So has anyone go this route instead of a lease or buying it straight up? I know if you want to do the mini select there is a balloon pymt at the end of it but dont know if it would be good to go this route to have a lower pymt and a higher residuals, or what so if someone knows more about this and explain it a little better that would be great. thanks in advance

 

I'm doing the same thing on my CM. Though, through a credit union instead (more on that in a bit).

Basically, it works like you said (and people, feel free to correct me if I'm wrong): you have lower monthly payments because you're only financing a portion of the car within the term, but at the end, you will either have to pay off the balance (balloon payment), or refinance it. I don't think it's a bad deal, so long as you're prepared to deal with the balloon payment at the end of the term. I, personally, will be paying more than the required monthly payment to take the sting off of the balloon and I will probably trade it in around that time anyway. I just don't want to pay the higher monthly payments a traditional loan requires, especially when I will probably sell or trade it.

Now, that all being said, I would recommend giving [PenFed's Auto Saver Loans] a look at. Their interest rate is MUCH lower (as low as 3.25% as opposed to the 6.9% MINI was quoting me), and works the same way MINI Select does. I'm still researching them while I wait for my CM to ship and I'll let you know how it goes!

 

So do you have to pay interest on the remaining balance, so lets say the CM you get is $30k and your pymt is $315/m and you do a 4 year deal so in that four year deal you pay $15,120 so now your balloon pymt is $14880 do they add interest from that balance or the entire balance? Also so at the end you have a couple of opitions you can buy it by paying the entire balance in full, or refinance through a bk, but what if you cant pay the entire balance off and you cant get a bk to refinace with b/c; lets say your money situation has changed? so do you sell back to mini? i heard if you sell it back or trade it in and when they go to sell it at an auction or to someone new what ever the residuals was when you turned it in, and it doesn't meet that price then you have to pay the remaining balance back? I dont know if that last part is true i just dont want to pay a crazy monthly pymt, the pymt estimator on the mini website was giving me over $600 for a lease and my chevy silveroda pymt was half of that so i dont know.

 

I believe you're paying interest on the whole amount with these types of loans, you're just deferring the amount you're paying on for the term of the loan.

I can tell you that you are definitely responsible for that balloon payment, so if you can't afford to pay off the balloon or refinance, you can try to sell the car, but it's possible that you might not be able to sell it for what you owe. Then, you're in trouble. It's more like a traditional loan in the sense that you're responsible for whatever it is that you owe- there is no "walk-away" option.

Unless you're ready for that balloon payment, you're going to owe more on the car for longer as you will by paying more interest on the car for longer. The rate may be the same, but you're paying it down at a slower rate.

 

Alright sounds good that helps out alot on trying to figure this out thanks for your help.

 

np... I'm still locking all the facts and figures down myself

Definitely hit up your MA if you're looking at going through MINI Select and they can tell you what your interest rate would be and what your monthly and balloon payments would be.

 

It all comes down to two things, what you intend to do with the car and how much you can afford.

If you drive a reasonable amount of miles per year, a lease program will give you a much lower monthly payment for the least amount of upfront money - at least as compared to a regular monthly payment loan. If you're going to trade every three years and don't drive an excessive number of miles, that could be the best way to go.

If you drive a lot of miles or want to keep the car at the end, a lease still could work for you, but your total cost of ownership will go up considerably if you then have to finance the buy out after the lease is up, or pay the excess mileage charge if you don't exercise the buy out option. The select program will work the same way, except you have no choice and you will have to pay the balance at the end of the payment term, and if you don't have the cash you'll have to get a loan. Terms for that loan will not be nearly as good as what you can arrange when the car is new.

For example, compare your total out of pocket in a lease at the end of three years to a conventional loan for 60 months - the 60 month loan gives you a similar payment by having a much longer term but you'll need more money down up front, and you'll still owe about as much on either program if you want to own the car. However, with the lease you can potentially walk away at the end of the payment term, if you want to keep the car you'll have to come up with the residual or finance it. In a way you're doing the same with the 60 month loan, you still owe the balance if you want to keep the car, but you have no option, save selling it, like you do with the lease.

So, bottom line.......

The cheapest way to own the car outright is just to stroke a check for it.

Next is the shortest term loan loan at the lowest interest rate.

As you extend the term and/or put down less, your cost goes up, as your monthly payment goes down. Where those two things make sense to you is your purchase point.

What the lease and select programs do is allow you to buy more car for less monthly payment, but there are potential negatives in the form of higher interest rates or the balloon at the end. You can't just look at the monthly cost, you need to look at the total cost of the loan program. That's easy enough to do - add up the monthly payments and down payment, or in the case of the select, add the monthly, the down and the balloon....then compare.

 

To answer a few questions about MINI Select:

-There is no walk-away option, you are required to pay the balance at the end in some manner (lump sum, payoff through a trade-in, or refinancing).

-There is a decent possibility that your car will not be worth the amount of the balloon if you plan to trade the car in, so you might have to sell it privately to get enough money to cover the balloon or deal with "negative equity" if you trade it in

-You pay interest on the entire amount financed (including the balloon), not just the amount you pay over the term. This means that you pay significantly more interest than you would with a traditional loan, and even more interest if you refinance the balloon at the end of the term. If you are a "finance" person and are at all concerned about minimizing finance charges, this is definitely not the choice for you.


"Owner's Choice" is only available in a handful of states (IL, TX and perhaps one or two more) where leasing is not advantageous due to tax laws. It essentially works like a Select, except that it offers a walk-away option like a lease. BMW created this program because the tax laws in those states made it very, very expensive to lease cars. If you do not live in one of these states, you can not do Owner's Choice.

 

Alright that makes more since, i was wondering about the trade in if you could trade your car back in at the end but with the possiablity of paying the remander of the balance if the car doesn't meet the balloon and i will have to check with MA about the owners choice program i think Indaina maybe the other one or two states. thanks for the info helps alot.

 

You can trade it, but whatever you owe on the car goes against how much the trade in is worth, just like in a traditional loan. So if at the end of my term (or any time, for that matter) I owe say, $20k with my balloon and they are wiling to give me $21k on a trade, I would have $1k of equity towards the purchase of a new car (though probably unlikely if you're only making the normal payments). What's more likely is that if you trade at the end of your term with that balloon still owed, that will go against what the trade in value is too - negative equity, which will go against the purchase price as well.

What I'm doing is paying a little more than the minimum monthly payments, so my balloon is lower.

Again, not as financially smart as a traditional loan since you're paying more interest either way, but I don't plan on keeping the car forever and I'd like that little bit of extra money I'm saving in monthly payments to invest in something else instead.

 

I talked to my MA the other day when we were running #'s for this program the mini selet, interest rate was 5.9% for what he gave me so dont know what eveyone else is getting?

 

Your post made me go looking at PenFed - I found this disclaimer, though, in their section on what they call Payment Saver Auto Loans.

† Trucks, Vans, Crossover Vehicles, Smart cars and SUVs are not eligible as Payment Saver Loan vehicle types. This restriction includes hybrid trucks and SUVs as well.

So does that rule out the CountryMan?

 

I saw that too, but it seems to pull up okay on the payment calculator...

Guess I'll find out in the next week or so. My CM is coming soon, so I have to get the financials nailed down. I'll keep you all posted.

 

Yeah let us know what you do if you do the pymt saver loan, the m/pymt is really good but what is the catch?

 

So i was reading more info on the pymt saver loan, i guess it's another balloon pymt program like the mini select program correct me if im wrong on this.

 

Will do! The catch is, if I just make the monthly payments they request, I'll owe ~$19k at the end of my 4 year term! I'll be paying more of the minimum every month though.


That's exactly right. They work exactly the same except that PenFed's interest rate goes as low as 3.25% as opposed to the 6.9% MINI was asking!

 

The true advantage to the mni select program is that you own the car. If you are prone t do mods then you do not have to worry about removing them at the end. Also, anything you pay over your mini select payment goes to principal. This is our second mini on the select program. We ran the numbers and are paying the traditional payment amount instead of the minimum payment. On my R56, we did mini select and the payment came out to be 378 minimum for 48 months. However traditional finincing was to be 517 per month. We still paid the 517 and will pay off the car in four years effectivley not being charged interest on the 15,000 balloon. You need discipline to do this but youu we are not paying any interest on 15,000. We are doing the same for my wife's Countryman that we just ordered last Saturday.

 

6.9%, yikes, I got locked in at 4.6% through Mini, and thats with so-so credit.

 

I didn't actually do a proper credit application, but I told my MA that I have impeccable credit and I asked him what kind of rates I'd be looking at with Select. He said that their rates for the MINI Select (which are higher than traditional finance) just got raised to 6.9% and I probably won't get much better from them.

 

My MA told me 5.9% but i will bring up the 3.25% from penfed and see what thinks of that.

 

I was initially told 5.9% in January when I started looking, but I guess MINI raised the rates one point in February and I never locked it down. Oh well...he told me to go for PenFed when I showed him the rates.

 

Sounds good i have not been back yet to talk to my MA, did you find anything out more about that penfed program? when did you plan on applying for it, i wonder how long that 3.25% will last?

 

I just joined Penfed a couple days ago and as soon as I get my member info and ID number, I'm applying for the Payment Saver loan.

Will keep you posted!

I've been looking the program for a month or so now and the rate has stayed steady at 3.25%. Don't see it changing anytime soon, but who knows..

 

Cool, did it cost anything to join or is it free?

 

Active or retired members of the military, govt employees, Red Cross members, or immediate family members of veterans can join for free. Everyone else has to join either the National Military Family Association or Voices for American Troops organizations for a one time charge of $20 or $15, respectively.

Small price to pay for great rates and the money goes towards a good cause.

[More info on joining here]