BMW "Owners Choice"

[dmk08]

Anyone have any insight on 'Owners Choice'? This is something they will start offering in GA OCT. 1 as we have bad tax laws on leases like TX and IL. It seems to be a mix between a BMW Select Loan and a Lease. My CA sufgested i look into it but looking for anyone who has used it.

Cheers

[hankcah]

I'm curious as well. I do see this page http://www.laurelbmw.com/Owners-Choice but I still have a ton of questions. And not sure if it's a lease/OC question or just OC question.

Let's say a lease if $500/mo and OC is $400. After 36 month term, with same miles, how do they calculate the value of the cars? Is it simply just an easier payment through some tax contract? Compared to paying taxes twice with a lease, you just pay once with the OC?

If a car is $50k, and you make OC payments for $20k, are you still faced with financing $30k? Are residuals usually higher or lower than 30k?

[8042]

I'm on one now w my 535. Its basically a balloon loan finance program. But is similar to a lease. However, Unlike a lease, the car is titled in your name. I bought the car when living in IL and its a great way to avoid double tax situation in IL as well as the absurd Chicago lease tax. I believe the residuals are the same as a traditional lease but the interest rate is a bit higher. W owners choice there is an actual interest rate (which is negotiable) and not a money factor. Same idea--just different terminology.

You may want to check out the penfed credit union auto saver program. Don't know the details but people on this forum seem to be fans and it sounds like it works in a similar capacity to owners choice

[dmk08]

Originally Posted by 8042

I'm on one now w my 535. Its basically a balloon loan finance program. But is similar to a lease. However, Unlike a lease, the car is titled in your name. I bought the car when living in IL and its a great way to avoid double tax situation in IL as well as the absurd Chicago lease tax. I believe the residuals are the same as a traditional lease but the interest rate is a bit higher. W owners choice there is an actual interest rate (which is negotiable) and not a money factor. Same idea--just different terminology.

You may want to check out the penfed credit union auto saver program. Don't know the details but people on this forum seem to be fans and it sounds like it works in a similar capacity to owners choice

With Owners choice you have the option to return the car like a lease, correct? I think that's the biggest difference between this and 'PenFed Payment Saver' || 'BMW Select'.

Thanks for the info.

[Siciliano611]

dmk, which option are you doing with financing?

[dmk08]

Originally Posted by Siciliano611

dmk, which option are you doing with financing?

Owners choice if I have a return option like a lease. It is a first year model after all. Otherwise PenFed Payment Saver.

[8042]

Originally Posted by dmk08

With Owners choice you have the option to return the car like a lease, correct? I think that's the biggest difference between this and 'PenFed Payment Saver' || 'BMW Select'.

Thanks for the info.

Yep. You can return like a lease. Which is what I'll be doing. 535 m sport w manual trans has been awesome but time to get back to m3/4 convert

[Eric500]

Is it required to get another BMW if you turn in for owner's choice? the language is unclear to me... it says you can, but do they really mean if you want to treat it like a "lease" you must get another BMW?

[dmk08]

Originally Posted by Eric Tsang

Is it required to get another BMW if you turn in for owner's choice? the language is unclear to me... it says you can, but do they really mean if you want to treat it like a "lease" you must get another BMW?

No you can turn it in but you have to pay that same lease turn in fee.

[rkcarter12]

Here is an example of an Owners Choice deal in GA:
39 Months/10,000
MSRP $70,575
Sales Price $66,947
Tax $4,632
Cash on Delivery $2,000
Monthly (inc tax) $825

As mentioned above, Owners Choice gives you the option to turn it in at the end of the term, or refinance the baloon payment.

[dmk08]

Originally Posted by rkcarter12

Here is an example of an Owners Choice deal in GA:
39 Months/10,000
MSRP $70,575
Sales Price $66,947
Tax $4,632
Cash on Delivery $2,000
Monthly (inc tax) $825

As mentioned above, Owners Choice gives you the option to turn it in at the end of the term, or refinance the baloon payment.

Thats a nice sales price for GA and no incentives. What dealer?

[rkcarter12]

Originally Posted by dmk08

Thats a nice sales price for GA and no incentives. What dealer?

Yeah, I was very happy with the deal. I went to Global Imports and worked with David Attal.

[tareemaa]

Im doing owners choice and I live in IL. I bought my car before the tax laws changed this year but from what I calculated it was still beneficial. I want to stay with BMW because after the term is over I am going to negotiate my current car into a new one (hopefully with LCI and ZCP), if I switch over to PenFed than the car will become "mine" completely and I will lose that leverage, BMW always wants you to give your car back to them so they can certify it and make a shit load on it as well as put you in a new car. I got my payments pretty low.

[Accel Junky]

Just saw this. If you are looking at this type of loan, also take a look at the Payment Saver from Pentagon Federal (PenFed). It is the same sort of thing. Basically a balloon auto loan with lower monthly payments. Essentially you get the freedom of a lower payment but can pay more as you go when finances allow if you want to eliminate that balloon. Downside is you will pay more interest over the time period than a traditional auto loan. I've used these sort of loans many times when I was getting in and out of cars every year. The balloon never factored into it for me.

EDIT: Just saw this was mentioned above. And yes, you can't turn the car in with PenFed you would need to sell it or refi if you reach the balloon without having paid it down.

[dmk08]

Originally Posted by Accel Junky

Just saw this. If you are looking at this type of loan, also take a look at the Payment Saver from Pentagon Federal (PenFed). It is the same sort of thing. Basically a balloon auto loan with lower monthly payments. Essentially you get the freedom of a lower payment but can pay more as you go when finances allow if you want to eliminate that balloon. Downside is you will pay more interest over the time period than a traditional auto loan. I've used these sort of loans many times when I was getting in and out of cars every year. The balloon never factored into it for me.

EDIT: Just saw this was mentioned above. And yes, you can't turn the car in with PenFed you would need to sell it or refi if you reach the balloon without having paid it down.

Correct Penfed Payment Saver is like BMW Select.

Owners choice is like a lease with a turn in option. They do this in various states that require you to pay full sales tax on a lease. Pretty much they defer the rest of the tax somehow. If you want to turn the car in at the end of term you still need to pay the disposition fee.

[my5rox]

Important question on Owner's Choice versus Lease - specific to what part of the purchase is financed.

Example - $100K car purchase price, 60% Residual - ie., $60K Residual and $40K Depreciation, 36 month Term.

In a traditional lease - your financing (at the APR of the Money Factor applied) is on the $40K depreciation over 3 years.

In an OC - is your financing on the $40K or is it on the entire $100K?

In the calculation my dealer is providing, it sure feels like in the OC finances the entire purchase whereas the lease only finances the depreciation. This could negate any tax benefits of OC, given you are paying interest on a much larger amount.

Do I have this all wrong? Please help, need to buy this car today and close the deal!

[mephiska]

Originally Posted by my5rox

Important question on Owner's Choice versus Lease - specific to what part of the purchase is financed.

Example - $100K car purchase price, 60% Residual - ie., $60K Residual and $40K Depreciation, 36 month Term.

In a traditional lease - your financing (at the APR of the Money Factor applied) is on the $40K depreciation over 3 years.

In an OC - is your financing on the $40K or is it on the entire $100K?

In the calculation my dealer is providing, it sure feels like in the OC finances the entire purchase whereas the lease only finances the depreciation. This could negate any tax benefits of OC, given you are paying interest on a much larger amount.

Do I have this all wrong? Please help, need to buy this car today and close the deal!

I think since it's a financing deal that the interest rate would be applied to the entire outstanding loan amount, including the balloon payment. It's almost like an interest only loan since you're paying down less of the principal with each payment.

Remember, the turn-in at the end isn't some guaranteed price. If the valuation on the car is less than what your residual payment is, you still owe them the difference.

[boss2k]

Originally Posted by my5rox

Important question on Owner's Choice versus Lease - specific to what part of the purchase is financed.

Example - $100K car purchase price, 60% Residual - ie., $60K Residual and $40K Depreciation, 36 month Term.

In a traditional lease - your financing (at the APR of the Money Factor applied) is on the $40K depreciation over 3 years.

In an OC - is your financing on the $40K or is it on the entire $100K?

In the calculation my dealer is providing, it sure feels like in the OC finances the entire purchase whereas the lease only finances the depreciation. This could negate any tax benefits of OC, given you are paying interest on a much larger amount.

Do I have this all wrong? Please help, need to buy this car today and close the deal!

As i understand from my dealer its same as lease , you are financing the 40K and residual will be listed as ballon amount of 60K. You can either refinance the ballon amount or walk away.

[MavRick]

Originally Posted by my5rox

Important question on Owner's Choice versus Lease - specific to what part of the purchase is financed.

Example - $100K car purchase price, 60% Residual - ie., $60K Residual and $40K Depreciation, 36 month Term.

In a traditional lease - your financing (at the APR of the Money Factor applied) is on the $40K depreciation over 3 years.

In an OC - is your financing on the $40K or is it on the entire $100K?

In the calculation my dealer is providing, it sure feels like in the OC finances the entire purchase whereas the lease only finances the depreciation. This could negate any tax benefits of OC, given you are paying interest on a much larger amount.

Do I have this all wrong? Please help, need to buy this car today and close the deal!

you have it right. the 36 month note on $40K will look a helluva lot different than financing $100K for 36 months.

what you are more than likely seeing are the taxes...of which you are still only paying the 'used' amount...and them rolling ALL of the financing charges into the loan (which will be more than $5K)

go get the damn car, man!!!

[boss2k]

Originally Posted by mephiska

Remember, the turn-in at the end isn't some guaranteed price. If the valuation on the car is less than what your residual payment is, you still owe them the difference.

I don't think so. Are you sure regarding above point on OC?

[bittrl1000]

Originally Posted by mephiska

Remember, the turn-in at the end isn't some guaranteed price. If the valuation on the car is less than what your residual payment is, you still owe them the difference.

Wrong. Owners Choice provides the same "walk away" option as a lease does.

[bittrl1000]

Originally Posted by my5rox

Important question on Owner's Choice versus Lease - specific to what part of the purchase is financed.

Example - $100K car purchase price, 60% Residual - ie., $60K Residual and $40K Depreciation, 36 month Term.

In a traditional lease - your financing (at the APR of the Money Factor applied) is on the $40K depreciation over 3 years.

In an OC - is your financing on the $40K or is it on the entire $100K?

In the calculation my dealer is providing, it sure feels like in the OC finances the entire purchase whereas the lease only finances the depreciation. This could negate any tax benefits of OC, given you are paying interest on a much larger amount

Do I have this all wrong? Please help, need to buy this car today and close the deal!

Don't forget that on a lease or OC, you are not just financing the amount of depreciation over the lease term (the $40k in your example), but you are also paying interest on the residual for that same term. After all, you are borrowing that portion of the car (the $60k in your example) as well, and BMW won't let you borrow that for nothing. In other words, a lease is where you finance the depreciation, and pay an interest only loan on the residual.