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      04-22-2014, 03:26 AM   #1
Vladik95
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Thinking of buying a M3...

Hello everyone, my name is Vlad, I've been lurking around on this forum for some time now as I am interested in buying my first BMW. At first I wanted to get a 335xi, but changed my mind after I saw how awesome the e92 M3 is!
A little bit about me, I'm currently 18 years of age, and live with my parents. I have a job and I am able to save about 1k a month for the car. So far I have about 2k saved up. (I have been working for about 2 months at my new job)
I mostly have financial questions as I have no experience with that kind of stuff.
First of, is it possible to get a loan for a bank or site like penned for a used car from a private sale? Or will I get the loan only if I'm buying from a dealer? I don't have enough much of a credit history, so I will probably get a horrible rate huh? I do have an option though, or at least I think I do. I've heard that if you have your parent sigh some deal that if for some reason I won't be able to pay for the car that they will take over the loan. Is there such a thing or no?
Now another question, if I will be taking a loan is it better to give at least 50% down for the car or will it not really matter if I'm taking a loan and get a set price with the dealer.
Also I'm still a little confused about how the whole loan thing works out and how the dealer makes money of it, could some one berifly explain how?

Any financial tips/advice is always welcome

Thanks
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      04-22-2014, 01:43 PM   #2
ERinEC
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Oh boy, here we go again...
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      04-24-2014, 07:45 PM   #3
E90-F30
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If you have no prior credit history, chances are they won't even approve you for more than $15K, and you WILL need a person to co-sign the loan. Not to mention, you'll get killed on insurance.

Your 18, you're saving good money/month. Keep on saving, get your emergency fund set up.

Get one of your parents to co-sign a loan on a used Golf or a cheaper vehicle where you can afford the monthly payment and keep saving money. Paying the loan will start your credit history.

Get ONE credit card, they probably won't approve you for more than $1K. Use it, and pay it off every month.

Follow this, and by the time your 25, insurance will be cheaper, you'll have good credit history, and you'll have money in the bank for a downpayment on your dream car.
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      04-25-2014, 09:42 AM   #4
Galt?
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Vlad,

Most car dealers are not lending you their own money, they have relationships with one or more banks (that you could contact on your own) who will quickly make a lending decision. These dealers may make a small fee for sourcing the loan but ultimately it is the banks that make the money on car loans and not the dealers.

You are considered a sub-prime borrower by lenders and there are always lenders who will finance sub-prime loans (see CMBS loans originated 2005-2008). Sub-prime is a euphemism for high credit risk and user E90-F30 listed all of the factors that make you such.

If your parents or someone else co-signs the loan, it will give you access to their credit, which may decrease your interest rate and increase your available loan proceeds. The co-signers will also be equally responsible for your loan and if you are unable to make payments the co-signer(s) will have to make them or everyone listed as a guarantor (you + co-signers) or the loan will be in default. Make sure that your parents or whomever else you are going to ask to co-sign a loan understands this. YOU ARE ALL ON THE HOOK.

In general, the larger your down payment, the better loan terms you are going to receive because the lender's money is more secured by the asset. If you borrow 90% or even 80% of the purchase price of a car (an asset that depreciates at an accelerated rate as opposed to a linear rate), then the car may be worth less than the amount you borrowed the moment you drive the car off of the lot. This is referred to having "negative equity."

If you PM, me I have an easy to use debt amortization schedule that will help you see what your monthly payments are like given a purchase price, down payment, interest rate and term of loan.

Finally, in addition to loan payments, you will have the higher than normal insurance rate (you are 18 and would own a high performance car), and repair/maintenance costs for a car that is most likely outside of its free warranty and maintenance period. When you add those things together, it could easily exceed (on average) the $1,000/mo you are earning.

Last edited by Galt?; 04-25-2014 at 09:50 AM.
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      04-25-2014, 12:03 PM   #5
nicebraces
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^ Follow the advice in the above 2 posts ^ These fine gents know what they're talking about
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      05-07-2014, 12:52 AM   #6
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When I was 18, I was looking into cars that cost around $3000, not $30000. If you somehow do end up getting a M3, you'll be a slave to it, spending every paycheck just to drive it from home to work. What will you do if you lose your job?

Unless your parents can arrange something with you and help you out, I agree with everyone here. Go look into the Nissan 240sx and start from there...I'm sure you'll have much more fun while saving up for the M3.
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      05-07-2014, 03:00 AM   #7
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You are not making enough. Your monthly saving probably only enough to cover the gas and insurance. The loan will probably be at least $1,500 for you without any downpayment.
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      05-07-2014, 03:40 AM   #8
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Hey man, I know the allure of being young and wanting to own an M3. I was in the same boat, I guess three years ago (when I was your age). I think the most responsible thing to do is to look at something a little cheaper and less expensive to maintain. Maybe consider sliding into a 330 ZHP, or 335, g-coupe, golf? Those options might be a little more friendly to your budget and current financial situation.

Fortunately, my parents were able to buy my M3 outright and they are letting me pay it back when I start my new job in Houston. I'm literally graduating from college in two/three days, moving to Houston, and starting to work for a major oil company. What I'm trying to get at here is that even though I'm soon going to be on income and on a flexible payment schedule with my parents, owning an M3 isn't easy. Money just flies out the door with this thing. I love it, but it's super expensive.

Just wait it out man, you'll get there!
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      05-07-2014, 04:34 AM   #9
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Don't do it. Listen to the prior advice that was given. Seeing that you've only worked 2 months take your time and get something reliable for now. Plans of going to college? Get the M3 now and you can throw a lot of the money needed to be an 18 year old enjoying life down the drain. Get your credit right, invest in yourself then get the M3 when your income, credit and education level match. I make 6 figures and the M3 is still a financial strain especially when getting into upgrading with aftermarket parts.
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      05-07-2014, 08:45 AM   #10
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BMWFS will approve pretty much anyone w/ a 580 score or higher and the needed income. Pretty hilarious actually. You'll get a shit rate but they will do it.
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      05-16-2014, 12:44 AM   #11
e90sexion
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e92 M3 isn't for you
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