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      12-29-2008, 08:41 AM   #1
sgar0777
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Example of Finance vs BMW Select purchase

I wanted to understand the mechanics of the BMW Select program, so I asked my F&I man to run the numbers on both, and thought it might be useful for some of you who have not seen how it works. I am not making any finance recomendations (As a matter of fact I used a long term with no down payment to exaggerate the program implications), just putting a purchase example out there for reference.

Common Information
Total Price 62,925.00
Total Fees 611.00
Total Taxes 4,444.58
Amount Financed 67,980.58
0 Down, 0 Trade
60 Months @ 3.9%

Finance
Finance Charge 7,075.22
Total of Payments 75,055.80
Payment 1,250.93

BMW Select
Finance Charge 9,191.67
Total of Payments 77,172.25
Payment 905.75
Final Payment 23,733.00

I hope this helps anyone considering the option to calculate their true costs and make a good decision.
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      12-29-2008, 08:52 AM   #2
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I get $825 as the BMW Select payment.

What I did was take the $67K, and residualized it by 66% (34% is the $23,733), which gives you $44,867.18.

The $44,867.18 over 60 months at 3.9% is around $825/month.
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      12-29-2008, 09:00 AM   #3
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Quote:
Originally Posted by trendy26 View Post
I get $825 as the BMW Select payment.

What I did was take the $67K, and residualized it by 66% (34% is the $23,733), which gives you $44,867.18.

The $44,867.18 over 60 months at 3.9% is around $825/month.
Trendy,

I am not sure why the numbers differ, although I would expect that you are paying some amount for the outstanding balance including the balloon.

My advice to anyone considering the option would be to have the dealership send you a comparative quote based on on your situation.

FYI, I took these numbers from the dealers printout generated by their finance software.
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      12-29-2008, 02:39 PM   #4
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select = balloon payment yes?
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      12-29-2008, 03:12 PM   #5
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Quote:
Originally Posted by duk View Post
select = balloon payment yes?
Yes
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      12-29-2008, 04:10 PM   #6
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Thanks sgar0777; I've been wondering how it works. I guess the main reason for someone to do the select is if they don't want a high monthly payment and plan to sell the car before the balloon payment comes due. Seems like Select is just throwing money out the door (in your scenario $2k).
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      12-29-2008, 04:49 PM   #7
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Quote:
Originally Posted by sgar0777 View Post
Trendy,

I am not sure why the numbers differ, although I would expect that you are paying some amount for the outstanding balance including the balloon.

My advice to anyone considering the option would be to have the dealership send you a comparative quote based on on your situation.

FYI, I took these numbers from the dealers printout generated by their finance software.
Somewhere that dealer is doing something wrong or on purpose, as the interest only applies to the total price minus the balloon payment.

So it is:

Total Price 62,925.00
Total Fees 611.00
Total Taxes 4,444.58
Amount Financed 67,980.58

BMW Select
Finance Charge $4524
Total of Payments $48772
Payment $812.88
Final Payment $23,733.00

I know, because my M3 is financed thru the Select program and I ran my numbers way before showing up at the dealer the same way as this... and they were matched within $10 (did not have the correct fees calculated).
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      12-29-2008, 07:32 PM   #8
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I don't doubt your numbers, as the car business is a funny thing, but it doesn't make sense for the dealer to make an interest free loan of 23K. If that were the case, no one would do a straight finance since they could get that part of the purchase interest free. The effective interest rate would be very small.

Is there anyone else out there who has used BMW select that can weigh in?
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      12-29-2008, 07:37 PM   #9
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It's not interest free, interest is calculated using the full amount of the loan including the balloon. You're just deferring the principal that is the balloon until the end.
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      12-29-2008, 07:45 PM   #10
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whats the formula you used technic?
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      12-29-2008, 08:01 PM   #11
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Yea 2 of my friends are financed through select loaded m3's..... and there payments are both around 800$
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      12-29-2008, 08:19 PM   #12
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Quote:
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whats the formula you used technic?
There is no magic formula, you take the selling price minus the balloon payment and that's what you finance. This is like a lease, as you separate the residual value from the leasing amount. You don't pay any interest on the residual value, right?

This is the same concept except the little detail of the car is yours and you are obligated to take care of the balloon payment somehow, as there is no turning the car in and walk away option as a lease.

I found out that too many dealers' finance persons do not know too much about the Select program, so I'll give the benefit of the doubt to the OP's dealers numbers, as it could be an "honest" mistake.
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      12-29-2008, 08:30 PM   #13
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let's put this up to a lease comparison too!
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      12-30-2008, 12:29 AM   #14
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arent Select terms above for 60m loans? Also doesnt BMW require the original owner to buy the car out at the end of the select program?
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