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      02-03-2010, 07:34 PM   #1
ac3
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Question What am I STILL not understanding about BMW Select??

What am I not understanding? Say I owe $23,000 for a balloon payment at the end of select financing. If I trade the car in prior to that, wouldn't an M3 be worth much more than what I would owe on the balloon? It can't be that good of a deal
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      02-03-2010, 07:48 PM   #2
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bmw select allows you to purchase the vehicle as a retail purchase at lower payment, you are charged daily interest on the outstanding balance. you can pay the $23,000 in cash or finance it
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      02-03-2010, 07:57 PM   #3
ac3
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I know, but couldn't I trade the car in instead? The value of the car would surely be greater than the $23,000 and would take care of the payments.

Say for instance the car's worth $30,000 at the end... Couldn't I trade it in, pay the $23,000 with that money, and put down the remaining $7,000 on something new??
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      02-03-2010, 08:14 PM   #4
fortressmaximus
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Yes, you can trade in the car, but realize that trade-in value is noticeably lower than what the car is actually worth. So, let's say the car is in great condition, low miles etc and the worth of the car is about 28-30 k in 5 years, you'll probably get a trade in value of 22-25 or so. To the extent you get a trade in Value over the balloon you can apply it to a new car, but I'm sure they'll find some way to dock your trade in value so that doesnt happen.
I may be off on some of this but I asked some of these questions when I bought my car

hope this helps
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      02-03-2010, 08:21 PM   #5
ac3
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Cool. The $30k was just a random number, factoring edmunds depreciation rates, the value would be much higher.

So why would anyone lease then if they were planning on trading in the car anyway? Lease rates are usually higher than bmw select.
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      02-03-2010, 08:22 PM   #6
fortressmaximus
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Also, it wouldn't surprise me if they gave you a trade in value that is less than the amount of the balloon so you have to pay the balance of the balloon after you trade it in!
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      02-03-2010, 08:25 PM   #7
fortressmaximus
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Quote:
Originally Posted by ac3 View Post
Cool. The $30k was just a random number, factoring edmunds depreciation rates, the value would be much higher.

So why would anyone lease then if they were planning on trading in the car anyway? Lease rates are usually higher than bmw select.

I am inclined to agree with you on this. It seems that select would be better than leasing under your trade in scenario. (assuming your car is not in terrible shape with very high miles)

Also, hopefully these M's hold their value!!!
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      02-03-2010, 08:51 PM   #8
ac3
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Quote:
Originally Posted by fortressmaximus View Post
Also, it wouldn't surprise me if they gave you a trade in value that is less than the amount of the balloon so you have to pay the balance of the balloon after you trade it in!
Well couldn't I privately sell it and pay off everything if that were to happen?
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      02-03-2010, 09:55 PM   #9
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Quote:
Originally Posted by ac3 View Post
Well couldn't I privately sell it and pay off everything if that were to happen?
Absolutely. I have select financing and that is my plan. If you keep the car in good shape and under the miles, you can sell it yourself and make a few $$$$. So much better than leasing in my opinion ( If you take good care of the car and watch the miles), especially with the lease programs on the M3 being as horrible as they are. And I got 0.9% financing on the select program. Don't think I could've done much better.
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      02-03-2010, 10:19 PM   #10
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If you trade in the car before the balloon payment is due, you still need to pay off the total sum of all the remaining monthly payments. Just because you sell the car or trade it in does not magically make the amount borrowed disappear.

Also, according to BMWFS, a M3 coupe has a 31% residual after 5 years....it makes sense because the next M3 would be out by then. And my bet is the balloon payment will be higher than this residual value.

Quote:
Originally Posted by ac3 View Post
What am I not understanding? Say I owe $23,000 for a balloon payment at the end of select financing. If I trade the car in prior to that, wouldn't an M3 be worth much more than what I would owe on the balloon? It can't be that good of a deal
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      02-04-2010, 08:07 AM   #11
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Quote:
Originally Posted by ac3 View Post
So why would anyone lease then if they were planning on trading in the car anyway? Lease rates are usually higher than bmw select.
If you own a business, this is still not a good option due to the depreciation schedule for luxury autos. Leasing is off balance sheet whereas financing is not. The question is not always which monthly payment is cheaper....
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