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BMW Select Financing

14K views 40 replies 17 participants last post by  JOEYPDX 
#1 ·
When looking at BMW's website it's not clear how exactly it works, but it sounds like it's one of those "too good to be true" deals and/or a sucker's game.

I personally don't like the idea of leasing because my mileage is projected to vary by year. I currently work close to home but there's no guarantee my professional situation will be like that a year from now.

Traditional financing would be a good option but there's always the lure of that low monthly payment with Select.

Is there a catch aside from the balloon payment? Like, are interest rates higher? Less negotiation wiggle room for pricing? I guess my question is what exactly is the "catch" here?
 
#2 ·
Catch? There is no "catch" with select. It basically is a program that allows you to get more car right now and "figure it out" after the term of your loan (usually 60 months).
What I mean by "figure it out" is that at the end of your 5 years you will have to pay the car off, trade it in or refinance. I guess the ONLY catch is...unless you put down a rather large down payment..you will probably never be right side up on your loan. So if you plan to trade prior to the 5 years...you will MOST CERTAINLY be rolling over a balance into your new loan. If your sales agent is being totally honest with you...you will more than likely be upside down through the entire duration of the loan. Some people don't care about stuff like that though. For many people today it all comes down to monthly payment and SELECT will most CERTAINLY give you a lower monthly payment than leasing and traditional financing.
 
#3 ·
Interesting. But doesn't someone pay a lot more in interest because the balloon payment at the end puts most of the remaining balance at the end?

Only reason I'd even consider it is because my current car has decent trade in value and I'd put a nice down payment on the car.
 
#4 ·
Well absolutely you will be paying a lot more interest on the loan. To be honest, for the first two years of select you are pretty much paying the interest as opposed to the principal. You have to remember if you decided to refinance the car at the end of your 60 months; you are essentially financing the car for 7, 8, 9 years. So by all means yes you are paying more interest. But it all comes down to residuals.

If BMW told you that your final payment after 60 months would be 20k --- try to do a comparison and see if your car would be worth 20k in 5 years time. If so...just do the select if your main concern is monthly payment. A fairly easy way to gauge it is to look at previous model years. So for instance, if you are buying a 2014, you are hoping that in 2019, your car is worth the balloon payment..so in this case you are hoping it's worth 20k. Do a search for a 2008 of the same class car that you are considering buying today. If you find that the cars are pretty close to what BMW is saying your final balloon will be...then it may be a good idea.

If you have a good trade in value AND a hefty down payment. You will probably always be right side up on your loan so you shouldn't have anything to worry about.

It's like this. If you want the lowest payment possible and actually plan to keep the car 5 years or longer....in your position with the trade in and down payment....you are absolutely free to consider the SELECT and may be wise to do so.

Do a search for a AUTO LOAN BALLOON PAYMENT CALCULATOR. Call your dealer and see what the ballon would be on the car you are interested in and then plug in the numbers. You will see exactly how much interest you are paying and may be able to gauge it better if it's smart for you. I will say though...it sounds like you are a great candidate for it because of the trade AND the down payment.
 
#5 ·
Here's an example.

My friend financed 51k and put 3k down on his new BMW.
His note is 565 per month.

565 * 60 months = 34k
51k - 34k = 17k
His interest rate is 2.9%

He would hope in 5 years that his car will be worth 17k.
IF NOT HE SHOULD BE PREPARED TO ROLL THE REMAINING OVER, or refinance.
 
#6 ·
Here's an example.

My friend financed 51k and put 3k down on his new BMW.
His note is 565 per month.

565 * 60 months = 34k
51k - 34k = 17k
His interest rate is 2.9%

He would hope in 5 years that his car will be worth 17k.
IF NOT HE SHOULD BE PREPARED TO ROLL THE REMAINING OVER, or refinance.
Those terms come to 860 a month excluding tax. Or is this a ballon loan?

Sent from BimmerApp mobile app
 
#8 ·
No catch, really. Was ideal for me.

I didn't want to count the miles on a lease, but also did not want to take on a full 60 month purchase at the full price due to not knowing if I was going to want the car for 5-10 years.

My thinking was, if I keep this car, in 5 years I have a balloon payment. If I were to walk into the dealer and buy a 5 year old BMW like mine with 48k miles for that buy price($15k), would it be a good deal? The answer was yes, a 5 year old car like mine for $15k was a good deal.
 
#10 ·
I was real close to doing the select but opted not to because you lock yourself in for 5 years vs 3 on a lease but it basically works out to be the same if the residual holds value. If you want to have the option of buying or rolling the car over at the end for a new one, it is a good option. I like the lease because you get the free maintenance for the duration. There is also a tax advantage in leasing too.
 
#11 ·
My dealer was honest enough to run the numbers with me. I boiled it down to "pay less now and get stuck later".
My personal opinion is it was a bad idea. It allows you to get a car you can't afford and not think about it. It does cost more later, so why waste money?
 
#18 ·
With BMW select, if you keep your car in good shape and put on average miles (12k -15k) per year, you will have a little equity at the time of the balloon payment. Balloon payment $12500 car value is $14500. Something like that. If you put 250k miles on the car and beat it to ****, not so much.

BMW calculates the balloon residual using 15k a year. Stay around that and you shouldn't be upside down in the end.
Depends on a few factors. How long and how many miles plus condition. I'm leaning towards no on both of these. And that is from some personal experience.

A close to base M3 is your best bet to come out even. Even then though I'd go easy on the miles and obviously keep it in top condition.
 
#17 ·
With BMW select, if you keep your car in good shape and put on average miles (12k -15k) per year, you will have a little equity at the time of the balloon payment. Balloon payment $12500 car value is $14500. Something like that. If you put 250k miles on the car and beat it to ****, not so much.

BMW calculates the balloon residual using 15k a year. Stay around that and you shouldn't be upside down in the end.
 
#29 ·
Is there a catch aside from the balloon payment? Like, are interest rates higher? Less negotiation wiggle room for pricing? I guess my question is what exactly is the "catch" here?
BMW select was at one time a great way to get a BMW, it's like a lease except there is no real mileage restriction, and the APR is usually 3%. My 320i is a BMW select, at the time it was a good idea, but things have change, and now it's not. A BMW CA that I have become friends with has shown me why leasing is really a good way to go with BMW's.

on 3 series the balloon payment is usually 33% of the MSRP, this on a 60 month program.
 
#41 ·
I had the 3 year Select program on my 2011 X5d. I never got an offer from BMW to pull ahead on it or pay the last 6 months - just the you need to pay this amount in 30 days or refinance it. There refinance interest rate was over 6%! I had a 32K balloon and sold the car for 38,500 and took the money and ran. I put a huge chunk of change down on the car at the time and had $200 a month payments. But I wouldn't do it again. We just leased a 2015 328 that stickered for 47K, (was a service loaner with barely 2,000 miles on it). They had it on sale for $37,500 and with $3,500 down we got the car for $289 a month for 3 years and 12K miles.
 
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