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Hey guys,

Wanted to open this question of mine to a broader audience, but couldn't find a lot of active threads on people that had opted for BMW Select recently. So, figured I'd throw this here to get some opinions.

I have a 2012 BMW X5 Premium - cold weather package, XM, nav, black on black. I bought it from a dealer in Jersey last year as a CPO'd Executive Demo. Had 15K miles on it, purchased for $47K and financed the rest with BofA. My current payment is $455 a month at 2.24% APR. I have about $19K left worth to pay off. X5 is now up to about 35K miles, and although I'm not extremely close to the warranty run out, I'm just thinking a little ahead here about what option to choose.

I started looking at 2015's, not really in a serious fashion, but just window shopping. My 2012's MSRP was about the same of what I built online for a MSRP of $64K. Talked to my CA, and he presented me the finance options at 60 months (my current loan term) for $696.52/month, assuming $5K cash down, my trade less my payoff, and BMWFS's APR at 3.65%. Obviously I'd probably go with BofA again and get a lesser rate than that. Then came the BMW Select pitch. The numbers on this looked better - $413.61/month, $5K down, plus my trade less my payoff on the current X5. $45,122 financed. I'd probably bump my payment to around $500 or $550 a month to make it a little easier on myself in the future.

Here's my question, since my CA didn't really know a whole lot on how to sell me on Select. In my case, is it worth it? Especially since I'm in the old body style, that's their justification for only giving me $34K for my trade. However, the new car sales manager and the GM were pitching to me that the CA's get an alert on their computer to "call you in" to trade sometimes a year, year and a half, or two years into the 60 months where I could trade up to the newest model at that time, and probably not be out but $1K to $2K, with the trade in covering the balloon. I would definitely not be keeping the car for the full 60 months.

I evaluated leasing when I bought my current 2012, however, I drive a long distance for commuting (100 miles round trip, when I'm not working at home) sometimes. This past year, obviously I drove a lot. This year, I probably won't, but don't want to risk going over the mileage severely on a lease. That's why Select looked attractive. It seems like it would be best for me to trade now and get into the new body style to not lose more money if I were to look at a trade again in the next year to year and a half.

Here comes the balloon part that somewhat worries me -


Balloon being $25,910 @ 3.12% doesn't seem that bad, but I'm not extremely well versed on Select (obviously). Looking at the residuals at http://www.cars.com/go/alg/index.jsp?makename=BMW&modelname=X5&year=2015, it looks like it'll be worth that when I plan on trading it in probably 24 months out or so to jump into another one. I came up with that based on paying around $500/month instead of $413ish, less two years worth of payments off of the "amount finaced" + "finance charge" line items.

I evaluated leasing, but at the $800s didn't seem all that great to me for almost the same deal. Unless I'm looking at the math wrong or underestimating the interest to the point where I'll be upside down on it when I go in 24 months later to trade.

I researched online to see if I could find any posts on people saying they managed to get screwed on Select, but most people that are on it seem happy with it, to the point where they've traded up and broke even on getting into a new car with putting another $2K down payment down, etc. My general fear is that somehow I'm just going to wind up upside down though, along with my CA saying that they can "play with" the residual when I sit down to buy to see what's most beneficial to me. I thought the residual was mostly set as predicted by BMW.
 

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There is no residual because it's not a lease. BMW Select doesn't limit the mileage you can drive the car. It's the mileage that determines the residual on the car at the end of the lease. The payment at the end of the BMW Select term is the balance on the loan and has nothing to do with the value of the car. The only thing the sales advisor can "play with" is the sales cost, the interest rate or the term to adjust the balloon payment at the end.
 

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I think you will be severely underwater on a Select plan if you plan on getting out in only 24mo. I would rather lease for 36mo and have them write me a check for my trade in, or sell my car privately and lease.

I dont know much about Select but Ive looked into it before and even by ballon time i think one would still be underwater because the payments are artificially low. For short term, i like leasing because you assume no risk on the residual at term. If the car is valued less then your payoff, you can walk away. If it is worth more, you can sell it for a profit (i have done this) or choose to finance the remainder. If some serious issue occurs which severely devalues your car, or say you get into an accident which generates a carfax, you just give it back and walk away. With Select, like a purchase, that burden is on you. Mileage is definitely a concern for a lease, but i dont think Select is the solution to have a car short term to get around the miles.

Thats my $0.02.
 
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