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12-29-2008, 07:41 AM | #1 |
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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. |
12-29-2008, 07:52 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, 08:00 AM | #3 | |
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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, 03:10 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, 03:49 PM | #7 | |
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Quote:
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 $10 (did not have the correct fees calculated). |
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12-29-2008, 06:32 PM | #8 |
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I don't doubt your numbers, as the car business is a funny thing, but it doesn't make sense for the dealer to make an interest free loan of 23K. If that were the case, no one would do a straight finance since they could get that part of the purchase interest free. The effective interest rate would be very small.
Is there anyone else out there who has used BMW select that can weigh in? |
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12-29-2008, 06:37 PM | #9 |
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It's not interest free, interest is calculated using the full amount of the loan including the balloon. You're just deferring the principal that is the balloon until the end.
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12-29-2008, 07:01 PM | #11 |
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Yea 2 of my friends are financed through select loaded m3's..... and there payments are both around 800$
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12-29-2008, 07:19 PM | #12 |
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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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