I did some fishing around and the new 2012 BMW 3 Series (328i) starts at $34,900. Okay...a little rich for my blood, given I cant easily get a stroller in the truck...but I digress.
According to the brochure, the "Offers to get your (my) pulse racing" is a choice between $1,000 credit on select BMWs OR 2.9% APR financing!
Check it out!
Since I'm broke (still in debt), I'll most likely take the 2.9% financing please. After all the BMW company must know that I can afford it, or they wouldn't have sent me the offer, right?
Being a broke person, I will only consider the payments when determining if I can afford this car. Even though I am NOT maxing out my retirement, I have a negative net worth, and my kids DO NOT have a college fund. I'm going to take the plunge, you only live once and I'm sure I can pay it off quickly and get back to my goals in no time!
ASSUMING I qualify for a 2.9% APR:
A) If I pay the car off in 3 years, I will have $1,102 monthly payments and pay $1,721 in interest.
B) If I pay the car off in 5 years, I will have $680 monthly payments and pay $2,864 in interest.
C) If I pay the car off in 7 years, I will have $499 monthly payments and pay $4,028 in interest.
Given that I'm broke and want the lowest payment possible...I most likely will take Option C!
Oops don't forget the opportunity cost of the BMW...it doesn't stop at just $4,028 in interest. Let calculate how much money I would have saved if I had not bought a car and just paid myself...$499/month invested in a mutual fund (for college savings, investments, or retirement) would have yielded me $60,449 over 7 years. If at the end of 7 years, I leave that $60,449 alone and don't touch it for 20 more years, I will have $442,976...
Oh Darn! They don't mention that in the brochure!