So I might be getting a 1er sooner than I thought...

[mfratt]

I just realized that BMW offers balloon payment systems (BMW Select), which based on the BMW loan calculator means that with a trade in and $2500 down I can get a 128i ZSP/CWP for $340/mo, only $70 more than I'm paying now.

I'd never even considered BMW Select as an option; here I am trying to figure out how I'm gonna save up $15k to make the monthly payments affordable.

So...I'm off to the dealership in the next few days to drive a 128 and 135 (I can get a 135 for $390/mo apparently). I'll probably wait until they start getting flexible with the 09 prices (or get a left over 08) before I pull the trigger.

[Robert]

Grats!

What is bmw select?

[BForbes]

Thats gotta be a great feeling. I hope everything works out!

[larryn]

Think hard about BMW Select. It's a means for you to be paying interest on the car for many years. Most people who use it tend to make their 4 years of payments, then finance the balloon payment for another bunch of years. I think that program is only a win for BMW Financial Services.

[IDBMW]

Originally Posted by larryn

Think hard about BMW Select. It's a means for you to be paying interest on the car for many years. Most people who use it tend to make their 4 years of payments, then finance the balloon payment for another bunch of years. I think that program is only a win for BMW Financial Services.

That sounds bad to me. Almost like the current housing finance problem people are in but with a car.
IMO if the deal is that close in your financial situation I would go for the base 128i or another less expensive car.

[p_man]

As much as I'd like to see another 1er on the road, watch out. The balloon payment can be a killer. Think about it this way: not only do you have to make the regular payments, you need to save enough to make the balloon at the end. For example, at a 5% nominal annual rate (and good luck getting that), you would need to save around $200/month to have $10,000 after four years.

If you know your rich uncle is going to die and leave you the money, that's one thing. But if you're going to have to come up with it yourself, be careful. And be very cautious of financing it when it comes due - you'll be surprised how much extra that will cost you once you stretch those payments out over another 4-5 years IF you can even get it financed.

[mfratt]

Yea I am kind of weary about going with a balloon payment system, but my other option is to save up the $15k out front. I know that I can save $10k over the course of 3-4 years, I just have to stick to my saving.

Absolute worst case, I'm stuck with a nominal loan at the end to pay it off, which would suck, but theres little likelihood that it would come to that.

Or am I just too eager to get a 1?

[tkbr0wn]

If you are sure you can save the 10k over 4 years, then why cant you just make the higher payment?

[EINSER M]

but in the case of the balloon payment, can you sell the car at any time and payoff the loan?

[chookcooker]

In Aus, BMW guarantees the Ballon value on the car (called BMW full circle) so worst case scenario the car comes in below the Balloon, and then you trade it for zero. Anything above the balloon value given on purchase is cash in your pocket. Any time you finance, they win, but its a nice piece of mind. (Its called the full circle cause most people hand in the keys and grab a new one)

[lamini]

bad idea on the select stuff.
The payment quoted is very optiministic and very likely for a car that costs under 20k. Since your dream car costs twice as much ONE would expect to pay twice as much each month.

The timing may not be right for your one.

[Sephiroth]

Sounds a little fishy. Whatever you do make sure you are thinking clearly and you know what you are getting into.

[amurph182]

Originally Posted by tkbr0wn

If you are sure you can save the 10k over 4 years, then why cant you just make the higher payment?

this.

if you're going to try and save $10k over 4 years, that's ~$200 mo. Will you have an extra $200 each month after all your expenses? Will you be tempted to spend that $200? That's assuming it's ONLY $10k that you'd owe. If it's more, will you have MORE than $200 each month left over?

I know the rationale...get the car for a lower monthly payment, save the extra money and if you have something come up that needs that months $200 car savings, then you've got the money and don't have to worry about it. But then it happens the next month, and the next month. Then you've got a 4 year old car that you still owe a big chunk of money on. You could end up getting a new loan (at god only knows what interest rate) for your now used and out of warranty car.

If you can't afford to save >$200/mo after the car payment now, then don't get the car thinking that it won't be a problem. Just wait until you can afford it with a traditional loan or lease. And if you can afford to save the money, then just buy it with a normal loan anyway and don't worry about a balloon.

[amurph182]

Originally Posted by mfratt

Yea I am kind of weary about going with a balloon payment system, but my other option is to save up the $15k out front.

just saw this...if you can only afford a ~$20k loan, then don't buy a new 1'er now. If that's really all you can afford then your income isn't large enough to support your current lifestyle PLUS a new ~30k-40k car unless, as you said, you save $15k up front. Why not just pay off your current car and then save more money faster?