THE LARGEST BMW 2-SERIES FORUM ON THE PLANET
2Addicts
2Addicts
BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read
2Addicts | BMW 2-Series forum BMW 2 Series (F22) Forum 2 Series Pricing, Ordering, European Delivery How much money down?

Post Reply
 
Thread Tools Search this Thread
      12-16-2013, 10:57 PM   #1
Greenkirby21
Vrooom :)
Greenkirby21's Avatar
United_States
313
Rep
2,602
Posts

Drives: C7 Stringray
Join Date: Jun 2010
Location: Dream Land

iTrader: (1)

How much money down?

Please excuse me as this is my first car I am financing by myself!

ALSO ITS REALLY HARD SINCE BMW HASN"T ANNOUNCED PRICES OF THE LSD *HINT HINT*

Anyways, let's assume I spec out my car to be around $47,000.

I know I have to do some math, but are the benefits and disadvantages of putting down 5k, 10k, or even 15k?

I know the more you put down, the lower your monthly payments are. But is there a reason why I don't want to put down so much money (i.e if the car loses value quickly?)

My bank is giving me 1.9% for up to 6 years (I want to do 4), and BMW, assuming their current rates, is 2.99% with 500 loyalty discount and 1,000 college education discount.

Thanks!
__________________
2014 C7 Corvette Stringray - Laguna Blue - NPP Exhaust - Competition Seats
Appreciate 0
      12-17-2013, 01:00 AM   #2
ibimmer954
Major
136
Rep
1,422
Posts

Drives: '23 i4 M50, '15 M3, '18 911
Join Date: Jul 2007
Location: San Diego, California, USA

iTrader: (0)

Garage List
For me, it's generally about cash flow since savings is a different "pool" of money than monthly expenses. But 1.9% sounds pretty cheap to me. So I don't see a reason not to finance over 4 years for an amount that meets your monthly budget. The more you finance, the more the payment goes up. But it's also the more you have to mod the car upfront. The LSD would cost at least $3K installed if not more is my guess. Given your listed mods on the 128i, I'd count on at least $5K for mods if you want the LSD.
Appreciate 0
      12-17-2013, 08:47 AM   #3
Lucky13
Lucky13
United_States
211
Rep
1,762
Posts

Drives: 2014 M235 manual, 2020 X3 30X
Join Date: Mar 2007
Location: Columbia, S.C.

iTrader: (0)

The general rule would be if you can invest it and make more money put very little down. With interest rates this low (1.99-2.99%) I would put little down because you are not really paying much interest you are paying mostly principal. If rates were like they used to be you would get killed with interest so you would finance as little as possible and put more down.
__________________
1995 325i, 1996 328ci, 1997 528i, 1997 Z3 2.8, 2000 528i, 2001 X5 3.0, 2001 330i Convertible, 2002 M3 Convertible, 2003 M3 Coupe, 2004 M3 Coupe, 2004 Z4 3.0, 2004 X3 3.0, 2007 X3 3.0, 2007 335i Convertible, 2013 X1 28 sdrive, 2014 M235 manual, 2020 X3 30i Xdrive
Appreciate 0
      12-17-2013, 01:30 PM   #4
puma1552
Banned
23
Rep
380
Posts

Drives: '14 Mustang GT Premium
Join Date: Jul 2013
Location: Twin Cities

iTrader: (0)

While the above may be true, in this economy it might be tough to generate a return over a short period of time that exceeds the cost of borrowing; I'd probably just put as much down as you can (note, the worse a car's value, the MORE you want to put down to minimize being upside down). It's generally not good practice to put a tiny amount down since you will be upside down on the car for a long time, but then again being upside down on a car isn't the end of the world when you know you have access to cash that could put you right-side-up anytime you want if you needed to. Being $5k+ upside down on a car with nothing in savings and job loss is a different story.

I would put as much down as you are comfortable with, e.g. not your entire savings. Another thing you could do is finance on a longer term to get a lower payment and pay extra on the loan to pay it off early, that way you won't get nailed with the interest of the long-term loan but will have the flexibility of a lower payment in case you have a tight month or you lose your job or what have you.
Appreciate 0
      12-17-2013, 04:31 PM   #5
Lucky13
Lucky13
United_States
211
Rep
1,762
Posts

Drives: 2014 M235 manual, 2020 X3 30X
Join Date: Mar 2007
Location: Columbia, S.C.

iTrader: (0)

The stock market was only up 27% this year I guess I should have stuck in a pillow instead.
__________________
1995 325i, 1996 328ci, 1997 528i, 1997 Z3 2.8, 2000 528i, 2001 X5 3.0, 2001 330i Convertible, 2002 M3 Convertible, 2003 M3 Coupe, 2004 M3 Coupe, 2004 Z4 3.0, 2004 X3 3.0, 2007 X3 3.0, 2007 335i Convertible, 2013 X1 28 sdrive, 2014 M235 manual, 2020 X3 30i Xdrive
Appreciate 0
      12-17-2013, 05:48 PM   #6
puma1552
Banned
23
Rep
380
Posts

Drives: '14 Mustang GT Premium
Join Date: Jul 2013
Location: Twin Cities

iTrader: (0)

Quote:
Originally Posted by Lucky13 View Post
The stock market was only up 27% this year I guess I should have stuck in a pillow instead.
No need for the sarcasm, and no guarantee on that return; don't act like 27% returns are the norm. Do what you want.
Appreciate 0
      12-17-2013, 08:31 PM   #7
Sy546
Captain
44
Rep
699
Posts

Drives: E36 M3, E46 M3, E92 M3
Join Date: Aug 2010
Location: Long Island

iTrader: (0)

Quote:
Originally Posted by Lucky13 View Post
The stock market was only up 27% this year I guess I should have stuck in a pillow instead.
even tho thats the norm, i agree. I invest conservatively and it still VERY easy to beat a 2% interest rate. Anyways, very little down. It makes no difference except better cash flow if you put $0 down. I have financed everything with $0 down.
Appreciate 0
      12-19-2013, 07:58 PM   #8
Powaup
Brigadier General
Powaup's Avatar
United_States
1252
Rep
3,688
Posts

Drives: 2021 Supra 3.0 (Past: 2015 M23
Join Date: Aug 2012
Location: San Francisco, CA

iTrader: (0)

Garage List
2015 BMW M4  [10.00]
BMW college grad will give you 1.9% APR through 5 years at the most. I recommend putting down as much as possible unless you're good at investing
__________________
Check out my YouTube Channel Powaup
Instagram: @ Powaup
Appreciate 0
      12-19-2013, 09:46 PM   #9
Lucky13
Lucky13
United_States
211
Rep
1,762
Posts

Drives: 2014 M235 manual, 2020 X3 30X
Join Date: Mar 2007
Location: Columbia, S.C.

iTrader: (0)

Quote:
Originally Posted by Powaup View Post
BMW college grad will give you 1.9% APR through 5 years at the most. I recommend putting down as much as possible unless you're good at investing
Just a simple question and I'm not being a smart ass. If interest rates are the lowest level in over 30 years and an only go up in the future why would you put as much down as possible. Every 401k and every financial advisors I've ever spoken to recommends at least 60% stocks/40% bonds or higher in stocks if your young so why use up your cash and cash flow when money is almost free? I'm about as conservative as they come and yes I have money in CD's at 1% but if you don't invest in stocks you will never keep up or surpass inflation. I'm retired and really don't understand the logic to using up your cash especially if interest rates will certainly rise sharply in the next 2-3 years. Cash is King. I have paid cash for cars in the past before but not when someone is willing to finance a car for you at 2%. Guess you didn't live through Jimmy Carter and 18% interest rates but I did.
__________________
1995 325i, 1996 328ci, 1997 528i, 1997 Z3 2.8, 2000 528i, 2001 X5 3.0, 2001 330i Convertible, 2002 M3 Convertible, 2003 M3 Coupe, 2004 M3 Coupe, 2004 Z4 3.0, 2004 X3 3.0, 2007 X3 3.0, 2007 335i Convertible, 2013 X1 28 sdrive, 2014 M235 manual, 2020 X3 30i Xdrive
Appreciate 0
      12-19-2013, 10:53 PM   #10
ska///235i
***** noob
ska///235i's Avatar
United_States
1355
Rep
10,479
Posts

Drives: 325xi>M235i>428GCx Mspor
Join Date: Sep 2005
Location: Boston

iTrader: (34)

Garage List
2006 325xi  [0.00]
im not a financial adviser but on $40k in 3-5 years is not going to make you a killing. You need to pay fees and taxes. We're not buying millions dollar homes here, its just a $40k car. that money aint going no where. Put as much down as you can afford and have a easy monthly payment,when you payoff the car....then invest
__________________
2006 325xi (Sold)
2014 M235I (Current)
2015 428xi Gran Coupe (STB)
Appreciate 0
      12-20-2013, 11:33 AM   #11
Lucky13
Lucky13
United_States
211
Rep
1,762
Posts

Drives: 2014 M235 manual, 2020 X3 30X
Join Date: Mar 2007
Location: Columbia, S.C.

iTrader: (0)

The money should go into your company 401K if its not maxed out, that's the best investment anyone can make because its tax free. Yes $40K is a lot of money based on all the comments about trying to get the lowest price, the lowest interest etc.
You pay taxes whether you finance or pay cash, you pay property tax whether you finance or pay cash, the only additional fee is the interest which historically is at an all time low.
__________________
1995 325i, 1996 328ci, 1997 528i, 1997 Z3 2.8, 2000 528i, 2001 X5 3.0, 2001 330i Convertible, 2002 M3 Convertible, 2003 M3 Coupe, 2004 M3 Coupe, 2004 Z4 3.0, 2004 X3 3.0, 2007 X3 3.0, 2007 335i Convertible, 2013 X1 28 sdrive, 2014 M235 manual, 2020 X3 30i Xdrive
Appreciate 0
      12-20-2013, 12:24 PM   #12
ska///235i
***** noob
ska///235i's Avatar
United_States
1355
Rep
10,479
Posts

Drives: 325xi>M235i>428GCx Mspor
Join Date: Sep 2005
Location: Boston

iTrader: (34)

Garage List
2006 325xi  [0.00]
Its not tax free when you start to pull the money out when u retire

Everyone should already be taking advantage of company match, thats the real benefit of a 401k...and it is pre-tax (not tax free). Now if you want to put the $40k in to that, you're deducting more from your pay. 401k investment is not garantee. Look what happen during the early years of 2000

Pay off the car first before u do any investment with your REAL savings. This is the problem in this country. We're all in dept with auto loans and mortgages. We use all of what we saved..either thru spending or investing...if the market takes another dive, we're fuked

Anything can happen...we cant predict. We have historic low on rates, nothing is made in the old USA anymore, we have a black president, this internet thing called Facebook is worth billions, food needs to be organic (wtf?), the list goes on
__________________
2006 325xi (Sold)
2014 M235I (Current)
2015 428xi Gran Coupe (STB)
Appreciate 0
      12-20-2013, 01:48 PM   #13
puma1552
Banned
23
Rep
380
Posts

Drives: '14 Mustang GT Premium
Join Date: Jul 2013
Location: Twin Cities

iTrader: (0)

Quote:
Originally Posted by Lucky13 View Post
The money should go into your company 401K if its not maxed out, that's the best investment anyone can make because its tax free.
No 401k is tax free. Traditional 401ks require you to pay taxes on the earnings (ouch) while the contributions to the new Roth 401ks are made with post-tax dollars, and thus, the compound interest/earnings are withdrawn tax free (much better than a traditional 401k).

Really you should match your company dollar for dollar (or go 6% if it takes that to get them to do 4.5% which alot of places do), throw everything above that into a Roth IRA til you hit the max, then anything left over should come back and go into the 401k above the company match.

Really, nobody should be buying a new BMW without meeting the company match on the 401k and maxing out the Roth IRA IMO. Problem is, and I say this as a young 29 year old, too many people in this country are clueless on 401ks and Roth IRAs, and stretch themselves thin to make lease payments on cars they can't afford, but that's another can of worms. IMO most people will be better off not being upside down on the vehicle and putting a decent chunk down rather than borrowing to the hilt. But like I said before, I wouldn't spend my whole savings on the downpayment either, that should come above and beyond an 8-12 month emergency savings fund.
Appreciate 0
      12-22-2013, 01:34 PM   #14
Sy546
Captain
44
Rep
699
Posts

Drives: E36 M3, E46 M3, E92 M3
Join Date: Aug 2010
Location: Long Island

iTrader: (0)

Quote:
Originally Posted by ska325xi View Post
im not a financial adviser but on $40k in 3-5 years is not going to make you a killing. You need to pay fees and taxes. We're not buying millions dollar homes here, its just a $40k car. that money aint going no where. Put as much down as you can afford and have a easy monthly payment,when you payoff the car....then invest

The Goal is to have a monthly payment you can afford without putting almost anything down. People look too much at the monthly payment and not the total cost.

& $50k over 5 years can be a substantial amount.

$50k invest @ 5% is $63k in 5 years. @ 10% after 5 years its $80k.
The cost of borrowing 50k @ 2% is only $5,200.

And this is if we're talking traditional investments. Im not heavily into stocks/bonds/etc. Majority of my investments are in small businesses, real estate; etc. All paying way better than the finance sector. But they require more work.
Appreciate 0
      12-22-2013, 01:44 PM   #15
Lucky13
Lucky13
United_States
211
Rep
1,762
Posts

Drives: 2014 M235 manual, 2020 X3 30X
Join Date: Mar 2007
Location: Columbia, S.C.

iTrader: (0)

Quote:
Originally Posted by S.hasan546 View Post
The Goal is to have a monthly payment you can afford without putting almost anything down. People look too much at the monthly payment and not the total cost.

& $50k over 5 years can be a substantial amount.

$50k invest @ 5% is $63k in 5 years. @ 10% after 5 years its $80k.
The cost of borrowing 50k @ 2% is only $5,200.

And this is if we're talking traditional investments. Im not heavily into stocks/bonds/etc. Majority of my investments are in small businesses, real estate; etc. All paying way better than the finance sector. But they require more work.
Thank you for a reasonable answer. Yes 401K is tax free until you take it out so you are compounding money that initially would have gone up front in taxes and when you are retired chances are you will be in a much lower tax bracket.
__________________
1995 325i, 1996 328ci, 1997 528i, 1997 Z3 2.8, 2000 528i, 2001 X5 3.0, 2001 330i Convertible, 2002 M3 Convertible, 2003 M3 Coupe, 2004 M3 Coupe, 2004 Z4 3.0, 2004 X3 3.0, 2007 X3 3.0, 2007 335i Convertible, 2013 X1 28 sdrive, 2014 M235 manual, 2020 X3 30i Xdrive
Appreciate 0
      12-22-2013, 02:06 PM   #16
Sy546
Captain
44
Rep
699
Posts

Drives: E36 M3, E46 M3, E92 M3
Join Date: Aug 2010
Location: Long Island

iTrader: (0)

Quote:
Originally Posted by Lucky13 View Post
Thank you for a reasonable answer. Yes 401K is tax free until you take it out so you are compounding money that initially would have gone up front in taxes and when you are retired chances are you will be in a much lower tax bracket.
exactly. Your money grows pre-tax, & you will be in a lower tax bracket when you retire.
Appreciate 0
      12-22-2013, 08:32 PM   #17
ska///235i
***** noob
ska///235i's Avatar
United_States
1355
Rep
10,479
Posts

Drives: 325xi>M235i>428GCx Mspor
Join Date: Sep 2005
Location: Boston

iTrader: (34)

Garage List
2006 325xi  [0.00]
Well if you can afford a $1000 monthly payment on the $50k car loan (not including insurance, gas money, maintenance cost and all your other expenses)....go ahead and invest that money lol

Everyone can do the math....rate @ 2%, 5%+ on investment = 3%+

It all looks good on paper
__________________
2006 325xi (Sold)
2014 M235I (Current)
2015 428xi Gran Coupe (STB)
Appreciate 0
      01-19-2014, 07:45 PM   #18
Cosa Nostra
Banned
32
Rep
267
Posts

Drives: 335i coupe
Join Date: Dec 2009
Location: Sicily

iTrader: (0)

I'm by no means a financial guru, but here are my thoughts, having leased my two previous BMWs. Leasing is a bit more expensive than out-right purchase, but there are a few advantages too. If the car is in an accident then you simply return it to BMW at the end of the lease (as it is pretty hard to sell a car that's been in an accident at a premium above the buyout price), whereas you'll take the hit if you own a car with an accident and try to sell or trade it in. If you take really good care of the car (like I do) then you have the golden opportunity to sell it at a premium (well above the buy-out price) provided you clear it with BMW and pay likely a $500 admin fee to the dealer. Now to the specifics of your question. I recommend being consistent when you lease a car so that you always have a baseline of comparison when you go to lease the next time. Generally, 4 year leases are the cheapest way to go vs. 3 years. I prefer to negotiate a lease with 0-down (except for the freight and PDI which I pay upfront). You are borrowing money to finance the car, so why put down any more than you have to, so you can invest this money. Don't be fooled by Dealers that try to increase your down-payment to somehow magically reduce the cost of the car. All you need worry about is the discount to be applied to the lease cost, because you have no control over the list price of the car, the residual value or the interest/APR rate. For me the break-point of a reasonable deal is 0-down (except for freight and PDI) and a monthly taxes-in cost of $700 Canadian. Then all you need to do is negotiate a discount on the car that achieves this monthly rate. My attitude is that an average car costs $500/m to lease, so I can justify a loaded BMW (335i/M235i/etc.) for $700/m. Anything above this, and you're either buying to much car (e.g., M cars are overpriced) or getting a bad deal from the dealer. Hope this helps.
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 08:31 AM.




2addicts
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST