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02-09-2009, 07:47 PM | #1 |
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How do you calculate bmw select?
Hi,
How is the bmw select payment calculated? Saw the amount to be financed was $35k over 60months, what would the select payment be given the current rate. Car is an 08 if that has any impact. Thanks, |
02-10-2009, 02:04 AM | #2 |
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BMW Select rates are the same rate as BMW Finance. Since no one else seems to have a clear answer on this forum, I figured it out myself and seems to come very close.
A BMW Select loan consists of two parts. A balloon worth a % of the MSRP and a tradition loan of whats left over. The balloon you pay interest on and no principal and with a traditional loan, you pay principal and interest. So let's say you finance $35,000 for a $40,000 car and a residual of 38%. You pay out of pocket $5,000 at delivery. The balloon would be $15,200 and the other loan would be $19,800. You pay interest on the balloon at all times without reducing principal. So at 3.9% APR, $15,200 * 0.039 * 5 / 60 = $49.4 interest per month from balloon $19,800/60 months at 3.9% = $363.75 per month $49.40 is only interest from balloon and $363.75 is both principal and interest from $19,800. So monthly payment for a BMW Select loan for $35,000 in this case would be $413.15 / month + balloon for $15,200 at the end. $413.15 vs $643.00 Total Cost BMW Select = $44,989 BMW Traditional Finance = $43,580 In the end you do come out paying a bit more cause of the interest on the balloon and never lowering your principal. But this is definitely a valid route and don't let other people tell you its not. This method does require financial discipline but that extra $200 a month is more liquid. Having liquid assets is good especially if an emergency comes up it'll buy you time to recuperate without selling your car. Again depending on your financial situation which program is best is up to you. BMW Select definitely costs more in the end. |
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02-10-2009, 07:59 AM | #3 |
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Ok, that makes sense. Question #2, lets say that I paid extra from time to time, over and above my monthly payment, does that go towards the balloon payment at the end of the term?
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02-10-2009, 08:27 AM | #4 |
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At the end of the term are you required to pay the balloon off or can you turn the car in like a lease?
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02-10-2009, 11:14 AM | #5 |
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Do you calculate the ballon and the loan amount based off the sticker price for the car, or your final agreed upon price? lets say sticker is 39k and you agree on 36k, which number is used?
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02-10-2009, 01:06 PM | #6 |
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BMW Select means you buy the car. The balloon HAS to be paid and you can't return the car. You might be able to trade it in but you'd be better off selling it through private party. The loan is based off how much you want to take out like any other loan. It is the SAME as any other car loan except how interest/payments are calculated.
The % is negotiable to be lower and is most likely off MSRP. There is a limit to how much you can defer to a balloon so that you don't end up upside down when you have to make the balloon. It makes sure that your car value and balloon payment matches closely in case you have to sell the car to make the balloon payment. I believe the % are the same as lease residuals so for 60 months its like 35-38% for most cars. You can always negotiate a lower % but not higher because of the risk. So you can't defer like $35,000 to a balloon. Also you cannot pay off the balloon until you pay off all of the first loan. It's BMW's way of making money. They treat it as one loan I believe and the balloon is the last value you can touch. |
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