Hello folks, this is my second post on the forum, but first new thread. I have fallen for the MINI and have set out to obtain one, but I have a question or two and I was hoping someone who is in the know could help me out.

I have of course built countless MCS's on the MINI site, and then checked out the different options for financing them, one of which sounds very awesome because it very well be what gives me the ability to purchase a car. With a decent trade in and downpayment on a new MCS, MINI Select says my payments would be about 180 bucks a month. I am pretty much guaranteed a job with a family friend's computer networking company in Madison, WI (hello to all you Wisconsin locals ) and that amount, and maybe a little more, would be very possible to make.

I really just want to know if anyone here financed their purchase with MINI Select and has a better knowledge of what fees and whatnot I may not know about or what may be excluded from the sites quote in all that wonderful small print at the bottom, or maybe if someone had a terrible time dealing with it, just anything you all can share with me. Thanks a bunch folks!

 

It was, in fact, the amazingly low monthly payment estimated by using MINI Select that made me finally decide to go after my MINI. Unfortunately, the number "estimated" on the website and what was quoted to me in reality at the dealership were two completely different numbers. It seems that the website uses the best-case credit scenario and interest rate, and that I somehow didn't qualify for that (damn student loans!) The finance manager didn't volunteer any details, but when I asked what the interest rate was on the MINI Select option, I could hardly believe it when he told me 15%! The lease option was much more reasonable and was very close to what had been estimated online. Reluctantly, I went with the lease. I do plan to keep the car once the lease is up, but I'm quite sure that I'll go over the 15K miles per year and that will end up costing me $0.20 per mile. I went with a short lease, so if I do go over, it won't be as much.

There is a $100 "paperwork" fee. Also, if your state/county has a sales tax, add that in, along with title fees. And, if you plan on ordering your MCS custom-tailored to your liking, have $500 on hand to make a deposit.

 

It has up and down sides. I went with it because it offered me the lowest monthly payment option. I can also do as many miles as I want. But after the select is over you have a balloon payment. Which you either pay, finance of get rid of the car.

MINI's website doesn't include Tax, Tags or title fees so it can be off by a few thousand. Even then Your $180/month payment won't be to much more.

Think of it this way MINI select is a lease with unlimited mileage. Mine is 4 years at which time I will probaly trade the car. Rather then finance or pay the balloon payment.

 

This is how it was explained to me by an MA at the dealership I'll be ordering through: the low payments come from you only financing a portion of the final price. Lets say after your down payment and trade-in, there's $15000 left over. Through MINI Select, you finance a percentage of that figure (maybe 65%), which brings your payments down. In the end, you do have a balloon payment, but it's usually smaller than a lease balloon payment. I think MINI Select will end up being the way I finance as well.

 

On my first MINI (a Cooper) I went with a lease. At that point, I wanted to be driving a MINI no matter what I had to do. My payments were in the low $200 range. But after a year and a half, having 37000 miles on the car, and falling in love with the S convertibles it was time to trade in. No lease this time. So they crunched numbers. If I had straight out financed my payments would have been well over $500 a month (something that as a college student I could not afford). With the MINI select I got 5.75% APR and a payment just over $300 a month. Plus, since I typically don't keep a car too long, the balloon payment offers me a way to walk away from the car after 4 years, with no mileage restrictions (I already have 38000 on my S 'vert and have only had it a year and a half).
The MINI select was explained to me by my MA, as a way for younger people who are just starting out to be able to afford a new car. The initial payments are low, and then in 4 years you have the option of trading up or refinancing the car.

 

hmm... i need to check out finnancing since the mini i want is in the ballpark of $25k... and these 3 year old used mini's are around $20k.. why not just get a new one with the color and options of your own choice....

 

I haven't read up on the particulars of the MINI balloon note scenario, but every other one I've heard of DOES have mileage limitations if you want to exercise the walkaway option. The only time mileage doesn't matter is if you payoff or refinance the balloon. And just remember, if you have to refi the balloon, you are going to end up paying on the car for years longer than a traditional loan.

 

If I plan on refinancing the car instead of paying the balloon payment, do I get to just continue with MINI Select or does it then fall under one of the other payment plans? Thanks a ton guys, I'm getting really excited as this becomes more and more a possibility!

 

Ok, this got me to thinking so I read up on it on miniusa. MINI Select gives you two choices at the end of the term, refinance the balloon or pay it outright. MINI Ownerschoice offers refi, payoff, or trade back with 15K a year mileage restrictions. The programs vary from state to state due to local laws and regulations. Just understand that if you enter into MINI Select, you HAVE to pay off the loan. If you've got 100K plus miles on your 4 year old MINI at the end, you are going to have LOTS of negative equity in your car, the balloon payment is going to be more than the car is worth. This option is the best for the finance company, they can likely have you on their rolls for 6-7 years instead of 5.

 

the down and dirty on any type of balloon payment finance program is you are only pay for what you are actually using---they will put a 'residual' value on the car based on the number of miles you intend to put on it and how long you are going to keep it. Typically, this residual value is your balloon payment.

Unfortunately in my many years in the car business i have never heard of 'unlimited mileage' on any type of balloon payment. They have to be able to come up with a residual value and they base it on mileage and 'wear and tear' on the vehicle.

I would read the fine print---if your residual value is, for giggles, $15k, they are basing it on a certain number of total miles, length of term, normal wear and tear on the vehicle--if at the end of the term, you try to give it back or trade it(and with the trade, the residual amt is only if you trade with the same manufacturer) and you have driven the car hard and put it away wet, they aren't going to give you the residual value as stated in your contract--somewhere there is verbiage stating they can deduct a certain amount per mile for high miles and more than normal wear and tear.

balloon financing or leasing is intended for folks who trade their cars in often--say every two years. typically the interest rate is going to be slightly higher than a straight conventional loan, and if you are doing a term longer than 3 years, the payment is close to the same as it would be if you did the straight finance.

for what its worth---i would never do a balloon--you are better off financing for a longer period of time (say 72 months) to try and get your payment down. And here's why--say after the term you want to keep the car, the residual value is $15k, you have paid for 4 years for a total of $14k(includes interest) and at the end, you have to finance the remaining 15k for a minimum of 4 years---technically, you will have financed that car for 8 years at an average higher interest rate than if you had done the straight financing for 6 years at a fixed interest rate. About the only time it is a wash is if you have a term for 2 years, and have to finance the balloon for 3 years.--your payment for those three years is going to be hefty though.

and sadly if you continue to 'flip it' at the end of the term, you never will own it as an asset---a depreciating asset is still an asset. kind of like a 'lease/purchase'--you have to end up purchasing it fully to have ownership--if you don't end up purchasing, you have just rented it.

hope that helps

 

All good points, but think of it like this - MINI Select can be good for first time car buyers, or those who expect their salaries to increase before the balloon payment is due. Yes, you end up paying off the car longer, but for some that's no problem (e.g., those who plan on keeping the car until it dies).

Edit: I don't know how reliable this is, but I was told by an MA that if you choose to refinance the balloon payment through MINI when it's due, that the interest rate is guaranteed not to be higher than the one you started the term with.

 

I did MINI Select. The finance guy asked how much I would probably drive it each year, and said at the end I could trade it, pay the balloon payment, or finance the balloon payment for 3 years at new-car interest rates. I am not sure if I'll keep it forever or trade, so it was perfect for me.

I think if you're one of us recent college grads wanting to get in a new car, and like someone else said you expect to be making substantially more at the end of the term, it's a great option.

 

Another thing to consider, if you do the balloon payment (mini select) and decide to trade in the vehicle instead of buying it, will they charge you for any after-market modifications (ie pulley, etc)?

I myself have been trying to figure this out because I know that a couple years (about 3) down the road I'll probably be really tempted by either a) a turbo-diesel awd mini (or something like that) or b) another car alltogether, or at least want to allow for the possibility

I've been trying to decide what payment method is financially optimized for the most flexible options after 3 years.

Maybe MINI Select is best for this?

 

good point about the college graduates, however---with balloon financing you are paying interest on the Full price of the car--so if your bottom line comes to $29k, you are paying interest on $29k, not on the amount you are paying for (using), so at the end of the term you will have paid the interest on $29k plus on the residual value you are financing.

when it comes to college students, they need all the money they can get and college grads arent making HUGE amounts right out of college--interest is interest--it doesn't make sound financial sense to pay a huge amount of interest on anything and that is what can happen if you have to finance a balloon payment.

with simple interest car loans, there is no penalty for early payoff-- so if Joe College student does make a substantial amount of money right out of college, increase the amount of your payments and pay it off sooner under the conventional loan---

if you still aren't convinced, find an amortization calculator and plug in the amounts and see what the difference in interest alone is---i haven't looked at it--but one thing i do know, interest rates are going to be higher in three years than they are now.

if you are building up a mini and want to know what your absolute bottom line is so that can plug it into a calculator, i can give you the amounts to calculate in texas and how to figure it if you are trading in a car or putting money down:

build up your car and get msrp
tax on new cars 6.25% in texas--if you are trading in your car, goto nada.com (texas doesn't use kelly blue book, but they use the blackbook which is only available to dealers) to figure out a trade value--when you get this amount , reduce it by $3k cause a dealer looks at your trade objectively and will make calls to see what he can get for it.

subtract your trade value from the msrp--the sum will be the amount you will tax at the 6.25% rate--if you don't have a trade, multipy the msrp by 6.25% and add in.
subtotal

add in any payoff or $0.00 for none
take the msrp and multiply it by .00254 for inventory tax
add into subtotal
add in $75 for plates and licensing
add in $50 documentation fee

and if your dealer adds in a 'prep' charge-tell them no dice-they shouldn't charge you for this.

subtotal
subtract any down payment

grand total

plug this amount into an amortization calculator (there is one under loans at www.ssfcu.org) and play around with interest rates and terms.

to figure out a residual value go to edmunds.com and value out your car as if it were a few years old--just to give you an idea and something to work with.

take the residual value and deduct it from the msrp and amortize out the difference at 0.00%, amortize out the msrp to figure out the interest and add it to the residual value to figure out a payment guesstimate.

the only thing you have to lose is some research time---if it saves you a few thousand dollars, it is worth it in the long run.

oh and one other item someone else mentioned---you will have negative equity in the car for longer than you would under a staight loan--you can figure you will be breaking even around 2 1/2 -3 years in a straight loan, but in a refinanced balloon, it will be between the 4-5th years,maybe between the 5th-6th year.

long winded, i know, but trying to help a fellow mini enthusiast!

 

Viv, I wasn't specifically targeting recent college graduates. But you are right, coming right out of college and shelling out all that money in interest isn't a good idea. I was more referring to someone in my situation - out of college for a few years, has a job where pay increases will be more than likely, and has never bought a brand new car. I liken the MINI Select option to some of the home loans currently available for first time home buyers - low monthly payments for the first few years, and then a sharp increase. My wife and I just recently purchased a home with such a loan. The expectation is that many people will sell the house (or car) before the monthly payment goes up (or when the balloon payment is due). However, my pay should increase substantially in the time it will take for either of those to happen, so loans like this are great. It gets me into the house/car that I want. Granted, yes, I will be paying a little more in the long run, but to me it comes with living in today's society - we needed a house, and the car I currently have is wearing out.

 

are you obligated to keep the car for however long your term is on the mini select program or can you sell the car whenever you want, and just payoff what you owe on it