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BMW 3-Series (E90 E92) Forum > BMW E90/E92/E93 3-series General Forums > New & Preowned BMW Ordering / Pricing / Tracking Information Forum (including European Delivery) > Interesting how 0.9% is no bargain



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      10-25-2008, 07:12 AM   #1
John 070
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Interesting how 0.9% is no bargain

Using exact numbers on the price of a 335i coupe, 2k7 vs. 2k9, on a specific config the prices are 46,470 and 49,850 respectively.

If you compare a 25k loan @ the 2k7 5.5% vs. today's 0.9%, assuming you can do 5 years at 0.9% (the website does not say, and we all have friends that have mentioned Toyota's 0% has a few hidden terms), your interest savings is around $3050. The price of the vehicle went up 3380, and there are no differences.

From a homeless guy to Warren Buffet, everybody has lost buying power over the last two years. It seems you are worse off spending today's dollars at 0.9%, than having spent yesterday's dollars at 5.5%.

The 0.9% is a psychological thing--sounds like cheap money. In reality, it is not. But what if a person buys today and doesn't get 0.9%? Wow, that's highway robbery.....can you imagine that at 50k there's still no iDrive yet? That would take you to 51,950, why don't we say 52k. For a non M 3 Series....that's steep.
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      10-25-2008, 08:35 AM   #2
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?
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      10-25-2008, 08:41 AM   #3
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So you expected prices to stay the same or decrease?????
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      10-25-2008, 09:04 AM   #4
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interesting indeed
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      10-25-2008, 09:10 AM   #5
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Not sure your logic makes sense, since even if you just increase the price of the car 2% annually to deal with inflation it is obvious the car would be more expensive today than in 2007.

Prices of goods/services rarely decline in value as time marches on. This is the same argument people have used to say the 128i is over priced, but if you extrapolate the 1972 tii price to today guess what you come out with? The same number and todays car has a lot more features, so the logic makes little sense.

The .9 is good for todays market.
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      10-25-2008, 09:13 AM   #6
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Quote:
Originally Posted by mapezzul View Post
Not sure your logic makes sense, since even if you just increase the price of the car 2% annually to deal with inflation it is obvious the car would be more expensive today than in 2007.

Prices of goods/services rarely decline in value as time marches on. This is the same argument people have used to say the 128i is over priced, but if you extrapolate the 1972 tii price to today guess what you come out with? The same number and todays car has a lot more features, so the logic makes little sense.

The .9 is good for todays market.


That's what i was thinking...i mean yesterday's money and today's money changes...cuz i make more today than i did couple years ago, so it's all relative.



a 46K dollar car at 5.5% APR u have to pay like 7 grand in interest or so, while a 49K dollar car at .9 APR you're paying a little over a grand...ur still saving a few grand over the life of the loan after u factor in the different price increase.
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      10-25-2008, 09:49 AM   #7
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Quote:
Originally Posted by John 070 View Post
Using exact numbers on the price of a 335i coupe, 2k7 vs. 2k9, on a specific config the prices are 46,470 and 49,850 respectively.

If you compare a 25k loan @ the 2k7 5.5% vs. today's 0.9%, assuming you can do 5 years at 0.9% (the website does not say, and we all have friends that have mentioned Toyota's 0% has a few hidden terms), your interest savings is around $3050. The price of the vehicle went up 3380, and there are no differences.

From a homeless guy to Warren Buffet, everybody has lost buying power over the last two years. It seems you are worse off spending today's dollars at 0.9%, than having spent yesterday's dollars at 5.5%.

The 0.9% is a psychological thing--sounds like cheap money. In reality, it is not. But what if a person buys today and doesn't get 0.9%? Wow, that's highway robbery.....can you imagine that at 50k there's still no iDrive yet? That would take you to 51,950, why don't we say 52k. For a non M 3 Series....that's steep.
True but it's better than having the 2K9 price AND 5.5%...Right?
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      10-25-2008, 09:59 AM   #8
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I'm no econ major but your logic makes no sense to me at all.
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      10-25-2008, 10:08 AM   #9
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Um...it doesn't make sense to me. 0.9% interest rate is cheaper than 5.5%. Let's say you want to borrow $25,000 for 5 years.

At 0.9%, you pay $426/month. Total interest will be $560.
At 5.5% you pay $478/month. Total interest will be $3,680.

That is "straightforward and basic" financial calculations. You have to find any hidden charges or silly dealer markups before you sign your name on the contract. When you are ready to purchase a car, bring the calculator, scratch pad and other useful stuff with you.
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      10-25-2008, 10:21 AM   #10
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OP is saying that buyers are paying about the same price after finance charges for an '09 with .9% financing as an '07 with 5.5% financing. The .9% really isn't that good in comparison as the end result is the same just less interest.
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      10-25-2008, 10:31 AM   #11
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Oh i see, the price hike due to inflation cancels out any savings from having a good financing rate. Thats what your trying to say.
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      10-25-2008, 10:33 AM   #12
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Quote:
Originally Posted by Bobby_Light View Post
OP is saying that buyers are paying about the same price after finance charges for an '09 with .9% financing as an '07 with 5.5% financing. The .9% really isn't that good in comparison as the end result is the same just less interest.
And like we have said, that is illogical since prices increase over time so you are not going to get the '09 for the same price as an '07. Just like a bottle of Coke was $1 a few years ago, now it is a $1.50 so if I financed that now at .9 It would be about the same as then at 5.5%.... what is the point? If you did not buy the car then you are not going to have that price point.

And as others have said, you now make more money, due to inflation based raises so guess what; prices raise. This is simple economics.

.9 is good for today, if you could have had it on a 2007 then, even better but you can't go back and change the situation and also why you can't judge the past price of an item to the current price; just not how it works.

You buy something sooner than later in the cycle it is going to be cheaper at a cost point but the interest is always a crap shoot.
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      10-25-2008, 10:37 AM   #13
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Quote:
Originally Posted by Bobby_Light View Post
OP is saying that buyers are paying about the same price after finance charges for an '09 with .9% financing as an '07 with 5.5% financing. The .9% really isn't that good in comparison as the end result is the same just less interest.
Yeah, we got it, but the car in 2009 doesn't cost the same as it did in 2007. Not sure what that is so hard to understand. The OPs argument makes as much sense as saying why didn't they have 2009 (.9%) financing in 2007. It's not 2007 anymore.
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      10-25-2008, 11:46 AM   #14
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The OP is pointing out to us (after some obvious hard work on his part) that the cost of new products seems to rise over time. I find this concept incredible!! Do I smell a Nobel prize here?
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      10-25-2008, 11:54 AM   #15
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Quote:
Originally Posted by LEDZEP View Post
The OP is pointing out to us (after some obvious hard work on his part) that the cost of new products seems to rise over time. I find this concept incredible!! Do I smell a Nobel prize here?
x2

At least it's at .9% today instead of yesteryear's interest rates. Imagine today in a strong economy: 2009 prices at 5%.
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      10-25-2008, 01:17 PM   #16
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The OP should get into his DeLorean, crank up the flux capacitor and go back to 2007 to buy that 335i with 5.5% financing. Either that, or get the 2009 with 0.9% financing.
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      10-25-2008, 01:32 PM   #17
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Quote:
Originally Posted by chazzz View Post
Um...it doesn't make sense to me. 0.9% interest rate is cheaper than 5.5%. Let's say you want to borrow $25,000 for 5 years.

At 0.9%, you pay $426/month. Total interest will be $560.
At 5.5% you pay $478/month. Total interest will be $3,680.

That is "straightforward and basic" financial calculations. You have to find any hidden charges or silly dealer markups before you sign your name on the contract. When you are ready to purchase a car, bring the calculator, scratch pad and other useful stuff with you.
yeah but he is talking about purchasing power which has decreased meaning that that dollar spent at 5.5 is the same spent at .9 also with the increase in price of the car itself
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      10-25-2008, 02:24 PM   #18
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What's "2k7" and "2k9" - some sort of a special option package?
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      10-25-2008, 02:25 PM   #19
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Quote:
Originally Posted by John 070 View Post
Using exact numbers on the price of a 335i coupe, 2k7 vs. 2k9, on a specific config the prices are 46,470 and 49,850 respectively.

If you compare a 25k loan @ the 2k7 5.5% vs. today's 0.9%, assuming you can do 5 years at 0.9% (the website does not say, and we all have friends that have mentioned Toyota's 0% has a few hidden terms), your interest savings is around $3050. The price of the vehicle went up 3380, and there are no differences.

From a homeless guy to Warren Buffet, everybody has lost buying power over the last two years. It seems you are worse off spending today's dollars at 0.9%, than having spent yesterday's dollars at 5.5%.

The 0.9% is a psychological thing--sounds like cheap money. In reality, it is not. But what if a person buys today and doesn't get 0.9%? Wow, that's highway robbery.....can you imagine that at 50k there's still no iDrive yet? That would take you to 51,950, why don't we say 52k. For a non M 3 Series....that's steep.
uh.. fail
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      10-25-2008, 05:05 PM   #20
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John's logic makes perfect sense. I don't understand what's so difficult to grasp. Looks to me like BMWNA is rather successful in tricking you all with its numbers.

In summary:
The 2009 335i's price increased by $3380 compared to 2007. Even with 0.9% financing, you save ~$3050. So you are still paying ~$330 more compared to 2007, which can be assumed to be a cause of inflation, so we can ignore that. Therefore, there is no bargain at all even with 0.9% financing.
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      10-25-2008, 05:10 PM   #21
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Quote:
Originally Posted by Spool View Post
That's what i was thinking...i mean yesterday's money and today's money changes...cuz i make more today than i did couple years ago, so it's all relative.
Yes, but not everyone gets the same salary raise as you. Some people still get the same hourly rate, while many others are just lucky to even have a job in today's world.
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      10-25-2008, 05:17 PM   #22
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Quote:
Originally Posted by JunkStory View Post
John's logic makes perfect sense. I don't understand what's so difficult to grasp. Looks to me like BMWNA is rather successful in tricking you all with its numbers.

In summary:
The 2009 335i's price increased by $3380 compared to 2007. Even with 0.9% financing, you save ~$3050. So you are still paying ~$330 more compared to 2007, which can be assumed to be a cause of inflation, so we can ignore that. Therefore, there is no bargain at all even with 0.9% financing.
What is so amazing is that people are silly enough to believe that it is not a bargain because the car was cheaper THEN!

I think this thread is proof positive why most people have no clue about finances and the world's economy is in shambles....

You can not compare the price of a 2009 vs. 2007 then compare financing. Just like you can not group an entire year of car production into having the same rate.

The avg. rate of inflation is 2-3% per year, so you are looking at 6-9% increase in the cost of the car. Last time i checked 9% on $40k is about $3600 dollars.... so by todays standards .9 is good and 5.5 was good at another time.

Do people even realize the cost of the steel in each car (by itself) jumped $800 in one year? BMW is not just raising prices to raise them. They are making less per car at MSRP than they were several years ago.

This thread is pointless. Next people are going to say that cars in the US are cheaper than elsewhere etc... then I will need to cite the Economists Big Mac index for the umpteenth time and what purchasing power is.

2009 prices are now, 2007 prices were then: can't compare. Pay cash and never finance and you will be ahead of the game if you plan on driving the car for 10 years.
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