[QuietQuirk]

Hi,

Long time lurker of the forum and just signed up not too long ago. I'm looking for advice on how to handle my current BMW situation. Right now I have a CPO 08 e93 335i. Bought the car two years ago. It runs fine and has been a joy to drive.

The problem is I messed up on the financing of the car. I did a 5 year loan with no money down. The payments as you can imagine are quite high. I have been able to make these payments but it is really starting to grate my nerves knowing that I will be stuck with this loan for 3 more years at which point my car will be 8 years old. Right now I have about 4k in negative equity in the car. Like I mentioned earlier I realized I messed up . However I am trying to now figure out what I can do to get myself out of this jam? Should I just save up that 4k or so and make on lump payment so that I am not upside down? If I were to get a new car how should I go about that given this situation?

If I had to do it all over again i would definitely wait until I had a decent down payment, but I got caught up in the beauty of the car and always wanted a bmw heh.

Thanks for any advice

[napeHbNYC]

You can either take the dive and sell it adding the negative balance out of pocket or refinance it. 4k is not that many payments to catch up, you can wait till you do and sell it to get out even. Hopefully some of this helps.

[ericgl]

Personally I would pay whatever I could additional each month. That way you cut your finance costs. $200 additional per month would get you right in less than 2 years.

[smallseafishie]

I'm not sure I quite follow the reasoning to catch up in negative equity.

If you want to throw money into it, then you'll cut down on your loan length. The more you pay as you go, the lower your total interest paid will be hence saving money for you in the long run. If you're taking the loan in that approach, then pay as much towards the loan monthly as you can to minimize total interest paid. It's not a function of negative equity though...

You signed up for 5yrs and if you've been making the minimum payments, then that's what you should've expected.

[ThEnder]

What's your interest rate? If low enough, it makes more sense to carry the loan for its duration than to pay off early. I don't know what the obsession on this board with paying off cars early is; unless your cost to borrow is higher than your rate of return you are better off making payments and keeping your money invested.

If you are seriously concerned about being underwater on the car then save the difference and keep it locked up. Then when it comes time to sell, get as much on sale as you can and dig into your saved difference if you are not able to sell for the value of the loan.

[e90inAZ]

I'm no expert, but here is my $.02

Depending on what your interest rate is, I would probably continue to pay the minimum payment and save up the negative equity in your checking/savings account. The car will continue to depreciate and you will be "out" of that extra money if you were to pay on the loan.

Save up ~ $4k and if there is another car you want, try to find one with a rebate (new) or if you prefer used, negotiate the best possible trade-in value along with best purchase price of new car and hope you don't need all of the $4k to pay off the car. This way you can attempt to leverage your negative equity on the dealer as opposed to yourself.

[Tom K.]

What is the car loan interest rate?
What is the interest rate you are paying on other debt such as credit cards, etc.?

If the other car loan rate is lower, pay off the other debt first. Otherwise, the other posters' suggestions make good sense, so add as much as you can to each monthly payment to shorten the loan and reduce your total interest expense.

And don't even think about a new car and a new loan until you pay off your E93 and actually have some equity in it - no matter how long it takes.

Tom

[jwzimm]

The first question you need to answer is "What do you want to do with the car?" If you are happy with the car and want to keep it through the end of your loan then stop worrying about being upside down in the equity. If you are so inclined to reduce you total finance charges go ahead and make extra principal payments each month.

Now if you want to get out of the car and into something else then you need to address the negative equity. As has been suggested, you can roll that into the new note on the new car but that is rather foolish. You are just compounding the problem. If this is the case you should try and save up the $4k and dump it into the loan before you go and try to trade the car in.

The other thing to think about is what is the interest rate you are paying on the note. If it is high (>4-5%) you should try and make those extra principal payments as you are paying a lot in interest.

[QuietQuirk]

Thanks for the responses. My loan rate is 2.9

I think my problem is the amount that I'm paying for a 08 is eating me inside. If I had the note I did now for a 2012 for example I think I'd feel a little better. I was worrying about the negative equity in case I traded this in for something newer.

[AndyR83]

Usually, people only begin to think about these things when they want to trade in their car and realize how deep underwater they are. If that is the case, the only thing that will really "fix" the situation is a bigger down payment on whatever you trade it in for, so that you not only pay off this gap between your car's value and its worth but also put a significant down payment on the new car. The alternative is to keep the car and pay it all the way off before trading it in.

It is EXTREMELY easy to set yourself up with one bad situation after another spanning many years of your life if you trade in negative equity cars several times in a row (i.e. every few years.) Eventually, you end up with loans that are way more than the value of the car, and you can never get out of the red unless you are willing to keep one until it's fully paid (no matter how long that takes.)

Take it from someone who's been there. I bought a car with little money down at age 18 and traded in (also with little money down) every year to year and a half for quite a long time. It's one of the worst things I ever did financially!

[Fillyo75]

If you are keeping the car, just continue to make your payments. I doubt your interest rate is that high since you can afford a BMW, you probably have decent credit. Sooner or later, you will catch up on equity, just enjoy the car. If you are looking to get out, your negative equity is a big problem. No money down + 5 years almost assures you are 3 years before you are break even on equity. I financed $30k at 2.6%, $525 a month, I likely have negative equity right now, but I'm not sweating it.

[fazman]

Hi OP,

You know that they will be having some amazing CPO deals on the 2010 335's in Oct/Nov, why don't you trade in your '08 for a newer CPO with more time on the warranty? You can probably get in on the 0.9% or 0% financing deals again for CPO's. But this time all you need to do is take out a loan for the longest period BUT for the smallest interest rate.

Meaning if you have to choose between:
* 4 to 5 years at 0.9%
* 1 to 3 years at 0%

--- Then choose the full 3 years but at 0% over the 5 years at 0.9%, this time also try to make weekly payments or bi-weekly payments on your own (even tho they only require you to pay monthly). It's a trick so you can pay less in interest It's also a good idea to pay more than the minimum every month, pretty much every spare penny you have you should be using to pound away on this car note so you are at zero as fast as can be. Once you are off the car note hook... you will be free to pay off other debts and eventually live a debt free life.

*** On final tip about the BMW NA Financing, if you are able to pay off the car note early so you only owe like something trivial like <$100, you should try to keep that balance on the books with them until like 1 or 2 months before the full loan term is up, reason being is that it looks great on your credit report that you are always paying on time (since you are pretty much ahead on payments anyways and no minimum will be due until the very last payment month).

[Titanium3er]

Originally Posted by Tom K.

What is the car loan interest rate?
What is the interest rate you are paying on other debt such as credit cards, etc.?

If the other car loan rate is lower, pay off the other debt first. Otherwise, the other posters' suggestions make good sense, so add as much as you can to each monthly payment to shorten the loan and reduce your total interest expense.

And don't even think about a new car and a new loan until you pay off your E93 and actually have some equity in it - no matter how long it takes.

Tom

+1

I'll just add a few things.

At this point the situation is what it is. In almost all cases it makes the most financial sense to keep the car you currently have.

Depending on what your interest rate is you may be able to refinance the loan. There is a company I recently used to purchase my wife's car called Lightstream. I got a 2.19% rate for 48 months. There are others out there with competitive rates as well. If your interest rate is higher than say 3% you may be able to cut interest off of each minimum payment and/or reduce your loan term by a few months.

Other than that, it's a matter prioritizing your debt by the amount it costs you. Chalk it up to experience and once the car is paid off make sure you don't get in over your head in the future.

Edit: i didn't see your comment on interest rate.

[Titanium3er]

Originally Posted by QuietQuirk

Thanks for the responses. My loan rate is 2.9

I think my problem is the amount that I'm paying for a 08 is eating me inside. If I had the note I did now for a 2012 for example I think I'd feel a little better. I was worrying about the negative equity in case I traded this in for something newer.

...but if that were the case you'd be paying about twice as much per month. If that wouldn't bother you it's time for a trade-in.

[Chriztofor]

Originally Posted by QuietQuirk

Hi,

Long time lurker of the forum and just signed up not too long ago. I'm looking for advice on how to handle my current BMW situation. Right now I have a CPO 08 e93 335i. Bought the car two years ago. It runs fine and has been a joy to drive.

The problem is I messed up on the financing of the car. I did a 5 year loan with no money down. The payments as you can imagine are quite high. I have been able to make these payments but it is really starting to grate my nerves knowing that I will be stuck with this loan for 3 more years at which point my car will be 8 years old. Right now I have about 4k in negative equity in the car. Like I mentioned earlier I realized I messed up . However I am trying to now figure out what I can do to get myself out of this jam? Should I just save up that 4k or so and make on lump payment so that I am not upside down? If I were to get a new car how should I go about that given this situation?

If I had to do it all over again i would definitely wait until I had a decent down payment, but I got caught up in the beauty of the car and always wanted a bmw heh.

Thanks for any advice

Originally Posted by QuietQuirk

Thanks for the responses. My loan rate is 2.9

I think my problem is the amount that I'm paying for a 08 is eating me inside. If I had the note I did now for a 2012 for example I think I'd feel a little better. I was worrying about the negative equity in case I traded this in for something newer.

I don't understand. Your interest rate is only 2.9%. Are you saying that you paid too much for the car and you rather spend more money on a 2012? How much is your car worth today? Are you planning on selling it? How much can you get a 2012 335 for? Generally, the longer you hold onto it the better you are. Getting rid of a car that is a joy to ride with no problems because you are paying 2.9 in interest seems silly.

Edit: I get the feeling that this is not a financing issue, but a regret issue (you paid too much for your car).

[QuietQuirk]

Originally Posted by Chriztofor

I don't understand. Your interest rate is only 2.9%. Are you saying that you paid too much for the car and you rather spend more money on a 2012? How much is your car worth today? Are you planning on selling it? How much can you get a 2012 335 for? Generally, the longer you hold onto it the better you are. Getting rid of a car that is a joy to ride with no problems because you are paying 2.9 in interest seems silly.

Edit: I get the feeling that this is not a financing issue, but a regret issue (you paid too much for your car).

Yeah this is what I was trying to get at and what I mentioned. I feel and know I'm paying way too much for this 08. So I was thinking of how I could get out of it and into something newer, but wasn't sure with the negative equity how to go about it. Or if i should just ride it out on this current loan.

[i dunno]

Originally Posted by QuietQuirk

Thanks for the responses. My loan rate is 2.9

I think my problem is the amount that I'm paying for a 08 is eating me inside. If I had the note I did now for a 2012 for example I think I'd feel a little better. I was worrying about the negative equity in case I traded this in for something newer.

if it makes you feel better, there's not that much of a difference between an 08 and 12 335i. most people can't distinguish an n54 from an n55 engine anyway.

[fazman]

Originally Posted by i dunno

if it makes you feel better, there's not that much of a difference between an 08 and 12 335i. most people can't distinguish an n54 from an n55 engine anyway.

My butt dyno can tell the difference in my FBO N54 vs a N55 stick with a 2010 for the N54

[NormE91]

Originally Posted by QuietQuirk

Yeah this is what I was trying to get at and what I mentioned. I feel and know I'm paying way too much for this 08. So I was thinking of how I could get out of it and into something newer, but wasn't sure with the negative equity how to go about it. Or if i should just ride it out on this current loan.

So do you feel like you paid too much for the car, or that you're paying too much. There's a difference...

[QuietQuirk]

Originally Posted by NormE91

So do you feel like you paid too much for the car, or that you're paying too much. There's a difference...

Paying relative to its model year.

But maybe I'll just suck it up and ride it out! But the fact that it'll be 8 years old while the F30s may be going through lci and I'll still be paying for a e93 pre lci is a bit annoying

I was blinded by the beauty of the car and didn't think long term at the time

[jwzimm]

You already paid for the car. You are now paying off the loan you took out to pay for it. That is a fact that you cannot change.

[NormE91]

Maybe leasing will be a better option for you next time. It works if you always want a newer car and want to keep the payments low. Only works if you don't do a ton of miles though...