PenFed Payment Saver Deal...

[hobart]

Originally Posted by E92_SID

The price I got wasent from PenFed, that was the price that my dealer offered me. I didnt even have to negotiate for it. I am sure though it probably has something to do with the fact that this is the 3rd car I have bought from them in the past couple years.

Thanks for clearing that up.
Unfortunately the dealer I bought my 3 BMW's from has quoted me MSRP. So much for customer loyalty.

[JoeFromPA]

Originally Posted by ASAP

I am going to guess that this is a terrible idea for someone that drives up to 20K miles / yr.

It's a fine idea if:

1. You plan on buying the car at balloon end or selling it and paying off the difference
2. You are doing the balloon payment route cause you want a lower monthly payment in the interim

[signes]

Originally Posted by JoeFromPA

It's a fine idea if:

1. You plan on buying the car at balloon end or selling it and paying off the difference
2. You are doing the balloon payment route cause you want a lower monthly payment in the interim

And in the process paying more interest since you are taking (much) longer to pay down the loan.

[Kief]

Originally Posted by JoeFromPA

The advantage here is there are no terms to ownership (you own the car), no acquisition fee, no lease tax (as there is in PA that is in excess of sales tax), no other lease-associated fees.

True, but other than my wife's X5d which we financed in part with a traditional loan, I have leased all my other BMWs and the lease terms are not a problem for me (i.e., I don't exceed the mileage, I'm OCD and my cars at turn in are in great shape,etc...). The added benefit to the lease is of course not worrying about diminished value in case of an accident. The acquisition fee in my case is a wash since I'm doing ED and if I finance I don't get the 2nd month waived. I'm in PA too, but the lease tax is only in the base/interest payment, not like in other states where some are taxed the entire sales price of the vehicle. The deposition fee is always waived since I'm drinking the BMW kool-aid and always end up in another one.

I'm not trying to debate a ballon payment vs. lease, and I plan to educate myself some more about this option, but I'm still not sure I see the overall benefit when comparing a balloon loan vs lease, rather than a balloon loan vs traditional loan.

[JoeFromPA]

Originally Posted by signes

And in the process paying more interest since you are taking (much) longer to pay down the loan.

Yes, but my assumption there is if you are taking a balloon loan out at a 2.24% interest rate then you have no problem extending that money out even longer.

For me, I've got no problem with it being a 20 year loan at 2.24% interest. I'm still getting a loan at 2.24% interest, which I will do all day long.

[JoeFromPA]

Originally Posted by Kief

True, but other than my wife's X5d which we financed in part with a traditional loan, I have leased all my other BMWs and the lease terms are not a problem for me (i.e., I don't exceed the mileage, I'm OCD and my cars at turn in are in great shape,etc...). The added benefit to the lease is of course not worrying about diminished value in case of an accident. The acquisition fee in my case is a wash since I'm doing ED and if I finance I don't get the 2nd month waived. I'm in PA too, but the lease tax is only in the base/interest payment, not like in other states where some are taxed the entire sales price of the vehicle. The deposition fee is always waived since I'm drinking the BMW kool-aid and always end up in another one.

I'm not trying to debate a ballon payment vs. lease, and I plan to educate myself some more about this option, but I'm still not sure I see the overall benefit when comparing a balloon loan vs lease, rather than a balloon loan vs traditional loan.

Yes but look at what you just said. A lease works for you because you meet ALL of those criteria: OCD, ED, managed mileage. Great. For those who don't, a lease becomes a less attractive option.

Also, regarding tax. Remember that you are in essence taking a huge tax hit in PA since you go get another BMW. You are paying 9% lease tax on the depreciation + interest (where else do you enjoy paying extra tax on interest payments)) then you are in essence trading the car in. If you had purchased the car, at that time you would deduct the TOTAL trade-in value of the vehicle from the tax you pay on the next car. But with a lease, no such benefit is garnered.

Again, I'm not trying to debate the benefits of leasing vs. balloon payment-style loan. Both have their pros and cons. A lessee needs to meet a very particular profile to avoid paying more than what a balloon-er would pay, but in exchange they also get convenience.

[michaelw9]

I'm also looking into using the PenFed saver loan. I have my application from them "conditionally approved", but I think they still want a VIN that I don't have.
Something to note is last year on Memorial Day they lowered their interest rates a bit. Hopefully they do the same this upcoming weekend, and can lock it in or have it disbursed immediately.

[Vectors2final]

I was waiting for this.


I was actually thinking about doing this. I've got a large amount to put down, plus there is something in the works that will allow me to pay the balloon with ease should I decide.

Which is really what makes me so interested. My price through military sales should be somewhat lower, plus with my money down should yield me a lower monthly than that, which is fine by me. I also thought that I could reduce the balloon by adding to the payment should I choose.

I'm feeling the lower monthly cost, even if it requires that I put some extra money up front.


Edit: I'll be paying taxes separate front financing.

[bdoooh]

How did you come up with that $750/mo payment? I am using online balloon payment calculators with a lesser amount build and am coming up with more a month.

[Kief]

Originally Posted by JoeFromPA

Yes but look at what you just said. A lease works for you because you meet ALL of those criteria: OCD, ED, managed mileage. Great. For those who don't, a lease becomes a less attractive option.

Also, regarding tax. Remember that you are in essence taking a huge tax hit in PA since you go get another BMW. You are paying 9% lease tax on the depreciation + interest (where else do you enjoy paying extra tax on interest payments)) then you are in essence trading the car in. If you had purchased the car, at that time you would deduct the TOTAL trade-in value of the vehicle from the tax you pay on the next car. But with a lease, no such benefit is garnered.

Again, I'm not trying to debate the benefits of leasing vs. balloon payment-style loan. Both have their pros and cons. A lessee needs to meet a very particular profile to avoid paying more than what a balloon-er would pay, but in exchange they also get convenience.

Joe,
You bring up a great point reminding me about PA's tax advantage when trading in a car. Also, I thought more about it, and the wash between the lease acquisition fee and the 2nd month waived for an ED lease isn't really accurate, since when you finance the 1st month payment isn't typically due until 45-days after signing the paperwork.

Again, the only negative or potential pitfall I see between PenFed's balloon loan vs a BMWFS lease is the worry of being upside down on the final balloon payment. Unlike the lease, where I can walk away, there is no guarantee that the M will be worth the approximate balloon payment--especially since I would not be making a down payment. Believe me, I'm not trying to find equity in the balloon loan, I just would like to know I can get the payoff of the loan if I were to trade it in at month 30 for example.

What I really need to compare is a 36 month PenFed's balloon loan vs BMWFS 36 month lease. So far from what I have read here, is that PenFed's program is actually better. But I'm skeptical b/c why would leasing be pushed so often instead of reading more about the positives of a balloon program. Again, I'm comparing a balloon to a lease. I have no intention of keeping the car longer than 36months.

[emranc]

Originally Posted by hobart

Thanks for clearing that up.
Unfortunately the dealer I bought my 3 BMW's from has quoted me MSRP. So much for customer loyalty.

Try 6 in 6 years, and at least 10 more for friends/family.... still paying MSRP, guess it depends on demographics as well as supply/demand, why would they discount if they can sell the same for higher (another dozen people just waiting to get an allocation). There are at least 2 dealers in a 50 mile radius who are asking $10K over.

[F82_SID]

Originally Posted by bdoooh

How did you come up with that $750/mo payment? I am using online balloon payment calculators with a lesser amount build and am coming up with more a month.

What rate, residual, and term are you using? This is 775.70 is the actual payment amount that is on my paperwork; not just a quote.

[Drizz]

Originally Posted by emranc

Try 6 in 6 years, and at least 10 more for friends/family.... still paying MSRP, guess it depends on demographics as well as supply/demand, why would they discount if they can sell the same for higher (another dozen people just waiting to get an allocation). There are at least 2 dealers in a 50 mile radius who are asking $10K over.

Same here...must be a Cali thing. I have also done 6 cars in 6 years, and I even bought an X5 on the same day I ordered the M3...MSRP it was. They did give me a substantial discount on the X5, well below what I've seen anyone else on these forums get, so I suppose I could consider that a discount toward my M.

[Drizz]

Originally Posted by bdoooh

How did you come up with that $750/mo payment? I am using online balloon payment calculators with a lesser amount build and am coming up with more a month.

I also couldn't come up with that low of a number on their online calculator. Also, I would assume I would have to factor in tax on top of the sale price, right? For instance, with your $72K MSRP shouldn't you add sales tax on top of that as if you were purchasing the car via a traditional loan? That would add another $5-6K to the loan value.

[Crispykickz]

Thanks for posting about this financing option. I had no idea PenFed offered it.
When the time comes, whether the car is an M235, 435, or M3 (haven't decided yet)
This option may fit my scenario.

Unfortunately, I live in the awesome state of VA.
Therefore I get to:
Pay sales tax on the full price of the car (It is at 4% though)
Pay yearly property tax on the vehicle (something like 4.53%. Of which, 4.53% on the first 20k of assessed value is covered 70% by the county...at least I can deduct that when i do my taxes)
Do NOT get a sales tax credit when trading the vehicle in for another car.

With these reasons above, and the fact that I am a fairly high mileage driver (Just hit 156k on my in July - 9 year old car)
Leasing may just not really be an option for me as there is no reduced sales tax for leasing, and I still have to pay property taxes on something I don't official own.

Therefore, if I look to get a vehicle it may make more sense to buy the car and just finance it and use it for 4 to 5 years. Knowing that there is another option than just a traditional car loan gives me something to think about/evaluate.

Now if someone could hook me up with an ED Invoice M3 Deal that would be awesome.

And yes, this is my first post here...long time lurker, but decided to start getting in the conversation.

[CJF]

does BMW still require you to finance through BMWFS if doing ED? If I recall, this was true in recent history?

[Kief]

Originally Posted by CJF

does BMW still require you to finance through BMWFS if doing ED? If I recall, this was true in recent history?

AFAIK, that was never the case. Problem is, some lenders shy away from financing ED.

[AndyzDad]

Oops

[W Cole]

Originally Posted by Kief

Joe,
You bring up a great point reminding me about PA's tax advantage when trading in a car. Also, I thought more about it, and the wash between the lease acquisition fee and the 2nd month waived for an ED lease isn't really accurate, since when you finance the 1st month payment isn't typically due until 45-days after signing the paperwork.

Again, the only negative or potential pitfall I see between PenFed's balloon loan vs a BMWFS lease is the worry of being upside down on the final balloon payment. Unlike the lease, where I can walk away, there is no guarantee that the M will be worth the approximate balloon payment--especially since I would not be making a down payment. Believe me, I'm not trying to find equity in the balloon loan, I just would like to know I can get the payoff of the loan if I were to trade it in at month 30 for example.

What I really need to compare is a 36 month PenFed's balloon loan vs BMWFS 36 month lease. So far from what I have read here, is that PenFed's program is actually better. But I'm skeptical b/c why would leasing be pushed so often instead of reading more about the positives of a balloon program. Again, I'm comparing a balloon to a lease. I have no intention of keeping the car longer than 36months.

The bolded statement is incorrect. Even if the first payment isnt due for 45 days or 1000 days you are still paying interest during this time period. You could always lease or get a loan through BMWFS (do they offer any ED interest free periods?) and then refi into the Penfed loan once you get the car stateside.

I agree comparing a lease through BMW FS to Penfed's payment saver plan has one fundamental flaw. Penfed's residual value is not guaranteed so you are on the hook for the residual risk which is not the case with a true lease (although you can always purchase the car and sell on the market to capture any benefit if BMW understated the residual value).

Taking the residual value risk out of the equation which is diffcult to quantify. The only two factors are your cost of money - interest rate on the Penfed loan vs. BMWFS money factor and tax consequences (your states particular tax laws and your particular tax situation - will you write off the lease payments, depreciate the car if you purchase, etc.)

[Vectors2final]

Originally Posted by Vectors2final

IIRC, you have 90 days to finalize. After that, you must reapply.

I asked this question in another thread... I'm all kinds of derp.



Anyone on this now that the cars have hit the streets? Results? Post your deal.

[adc]

Originally Posted by Crispykickz

Now if someone could hook me up with an ED Invoice M3 Deal that would be awesome. .

I've done 4 ED's with this guy, best deals around each time. PM me, and I'll give you my number so we can talk, and I can put you in touch with him.

I'm doing another ED next summer, can't wait. Best motoring experience of my life (times 4 ).

[trucheli]

I have done 7 EDs in a row and doing my 8th on December picking up an M4. All of them have been financed with PenFed. Recently I looked into the saver plan but came to the conclusion that the conventional loan for 72 months worked better. In my case I change my vehicles every year, I have around $30,000 in equity which was built in the past 7 years. Even at 2.56% APR I consider that free money. I don't like the fact that PenFed is determining the residual value on the car at the end of 5 years plus the interest rate is higher that the conventional.
If ain't broken don't fix it!