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      11-11-2009, 09:24 AM   #1
DiamondGCoupe
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Does BMW Select financing make sense..?

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Last edited by DiamondGCoupe; 08-01-2016 at 09:41 PM..
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      11-11-2009, 09:45 AM   #2
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Select financing usually does not make good financial sense as it allows for a lower payment and thus may allow a buyer that really cannot "afford" the car to get into one. However, let's assume this is not the case and just talk about select vs. traditional finance. In the case of the 2010 you are looking at, select seems like a bad idea as the interest rate is so high; by using select and thus extending the time you will pay on the car, you end up paying more in interest, which no one likes. By choosing a traditional finanace, you simply pay off the car earlier than you would with select and thus pay a lot less interest. So, IMHO, select with a high interest rate is a bad idea. If on the other hand the interest rate was good, then an argument can be made that you do not lose much with your balance collecting minimal interest. An instructive exercise would be to simply calculate the payments and residual for the 2010 at the given interest rate and then calculate a similar 2009 with the subsidized 0.9% rate. The difference is going to be huge.

Not sure that I answered your question, but I really think financing such a large purchase, with select or traditional, with a high interest rate does not make much financial sense. I'd find a nice 2009 or wait a few months when BMWFS is likely to introduce a reduced rate for 2010 models.
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      11-11-2009, 09:47 AM   #3
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BMW Select Financing is really only good when the Special Interest Rates from BMW are offered. That allows you to save alot each month over a traditional loan. At the same time, it is not a smart move financially to use this type of financing unless you are going to use the money you are saving each month, and invest it.

$16K seems like a VERY low balloon payment. I would double check with your dealer on that figure.

All in all, I am going the Select Financing route. Is it the smartest decision? No. But for now, I would rather have extra money in my pocket. I also plan on just switching to straight financing after a couple years of the loan.
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      11-11-2009, 10:08 AM   #4
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      11-11-2009, 10:22 AM   #5
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Quote:
Originally Posted by DiamondGCoupe View Post
Thanks for the info, I wish my sales guy would have mentioned to me this payment amount in the beggining I thougt it would be more like $6000 or so kind of like a reverse down payment not 1/5 of the cars value.. Anyways I'm going with the lease @ 1126/mo. for 36 months is makes the most sense.

And I could only get 6.9% on Select because of my age and the type of car, couldn't get 3.9 on an M3.
Wow man. What I'm about to tell your is going to hurt. I got my 09 E92 in late September from South Motors Bmw in Miami. Sticker was just over $71k. We are longtime customers of that dealership so I know we get the right price. I went with the Select program and I gave $2k up front and my payment is $865. They had 0.9 Financing across the board on all cars when I went in. Residual was $21k if memory serves.
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      11-11-2009, 10:37 AM   #6
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I couldn't get anywhere near $6000 off sticker from Vista or South Motors I am actually buying from up in GA. I'm only 25 and even if they had lower financing rates I doubt I would qualify.. The lease is more my style I won't be driving this for more than 2-2.5 years. I work in N. Miami so maybe I'll see you around. Thanks for the info.

Residual for me was around $23 so you're about right.
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      11-11-2009, 11:20 AM   #7
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Quote:
Originally Posted by CJF View Post
Select financing usually does not make good financial sense as it allows for a lower payment and thus may allow a buyer that really cannot "afford" the car to get into one. However, let's assume this is not the case and just talk about select vs. traditional finance. In the case of the 2010 you are looking at, select seems like a bad idea as the interest rate is so high; by using select and thus extending the time you will pay on the car, you end up paying more in interest, which no one likes. By choosing a traditional finanace, you simply pay off the car earlier than you would with select and thus pay a lot less interest. So, IMHO, select with a high interest rate is a bad idea. If on the other hand the interest rate was good, then an argument can be made that you do not lose much with your balance collecting minimal interest. An instructive exercise would be to simply calculate the payments and residual for the 2010 at the given interest rate and then calculate a similar 2009 with the subsidized 0.9% rate. The difference is going to be huge.

Not sure that I answered your question, but I really think financing such a large purchase, with select or traditional, with a high interest rate does not make much financial sense. I'd find a nice 2009 or wait a few months when BMWFS is likely to introduce a reduced rate for 2010 models.

Good take. Though it seems like the OP already resolved his issue, I think you make very good points.

That being said, I am doing Select on my car. To finance it traditionally would’ve been a much larger down payment, plus a larger monthly payment, and I like the idea of being able to re-fi or sell the car out right before the balloon come due. Sure I still have to pay the extra interest, but truth be told, my company is picking up the tab on pretty much the entire monthly payment, I just have to pony up about $150 a month on my side.
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      11-11-2009, 11:37 AM   #8
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      11-11-2009, 11:43 AM   #9
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A bit off topic, but I currently drive an '08 G37S as well. I'm on my third battery... Crazy stuff...! But yeah, the M3 is a MUCH superior car to the G37!
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      11-11-2009, 11:45 AM   #10
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^^^ You've got to be kidding! Are you a member of MyG37? I am one of the Admins.
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      11-11-2009, 11:56 AM   #11
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Yeah I am... Same name over there... Haven't been on there in a while... I'm in Ft. lauderdale as well....
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      11-12-2009, 01:39 AM   #12
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Can any current M3 owners who chose select financing clarify a few things for me?

Let's say I purchase a $55k M3 with $3k down and a 33% balloon at the end of 60 months.

66% of $52k = $34,320 (I'll bring up the TTL later) financed through 5 years
33% of $52k = $17,160 balloon payment due after 5 years

Let's also assume a 2.9% interest rate on the $34,320 loan but is it applicable to the balloon payment if say I paid it off in full without extending the loan past 5 years? I keep hearing about more interest or does that only apply to people who finance the balloon?

Also, regarding the taxes, title and license - are they all included in the 5 year loan because $55k here will run about $5k in TTL or you just pay the taxes on the $34,320 loan first?

That's my current understanding of the select financing option but I would like know all about it before approaching a dealer, thanks in advance.
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      11-12-2009, 02:56 AM   #13
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At 0.9% Select can make sense if you have the cash to pay off the balloon once the loan is up or if you plan on overpaying every month in order to wipe out the balloon in advance.
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      11-12-2009, 06:59 AM   #14
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Quote:
Originally Posted by DiamondGCoupe View Post
Thanks for the info, I wish my sales guy would have mentioned to me this payment amount in the beggining I thougt it would be more like $6000 or so kind of like a reverse down payment not 1/5 of the cars value.. Anyways I'm going with the lease @ 1126/mo. for 36 months is makes the most sense.

And I could only get 6.9% on Select because of my age and the type of car, couldn't get 3.9 on an M3.
1126 for a lease?! thats insane! You could lease an M6 for that money
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      11-12-2009, 01:12 PM   #15
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      11-12-2009, 01:41 PM   #16
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a point to be made on select financing is that you pay interest on the entire amount including the balloon. this is why most say you need to pay off the balloon at the end rather than re-financing or you essentially pay interest again on the balloon. i actually think select is great if the rate is low as you get a low payment and defer the balloon rather than pay a big down payment up front. if you have 0.9% that is basically free money. one should understand, assuming little down payment, that select allows you to be underwater for a longer period of time becuase you are paying less toward principle versus traditional finance. one can look at depreciation curves and get an idea of when payments have caught up with depreciation for both select and traditional finance and then make a good decision about which is best. if you are going to keep the car for 5 years or more, it is not likely you'll be under water at time of sale, but keeping it less than 4-5 years this may be the case.
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      11-12-2009, 06:08 PM   #17
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FYI, Select now on '10 M3's is somewhere around 5%, not .9% nor will it be .9% on '10s anytime soon.
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      11-19-2009, 01:21 PM   #18
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Having never used BMWFS, I'll ask what may be a silly question - why on earth is there a balloon payment at the end of 5 years? And, how can it possibly be so much - 30%+ of the purchase price? Is BMWFS deliberately keeping the monthly payments "low" to allow people who otherwise would never afford a standard car loan buy one of their cars? This is insanity. The balloon payment could easily be more than the value of the car in 5 years!
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      11-19-2009, 01:38 PM   #19
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The BMW Select Program is the new BMW Lease program but with a twist: the residual value responsability is on the buyer, not the seller.

That's it.

Only the buyer can determine if that makes sense or not. As anything of monetary value: you can either afford it or not.
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      11-19-2009, 02:19 PM   #20
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Seems to be a time value of money issue that is dependent on what the ROI of the money saved on the monthly payments over 5 years.
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      11-19-2009, 03:34 PM   #21
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Quote:
Originally Posted by MN M3 View Post
Having never used BMWFS, I'll ask what may be a silly question - why on earth is there a balloon payment at the end of 5 years? And, how can it possibly be so much - 30%+ of the purchase price? Is BMWFS deliberately keeping the monthly payments "low" to allow people who otherwise would never afford a standard car loan buy one of their cars? This is insanity. The balloon payment could easily be more than the value of the car in 5 years!

Most balloons are around $23-$24K. Are you telling me that after 5 years, an M3 is not worth that much?
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      11-19-2009, 05:03 PM   #22
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Quote:
Originally Posted by DiamondGCoupe View Post
I couldn't get anywhere near $6000 off sticker from Vista or South Motors I am actually buying from up in GA. I'm only 25 and even if they had lower financing rates I doubt I would qualify.. The lease is more my style I won't be driving this for more than 2-2.5 years. I work in N. Miami so maybe I'll see you around. Thanks for the info.

Residual for me was around $23 so you're about right.
hey man, my friend just got one from lauderdale imports with $6k off and $2500 holiday credit. Check it out..Jerry Talcott is the salesman
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