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      03-07-2008, 02:02 PM   #1
TitoSkulls
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BMW's Owner's Choice?

I've been doing some number crunching trying to figure out the impact of the 6.75% rate when using BMW's Owner's Choice plan. My initial thinking was that perhaps the impact wasn't as bad as we all thought.

Say the price of the car comes to $54,000 after tax and all other dealer fees. I'll put a $14,000 downpayment bringing the total owing to $40,000. Under a normal financing agreement, interest would be paid on the total amount borrowed which is $40,000.

Using Owner's Choice, we can lower our monthly payments with a predetermined lump sum at the end of our term. Lets say that we have a $20,000 balloon payment at the end of our term, we essentially would have only borrowed $20,000, and would therefore only be paying interest on that $20,000.

I guess what I'm confused about is how the interest is calculated when using the Owner's choice. I'm guessing the we'd actually be paying interest on the entire $40,000 regardless of the $20,000 balloon payment. This would mean that if we were to re-finance the $20,000 balloon payment at the end the term, we would essentially be paying interest on that sum twice.

Please tell me that I'm mistaken here.
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      03-07-2008, 02:44 PM   #2
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You have to pay interest on the full amount, no one gives out money for free...
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      03-07-2008, 03:22 PM   #3
TitoSkulls
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Yah, that makes sense. I guess I was just trying to get my head around this option. It's attractive because the monthly payments are lower. But in the end, you end up paying more interest than you would with a regular financing plan assuming the balloon payment is financed again at the end of the term.
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      03-07-2008, 05:42 PM   #4
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Damn.. I was going to go that way since I figured it would expose me less to BMW's huge interest rate. I'd be banking on the fact that the rates would be lower after the term ended, and could refinance as such.

But then I'm paying double interest? I always thought it was just on the amount financed... Every time I think I have a solution worked out, something gets in the way. This car does not want me owning it.
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      03-07-2008, 05:53 PM   #5
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Since everyone else from Calgary is posting on here I thought I would too.

I was looking at Owner's Choice at first too but I figure between looking at the banks which will have lower rates pegged to the BoC prime rate and extending the term 6 months I can get the payments closer to where I want them.
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      06-12-2008, 03:09 PM   #6
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I am from BC and the local dealer told me no one ever go for the owner choice here, WTF??? why do they have it then if nobody take up this plan.
They said the best way to have low monthly payment is to finance the 5 year option.
make any sense?
I am planning to do a cash buy, do you guys think they can do better? I see a lot of car dealers give you discount or rebate if pay cash....
thanks
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      06-12-2008, 03:17 PM   #7
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I don't think there's a cash rebate for the 1, it's $3000 or so on the 3 series.

I'm always going to lease my cars and invest the rest of the money, since that way if I ever end up with a lemon, I can just turn it in for a new one a couple years later.
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      06-12-2008, 04:50 PM   #8
TitoSkulls
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I did Owner's Choice.
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      06-12-2008, 06:10 PM   #9
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Quote:
Originally Posted by TitoSkulls View Post
I did Owner's Choice.
Can you please tell us what are some advantages choosing the owner choice as oppose to cash buy out or lease?
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      06-12-2008, 07:03 PM   #10
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Quote:
Originally Posted by TitoSkulls View Post
Yah, that makes sense. I guess I was just trying to get my head around this option. It's attractive because the monthly payments are lower. But in the end, you end up paying more interest than you would with a regular financing plan assuming the balloon payment is financed again at the end of the term.

its true its lower, but i was thinking about this months ago and came to this conclusion...

ur downpayment is gonna be roughly little less then mine but numbers will work

that 40,000, say your paying around 855 a month or whatever, but with the balloon its like 550 or something, which is appealing, but down the road, you have to technically save up for the remaining balloon amount.. which is 20,000 / your term... so that adds like extra 200+ a month in "savings" you have to do, chances are you wont, therefore get fucked with the balloon in the end and have to refinance that etc..

thats basically what i got out of it, ur not paying the full monthly payment, but in reality you should be, because your saving it, unless u feel a huge xmas bonus is coming, lol:headbang:
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