BMW "owner's choice" - anyone got into it?

Rockblock · 02-21-2010, 08:06 PM

Folks, I'm planning to get a new car and I was looking at BMW's "Owner's Choice". Has anyone signed on to this option?...dealer says it's a finance version with a baloon pmt at the end...so does that mean that they subtract the ballon amount and you get financed on the difference?

If anyone's signed up with this, I'd really appreciate an example with the numbers and how the math is done.

Thx

chenx15 · 02-21-2010, 08:52 PM

a lot of people say that the balloon program is a big no no.

Rockblock · 02-21-2010, 10:04 PM

Quote:

Originally Posted by chenx15

a lot of people say that the balloon program is a big no no.

some say it's better than lease as you actually own the car and can sell anytime you like (unlike lease)...unless we know how the math works, hard to say which is better...that's what I'm trying to find out.

Spencer2u · 02-22-2010, 11:11 AM

I almost did it, and I would of saved about $200. I didnt think it was worth it because basically at the end of the term you are paying your downpayment. Do you think in 5 years you are going to want to put that lump sum down, That might be more then the car is worth? You have to do the math and see what option is better for you. If numbers are the same and you can put the lump some up front I would do that.
As for one of the previous comments you can sell it anytime you want but you still owe BMW that lump sum.
Good luck.

Rockblock · 02-22-2010, 12:11 PM

Quote:

Originally Posted by Spencer2u

I almost did it, and I would of saved about $200. I didnt think it was worth it because basically at the end of the term you are paying your downpayment. Do you think in 5 years you are going to want to put that lump sum down, That might be more then the car is worth? You have to do the math and see what option is better for you. If numbers are the same and you can put the lump some up front I would do that.
As for one of the previous comments you can sell it anytime you want but you still owe BMW that lump sum.
Good luck.

So, when you did the math, did it boil down to a classic financing of the [Negotiated amount - Ballon Pmt]...or is there a different formula?
Thx

sski · 02-23-2010, 01:28 PM

BMW has a payment calculator on their website. Just start plugging in numbers. Whether you finance, lease or do owners choice really depends on your personal situation. Are you keeping it for 10 yrs or getting out after 4 years?...how many kms are you going to do?...Is your situation going to be different in 4 yrs (eg/ a big debt or mortgage will be paid...ie/ you can afford a big balloon payment)...

Rockblock · 02-26-2010, 11:13 PM

Thx I figured it out...it's a financing on the whole amount, after which they take away the balloon pmt (30% for a 60 mth financing) and you end up paying mthly installments on the difference and the balloon at the end

Mikeee46coup · 02-26-2010, 11:21 PM

Balloon payments are generally a HUGE mistake and if I'm not mistaken have been outlawed in a many provinces.

Spencer2u · 02-27-2010, 01:26 AM

Quote:

Originally Posted by Rockblock

So, when you did the math, did it boil down to a classic financing of the [Negotiated amount - Ballon Pmt]...or is there a different formula?
Thx

I did the standard financing. NOt sure what the formula is for the ballon i, (the sales people worked it for me) but I think someone just posted what it is.
Basically you are giving them the down payment at the end( do you want to do that?.Would you be better to lease and then use the "buy back option at the end"? At lease then if something changes you have a out.(work out the math) with a ballon you owe that money at the end no matter what.
I guess everyone's situation is differant. I know I talked to a couple of dealers business mangers both from BMW and Mazda and they both didn't recommend it.
Hope that helps

nikijack · 04-14-2010, 10:57 AM

Hi:
I purchased a 2001 530i in Dec. 2005, for $29,000, sold it in Dec. 2009 for $4500, and had to pay $12,000 balloon payment. That car kept me broke and made BMW rich.

Jack

mstearnsy · 04-14-2010, 12:19 PM

Some situations it is a good idea, other is it not. We have to know what year and model of BMW you're buying to know what interest rate it is.
When the balloon is financed at 1.9%, that's a very good financial decision in general (you're paying BMW just 1.9% and then with the money you save now, you pay off higher % debts). When the balloon is on a standard financing rate of ~7%, it's a very bad idea.

What a lot of salespeople don't explain is the formula of:
3 yr - 50%
4 yr - 40%
5 yr - 30%
is just the max allowable balloon.
I just did a contract where the buyer added a balloon of just $10,000 (about 20%) to the 4 year term. Here and there over the next few years, she will pay off a few Gs when she has the funds, and by the end of 4 years, there will be no balloon at all. Very good plan for her since she's enjoying low monthly payments.

MiroE36 · 04-14-2010, 12:45 PM

balloon payments are never a good idea... this is financing for people that cannot put anything down... aka highest effective rate of interest (highest risk). Unless you really have to (which you never have to) you should stay far and clear of balloon payments.

mstearnsy · 04-14-2010, 01:52 PM

Balloon payments CAN be a good idea. If you can effectively borrow money from BMW at 1.9% (which you are if they don't force you to pay $10Gs until years later), and you then turn around and pay $10Gs off your mortgage that costs you 5%, that's a very very good idea.
Or if it means you don't have to cash out some investments for a down payment, and those investments stay in the bank and pay you more than 1.9% (after any tax charges) then it's a good idea.