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Old 18th January 2011, 15:21   #1
rrich49132
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BMW select financing do people really do this?

I was reading on BMW"s site they have an alternative to a lease and conventional financing which is this BMW select. How it works is like regular finance with a lower monthly payment and a balloon payment at the end of the term. Do financially sound people do this. So I have a 6 yr loan and at the end of it I have to finance again?

I know this is not relevant to the E39 but just shocked at this. Someone I know bought a 2011 M3 which was I think about $73K OTD and financed it like this. If you can't afford the car why buy it. Isn't this how we got into trouble with the housing market? Creative financing for people that could not afford a home could buy one?
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Old 18th January 2011, 15:37   #2
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Depending on the terms it may not be a bad deal, I would make sure the residual payment would be about the value of the car this way you could always sell it or refinance.
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Old 18th January 2011, 15:43   #3
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Ya,
just hope the car is not underwater still at that point. I am sure BMW structures the loan in a way so that the car will be worth more than what remains when that balloon payment is due. Just a long path to own a car with 6 yrs of payment then maybe another 2 to settle that balloon payment.
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Old 18th January 2011, 16:02   #4
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True, but if it is a four year deal and you want to buy it this may work. I am sure it would be more favorable than traditional leasing especially with BMW not being cooperative when trying to purchase at the end of a lease. An additional advantage over leasing in Pa is that there would be a 3% sales tax advantage which Pa charges above and beyond sales tax when leasing.
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Old 18th January 2011, 17:59   #5
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Quote:
Originally Posted by rrich49132 View Post
I was reading on BMW"s site they have an alternative to a lease and conventional financing which is this BMW select. How it works is like regular finance with a lower monthly payment and a balloon payment at the end of the term. Do financially sound people do this. So I have a 6 yr loan and at the end of it I have to finance again?

I know this is not relevant to the E39 but just shocked at this. Someone I know bought a 2011 M3 which was I think about $73K OTD and financed it like this. If you can't afford the car why buy it. Isn't this how we got into trouble with the housing market? Creative financing for people that could not afford a home could buy one?
yup just a more creative way to get people who can't afford a luxury car to be able to afford one. if you can't afford something you shouldn't buy it. and outside of a house if you can't afford to pay cash you can't afford it.
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Old 18th January 2011, 18:12   #6
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When I purchased my e46 as CPO, BMW had 0.5% interest special. I had originally planned on putting a fair amount of money into the car, but later decided I was far better off putting very little money in the car as the total finance charge was less than $500. So I said, I can easily make more than $500 with my money over the same period time.

Also I think?? BMW may even finance some of the older and non CPO cars at decent rates sometimes as well? The problem is the dealer will be making a good margin on the car as they will not let anything out the door without some level of decent profit. Many times the dealers make more margin on used cars than the new cars! As long as you do not have the cash in hand, then buying via a dealer if they have good interest specials may make it worthwhile for some?
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Old 18th January 2011, 21:12   #7
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This "BMW Select" appears to be structured like a lease but for people who want to actually "own" the car during the term.

A surprising number of people cannot actually afford to purchase a $65,000 car with cash. Even fewer can buy a new M5 (I think the average price for the E60 M5 was around 90K - I'm sure the F10 will be close to 100) for cash.

We all need to be thankful to those folks who did finance these E39 cars new; if not for them, we would not be able to buy them used at a significant savings now.
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Old 19th January 2011, 21:32   #8
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BMW's alternative financing programs are "interesting" to say the least.

For a long time they offered a balloon payment program called Owner's Choice which was designed for the states in which leases are double-taxed (IL, TX, and others). This looked and smelled like a lease including the same turn-in options at the end.

BMW Select is a similar program, but without any residual protection. In other words the balloon payment is what it is and you are responsible for that at the end of the normal payments. There's no turn-in... you owe ALL of the money. Can you imagine financing an E60 M5 this way at a $100K sticker? At the end of 3 years you still owe more than $60K on the car and it's worth about $38K. Ouch!
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Old 20th January 2011, 04:34   #9
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Bought a 330ci back in '01 using what I think was the Owner's Choice program. Worked well for us. Sold it a few years later for slightly more than the payoff amount. Chose it because it had the benefits of ownership, the low payments of a lease, plus the guaranteed residual. I was happy with it and probably would do it again that way. However, it was more a matter of convenience - like jfoj we figured there was no reason to pay off more than the car would be worth when we went to sell it. I'd rather keep the extra cash.
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Old 20th January 2011, 22:11   #10
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Mercedes has been doing this for years. Like mentioned it made a guy fresh out of college able to afford a preowned SL and like Brian said I was able to sell it for more than the residual value. Worked great for me and I would def do it again with the right car.
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