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      03-02-2016, 10:04 PM   #1
///MIKE M
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Question BMW Select Financing--make sense with the M2??

BMW Select Financing--does it make sense with the M2??

Available in my state so its another option for me with the lease rates not being the greatest.

Discuss....
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      03-02-2016, 10:24 PM   #2
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Not sure how that works but I just checked my credit unions rate and it's at 1.49% for 60 months. I used them for my previous car purchases and I will do so with the M2 as well.
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      03-02-2016, 10:56 PM   #3
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Quote:
Originally Posted by chmura View Post
Not sure how that works but I just checked my credit unions rate and it's at 1.49% for 60 months. I used them for my previous car purchases and I will do so with the M2 as well.
What ur credit union. The best credit union rate around me I found was 2.25
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      03-02-2016, 11:22 PM   #4
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Quote:
Originally Posted by cole3488 View Post
What ur credit union. The best credit union rate around me I found was 2.25
https://www.schoolsfirstfcu.org
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      03-03-2016, 08:43 PM   #5
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Can someone explain the Select Program in detail?
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      03-03-2016, 09:28 PM   #6
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https://www.bmwusa.com/Secured/Conte...tateofPurchase

http://www.passportbmw.com/bmw-select-financing.htm

That's all I know. Trying to see if this kind of thing would be a good match for the M2.

Last part under 'how it works' sounds interesting for a car like the M2.

Anyone have any opinions on BMW Select for this car? OR have any experience/additional details....

Last edited by ///MIKE M; 03-03-2016 at 10:01 PM..
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      03-04-2016, 01:22 AM   #7
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BMW Select is effectively an open ended lease, the ballon payment is going to have some of the same issues as leases because they are estimating a residual value. We do open ended leasing for our fleet at work and as long as you understand what your getting into they are not a terrible idea. I have read some folks that were pretty upset when after their term was up on a BMW Select deal they discovered the ballon payment exceeded the value of the car on trade in, imagine paying for 48 or 60 months and still being upside down. If you can live with the residual value risk then it might be an option. When my turn comes up on the list I am going to study all three options and decide based on what makes the most sense for me. I plan on driving 8-10k a year max and take great care of my cars so all three are decent options for me.
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      03-04-2016, 01:38 AM   #8
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By the way Penfed has a financing option very similar to BMW Select that might be worth looking at if your a member (anyone can actually join now).
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      03-08-2016, 08:52 PM   #9
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I've done select financing with two MINIs, a 135i, and my current M4. The balloon payment is a fixed amount determined at the time of purchase. I'm not sure if it's based on MSRP or selling price. You can also refinance the balloon at the end of the term, effectively giving you a 9 or 10 year finance. Each time I've done this, I put a large amount down, so I've never been upside down on the loan, and each time I was able to trade in the car for what I owed, or slightly higher. The first car I traded in early after two years, and the last two cars I refinanced the balloon for a similar or lower payment, and shortly after traded in on something new. It's not for everyone, and putting a good chunk down is key to not getting stuck upside down, but it's allowed me to buy a car that would otherwise be above my pay grade.
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      03-09-2016, 09:04 AM   #10
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On the right car it is OK to do but not if your going to put a ton of miles on it. I have done it on a couple cars and did great on one and was upside down on my X5 that I put 110k miles on it 5 years. I will do it on the M2 since it will be a garage queen.
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      03-09-2016, 01:01 PM   #11
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This was basically invented as a loophole for states like IL where a traditional lease is a disaster because you pay tax on the full price of the vehicle, not just on the portion you are using.
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      03-09-2016, 02:51 PM   #12
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Ignoring sales tax issues, etc, because they vary by location, I'd never do it personally and here is why...

In principle, it is similar to a lease. However, the lease protects you as BMW takes the risk on getting the value wrong. If they guess too high, you give it back. If they guess too low, you buy it.

Also, and maybe as important, if you have a significant car accident we all know that kills resale value of the car when it is disclosed. However, on a lease, it is BMW's issue as long as you have the car properly repaired... you return it at lease end and they live with the diminished value. On the balloon option, the buyer lives with the hit. Ouch.
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      03-10-2016, 09:04 AM   #13
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Quote:
Originally Posted by BEM-S4 View Post
This was basically invented as a loophole for states like IL where a traditional lease is a disaster because you pay tax on the full price of the vehicle, not just on the portion you are using.
That is owners choice and not select.
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      03-10-2016, 09:05 AM   #14
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Also, with select you can lower the balloon payment to 30% instead of 40%.
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      03-10-2016, 09:09 AM   #15
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Quote:
Originally Posted by gthal View Post
Ignoring sales tax issues, etc, because they vary by location, I'd never do it personally and here is why...

In principle, it is similar to a lease. However, the lease protects you as BMW takes the risk on getting the value wrong. If they guess too high, you give it back. If they guess too low, you buy it.

Also, and maybe as important, if you have a significant car accident we all know that kills resale value of the car when it is disclosed. However, on a lease, it is BMW's issue as long as you have the car properly repaired... you return it at lease end and they live with the diminished value. On the balloon option, the buyer lives with the hit. Ouch.
In my state you get paid diminished value from your insurance as well as repairs.
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      03-23-2016, 10:01 PM   #16
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I am new to the idea of BMW Select, but if I am understanding this correctly the M2 may be the perfect car for BMW Select if you are looking to keep your monthly payment lower than the approx. $900-1000 a lease would be.

From what I understand, BMW Select will always cost more than a traditional finance in terms of total interest paid. So let's be clear about it - many people that lease or finance via BMW Select are looking to preserve liquidity in exchange for a bit of a higher cost down the road. Nothing wrong with that, I am looking to do that too.

What I think makes the M2 perfect for BMW Select is two things - BMWs lease residuals are insanely out of whack with their other cars, but the BMW Select residual is not. The second thing is that the M2 will likely enjoy a depreciation curve that is not nearly as bad as most cars, and for the first year or two of the loan if a decent down payment is placed, the owner may never even be under water.

The M2 residual for BMW Select is 37%. On a $57k car, that is about $20k. A 5 year old M2 is going to be worth significantly more than $20k. I did a search on 2011 M3s and the cheapest one in the country is $28k. A $28k remainder on a 37% residual would mean a MSRP of $78k, which we all know that generation of M3 couldn't get up to. So this means that the BMW Select residual is basically set too high, as opposed to the lease residual being set too low.

The way I calculate it:

MSRP of $57,395 after fees for a LBB with exec pack
Add in 5.75 sales tax for my state = $60695

$60695 - $5000 down payment = $55695 total cap cost

With 37% residual @ 2.99% that makes $35,088 regularly financed with a $20607 balloon

There are two components to the monthly payment - interest on the balloon and then the normal financed amount.

To figure out the balloon interest portion, I did $20607 x .029 x 5 / 60 =$49.8/mo

To figure out the financed portion I did $35,088 at 3.9% using a calculator....ends up $630 per month.

So using BMW select with $5k down, total monthly payment after fees and taxes is $679.8 per month.

Total cost of BMW select financing = 679.8 x 60 + 20607 which = $61395
Total cost of traditional financing $55695 @ 2.99 = 1003 x 12 = $60180

So I am basically paying BMW an additional $1215 in interest to preserve $330 per month in liquidity vs traditional financing. This is the upshot of BMW Select. Here is where it gets better: 37% residual seems very favorable as a 5 year old M2 will be worth well more than $20,000. Given a $5k down payment and limited supply for the next couple of years, I believe I will never at any point be upside down (at least not significantly), while preserving the ability to sell the car and walk at any time and having no mileage restrictions of a lease. If I decided to sell the car to make the balloon payment, I would likely have several thousand dollars of equity in the car at that point.

This seems too good to be true?
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      03-23-2016, 10:22 PM   #17
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PenFed offers a similar product and was slightly better than BMW last I checked.

.
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      03-23-2016, 11:05 PM   #18
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Quote:
Originally Posted by paradoxical3 View Post
I am new to the idea of BMW Select, but if I am understanding this correctly the M2 may be the perfect car for BMW Select if you are looking to keep your monthly payment lower than the approx. $900-1000 a lease would be.

From what I understand, BMW Select will always cost more than a traditional finance in terms of total interest paid. So let's be clear about it - many people that lease or finance via BMW Select are looking to preserve liquidity in exchange for a bit of a higher cost down the road. Nothing wrong with that, I am looking to do that too.

What I think makes the M2 perfect for BMW Select is two things - BMWs lease residuals are insanely out of whack with their other cars, but the BMW Select residual is not. The second thing is that the M2 will likely enjoy a depreciation curve that is not nearly as bad as most cars, and for the first year or two of the loan if a decent down payment is placed, the owner may never even be under water.

The M2 residual for BMW Select is 37%. On a $57k car, that is about $20k. A 5 year old M2 is going to be worth significantly more than $20k. I did a search on 2011 M3s and the cheapest one in the country is $28k. A $28k remainder on a 37% residual would mean a MSRP of $78k, which we all know that generation of M3 couldn't get up to. So this means that the BMW Select residual is basically set too high, as opposed to the lease residual being set too low.

The way I calculate it:

MSRP of $57,395 after fees for a LBB with exec pack
Add in 5.75 sales tax for my state = $60695

$60695 - $5000 down payment = $55695 total cap cost

With 37% residual @ 2.99% that makes $35,088 regularly financed with a $20607 balloon

There are two components to the monthly payment - interest on the balloon and then the normal financed amount.

To figure out the balloon interest portion, I did $20607 x .029 x 5 / 60 =$49.8/mo

To figure out the financed portion I did $35,088 at 3.9% using a calculator....ends up $630 per month.

So using BMW select with $5k down, total monthly payment after fees and taxes is $679.8 per month.

Total cost of BMW select financing = 679.8 x 60 + 20607 which = $61395
Total cost of traditional financing $55695 @ 2.99 = 1003 x 12 = $60180

So I am basically paying BMW an additional $1215 in interest to preserve $330 per month in liquidity vs traditional financing. This is the upshot of BMW Select. Here is where it gets better: 37% residual seems very favorable as a 5 year old M2 will be worth well more than $20,000. Given a $5k down payment and limited supply for the next couple of years, I believe I will never at any point be upside down (at least not significantly), while preserving the ability to sell the car and walk at any time and having no mileage restrictions of a lease. If I decided to sell the car to make the balloon payment, I would likely have several thousand dollars of equity in the car at that point.

This seems too good to be true?
Thank you so much for this breakdown of BMW Select Financing. I have been thinking about doing this myself instead of a lease. I do think the lease residual is set too low, making the lease payments over $800 at least. I can lease an M4 in the $800 - 900 range. What would make BMW Select even better is if BMW offers the promotional 0.99 APR for the M2.
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      03-24-2016, 12:13 AM   #19
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Quote:
Originally Posted by Gigglin View Post
Thank you so much for this breakdown of BMW Select Financing. I have been thinking about doing this myself instead of a lease. I do think the lease residual is set too low, making the lease payments over $800 at least. I can lease an M4 in the $800 - 900 range. What would make BMW Select even better is if BMW offers the promotional 0.99 APR for the M2.
I went ahead and made a calculator based on my assumptions that I think should answer a lot of questions about BMW Select. Wouldn't mind having someone double check my math but I think it works out correctly.

https://dl.dropboxusercontent.com/u/...alculator.xlsx
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      03-24-2016, 12:20 AM   #20
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wow alot of people are leasing this car huh...
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      03-24-2016, 04:05 AM   #21
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Makes more sense to lease an M3 at this point
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      03-24-2016, 06:36 AM   #22
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Quote:
Originally Posted by paradoxical3
Quote:
Originally Posted by Gigglin View Post
Thank you so much for this breakdown of BMW Select Financing. I have been thinking about doing this myself instead of a lease. I do think the lease residual is set too low, making the lease payments over $800 at least. I can lease an M4 in the $800 - 900 range. What would make BMW Select even better is if BMW offers the promotional 0.99 APR for the M2.
I went ahead and made a calculator based on my assumptions that I think should answer a lot of questions about BMW Select. Wouldn't mind having someone double check my math but I think it works out correctly.

https://dl.dropboxusercontent.com/u/...alculator.xlsx
The BMW website has the M2 configurator. After you build your car you can "estimate your payment" and it will let you compare the lease, finance, and Select payment amounts.
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