, I got it for 28,200 and now it is worth 18k, it is only 1 ½ years old with 11k miles on it.

Anyways thanks for the advice, I have more thinking to do.

[que2k]

Sounds like what they call "owners choice financing" up here in Canada and I am on it right now.

I think its a great deal. Here's a summary of my numbers:

2008 335xi w/ sport kit

20K down payment
48 payments of $475 = $22,800
Baloon payment of $21,000

Total for cost = $63,800

1% interest rate = $1,300 in interest over 4yrs. Or to put it simply to just buy my car outright I would have had to come up with $62,500 on delivery

I intend to keep my baby for many years (its not a daily driver and kept in the garage) so I also looked at leasing and then paying the buyout and regualr financing and this was the least expensive option and also had the lowest monthly payments.

In short it allowed me to get my baby now with only 20K down, and I'm sure I can come up with another 20K at the end to pay for the baloon.

Leasing = renting, why would you make payments for 3,4or5 yrs and then own nothing? (unless you intended to buy out like I was going to)

I guess I lucked out with the interest rate, at the end of the day its gonna cost me $1,300 dollars more than if I had all the cash saved up and that would have taken forever and I wanted my car now!

Good luck

[e90dream]

Originally Posted by scollins

Assuming that $55,775 is your "out the door price", it breaks down like this:
$785/mo x 12 mo x 5 years = $47,100 total of payments
$47,100 + $15,000 residual = $62,100 total cost of car.
So, $6,325 is paid in interest over the 5 years of the loan. This assumes you don't finance that last $15,000 and just pay it off.

If you finance the remaining $15,000, even at 2.9%, you'll pay another $700 in interest (assumes 36 month deal). Let's just call it $63,000 to buy a $50,000 car. Ouch.

You will be upside on this car until the day you pay it off, because you are rolling an extra $5,000 into the cost of the loan to cover the shortage on the Mustang.

Keep the Mustang until you aren't upside down, or try to sell it on your own to limit the shortage. Trading it in will have the higest difference between what its "worth" to what you owe.

very good analysis. are you a financial planner. OP - take his advice!

[JRT]

Originally Posted by scollins

Assuming that $55,775 is your "out the door price", it breaks down like this:
$785/mo x 12 mo x 5 years = $47,100 total of payments
$47,100 + $15,000 residual = $62,100 total cost of car.
So, $6,325 is paid in interest over the 5 years of the loan. This assumes you don't finance that last $15,000 and just pay it off.

If you finance the remaining $15,000, even at 2.9%, you'll pay another $700 in interest (assumes 36 month deal). Let's just call it $63,000 to buy a $50,000 car. Ouch.

You will be upside on this car until the day you pay it off, because you are rolling an extra $5,000 into the cost of the loan to cover the shortage on the Mustang.

Keep the Mustang until you aren't upside down, or try to sell it on your own to limit the shortage. Trading it in will have the higest difference between what its "worth" to what you owe.

Thanks for the post.
You are right in a sense but what I think you are wrong is the interest.
I may be wrong but the way it was explained to me is almost all of the payment is principle through the 5 years and at the end is a lot of interest.
So assuming that is correct where they get you is financing the interest that is left because I would be tacking interest onto interest.
But what I don't get is if this way is correct and i am paying mostly principle after 3 years I could trad it not be upside down.
I have to assume I am wrong here thought, because that just doesnt make sense.
That is way i am asking if anyone knows anything about it.

Thanks again for the helpfull reply.

[dubiousONE]

Originally Posted by JRT

These numbers are with no money down and if I put cash down then of course it will be different, but at 2.9% why take my cash out of the bank?

Is this smart financing?

Thanks for the help gentlemen!!

Not smart dude..

15K at the end of 5 years? Thats insane! 2.9% is not THAT great.. keeping your money in the bank you'd earn, what? 4% in returns? Dont forget the money you earn in interest is taxed, so you basically come off even anyways.. I'd put a hefty down payment.. AND, why are you buying the car at sticker??

[Kilgore Trout]

Maybe I am missing here, but how come nobody is reacting to the "nothing off MSRP" stuff? Without trying very hard, most of us are getting $500 to $1000 above invoice. Heck, even out here in BMW-crazy LA, I paid a bit less than $1000 above.

[dubiousONE]

Originally Posted by dubiousONE

Not smart dude..

AND, why are you buying the car at sticker??

Originally Posted by Kilgore Trout

Maybe I am missing here, but how come nobody is reacting to the "nothing off MSRP" stuff? Without trying very hard, most of us are getting $500 to $1000 above invoice. Heck, even out here in BMW-crazy LA, I paid a bit less than $1000 above.

I did!! But, maybe I should have added some emotions there!

[blakjack23]

Balloon payments.....isn't that what got our country into this mess? Don't do it.

[DenverJayhawk]

I still can't believe a new 3 costs over $50k new.

[sdiver68]

If you want the car....

2.9% over 5 years is not crazy. With inflation considered, chances are over the course of the loan you will be paying them less in future dollars versus what they are loaning you in today's dollar.

The crazy part is the dealer refusing to budge from MSRP. I have dealers at $500 over invoice for ordered 09's and below invoice on remaining 08's without really trying yet. Find another dealer.

Yes, in 3 years you will most likely still be upside down...but you are today so are you any worse off? Perhaps you can sell the car yourself and get more $$ for it.

Some of these so called financial planners on here don't have a clue. Probably many of them are watching their poor investments depreciate.

[Kilgore Trout]

Originally Posted by dubiousONE

I did!! But, maybe I should have added some emotions there!

Sorry!

[slipperman]

Originally Posted by JRT

Yes sorry it is called "BMW Select Financing."

It is true the Stang is a lot of fun.
I love the sound and power, especially with the 93 octane torque tune.
I just want something more luxurious these days with some performance.

The problem is my mustang has deprecated its value so much that it will be good while before I am in positive equity.
It really pisses me off that the sticker on this car was 31k, I got it for 28,200 and now it is worth 18k, it is only 1 ½ years old with 11k miles on it.

Anyways thanks for the advice, I have more thinking to do.

you will NEVER build equity on a car...

[ragingclue]

What about the people who bought Civics new two years ago, and sold them recently for more than they originally bought them for?

[Fortyb]

Keep the mustang if there is nothing wrong with it are do a private sell. It's just not worth it are smart to get rid of it and make that kind of sacrifice for a BMW.

[sdiver68]

Originally Posted by que2k

Leasing = renting, why would you make payments for 3,4or5 yrs and then own nothing? (unless you intended to buy out like I was going to)

In 2006 I leased my 335i at 650 month. The interest rate was subsidized so I borrowed the money at around 2%.

This month, my lease ends. According to all available sales information, the best I can get for my car on the market would be about $30K private party, $28K wholesale. Guess what, I get to turn the car back to the dealer at $33.9K value...so at a minimum I've come out ahead $3900, minus the lease acquisition fee I paid of $625.

Perfect case where my lease came out way head of Joe Buyer.