BMW Financing Options Explained
Buying or leasing a BMW is about more than choosing the right model. Choosing the right BMW financing option can be just as important.
Whether you’re considering a new BMW X5, 3 Series, all-electric BMW iX3, or another BMW model, there are several ways to structure your purchase. BMW Financial Services offers traditional financing and leasing, as well as BMW Select balloon financing, an alternative that combines some characteristics of financing with lower monthly payments.
For Los Angeles-area drivers, the best choice often comes down to three questions:
- How long do you plan to keep your BMW?
- How many miles do you typically drive?
- Is your priority ownership, flexibility, or a lower monthly payment?
Here’s how the three primary BMW financing options compare.
BMW Financing Options: Finance vs. Lease vs. BMW Select
| Finance | BMW Lease | BMW Select | |
|---|---|---|---|
| Ownership | Yes | No, unless purchased | Yes |
| Mileage Restrictions | None | Yes, based on contract | None |
| Monthly Payment | Typically higher | Typically lower | Lower than traditional financing |
| Large Final Payment | No | No | Yes |
| Vehicle Customization | Yes | Limited | Yes |
| Builds Vehicle Equity | Potentially | No | Potentially |
| Best For | Long-term ownership | Driving a newer BMW every few years | Ownership + lower monthly payments |
Option 1: Traditional BMW Financing
Traditional financing is probably the most familiar way to purchase a BMW.
You finance the purchase price of the vehicle, minus your down payment, trade-in, or other applicable credits, and make monthly payments over an agreed term.
BMW Financial Services typically offers financing terms ranging from 24 to 72 months. Extended financing terms up to 84 months may be available on select vehicles. There are also no mileage restrictions associated with traditional financing.
Once the loan is paid off, you own the BMW outright.
Pros of Financing a BMW
You own the vehicle.
Every payment moves you closer to full ownership, and your vehicle may have trade-in or resale value when you decide to move into your next BMW.
No mileage restrictions.
This can be particularly valuable in Southern California, where commuting throughout Los Angeles can quickly add miles. Financing is suggested for drivers who expect to travel more than 12,000 miles per year.
Freedom to customize.
Because you’re purchasing the vehicle, you have significantly more freedom to personalize it with accessories or modifications.
No lease-end inspection.
You don’t have to worry about excess mileage or lease-end wear-and-tear charges.
Potential long-term value.
After the loan is paid off, you can continue driving the vehicle without a monthly vehicle payment.
Cons of Financing a BMW
Monthly payments may be higher.
Traditional financing generally requires paying down the entire financed balance rather than just the portion associated with a lease term or deferring part of the balance as you would with BMW Select.
You’re responsible for long-term depreciation.
Your BMW’s future market value directly affects how much equity you ultimately have.
You take on long-term ownership costs.
Drivers keeping their BMW well beyond the original warranty period should budget for maintenance and repairs as the vehicle ages.
Traditional BMW Financing May Be Best If You:
- Plan on keeping your BMW for more than three years
- Drive more than 12,000 miles annually
- Want unlimited mileage
- Want the freedom to customize your vehicle
- Prefer building potential equity
- Want to eventually own your BMW without a monthly payment
Option 2: Leasing a BMW
A BMW lease can be an attractive option if you enjoy experiencing the newest BMW models and technologies every few years.
Rather than financing the entire purchase price, a lease is structured around using the vehicle for an agreed period and mileage allowance. BMW Financial Services allows customers to personalize leases around factors including term length and mileage needs.
At the conclusion of your lease, you generally have the flexibility to return the vehicle and get into a new one or explore buying it. If you would like to keep your BMW, you can purchase your BMW during the lease term, with the buyout amount based on residual value stated in the original contract.
Pros of Leasing a BMW
Potentially lower monthly payments.
Leasing can provide a lower monthly financial commitment than purchasing the same vehicle.
Drive a newer BMW more frequently.
If you enjoy the latest BMW design, technology, performance, and driver-assistance features, leasing makes it easier to move into another new model every few years.
Shorter commitment.
A lease may appeal to customers who don’t want to keep their vehicle for five, six, or seven years.
Flexible mileage options.
BMW leases can be structured around different mileage needs, but typically range from 7,500 – 12,000 miles per year. BMW Financial Services also offers a Mileage Adjustment Program that allows customers to purchase additional miles at a discounted rate before turning in their vehicle.
Potentially easier transition into your next BMW.
At lease-end, you can return your current BMW and begin looking at the newest models rather than worrying about selling it yourself.
Cons of Leasing a BMW
You don’t automatically own the vehicle.
Payments don’t result in outright ownership unless you ultimately exercise your purchase option.
Mileage limitations apply.
Drivers exceeding their contracted mileage allowance may face additional mileage charges.
Wear-and-tear standards apply.
The vehicle can be subject to a lease-end inspection, with charges possible for excess wear. This can include large scratches/dents and excessive tire wear. Vehicle must be well maintained with no outstanding service required at lease return.
Customization is limited.
Permanent modifications generally aren’t ideal for a vehicle you plan to return.
Leasing May Be Best If You:
- Like getting a new BMW every few years
- Prefer a potentially lower monthly payment
- Drive a predictable number of miles each year
- Don’t want the long-term responsibilities of ownership
- Want frequent access to new BMW technology
- Are comfortable with lease-end mileage and condition requirements
Option 3: BMW Select
What if you want the advantages of owning your BMW but don’t necessarily want the higher monthly payments typically associated with traditional financing?
That’s where BMW Select balloon financing becomes particularly interesting.
BMW Select is a retail installment contract that provides lower monthly payments than traditional retail installment financing by deferring a portion of the financed amount to a larger final balloon payment. You still receive the benefits associated with vehicle ownership during the contract.
In simple terms, instead of paying down the entire balance through equal monthly payments, you make lower monthly payments throughout the BMW Select term and then have a larger balance due at the end.
What Happens at the End of BMW Select?
When you reach the end of the contract, you have several potential options for addressing the balloon balance:
- Pay the remaining balloon balance in full
- Apply to refinance the remaining balance
- Trade in the BMW, potentially using available vehicle equity toward the balance
Refinancing is subject to approval and applicable terms, so customers should not assume that refinancing the balloon will automatically be available.
Pros of BMW Select
Lower monthly payments than traditional financing.
This is the primary appeal of BMW Select. Because part of the balance is deferred, the scheduled payments during the initial term can be lower than traditional retail financing.
You receive the benefits of vehicle ownership.
Unlike a traditional lease structure, BMW Select is a financing product rather than a lease.
No mileage restrictions or mileage fees.
BMW Select has no lease-style mileage restrictions or fees.
Greater flexibility for high-mileage drivers.
That can make BMW Select particularly interesting for Los Angeles-area drivers who want a lower payment but don’t want to monitor their annual mileage.
Available beyond new BMW models.
BMW Select can be available on new, pre-owned, and BMW Certified vehicles.
Cons of BMW Select
There’s a significant balloon payment at the end.
This is the biggest consideration. The lower monthly payment doesn’t make the money disappear. A portion of the vehicle balance is simply deferred until the end.
You need an exit strategy.
Before choosing BMW Select, you should have a clear idea of how you might handle the final balance.
Vehicle value matters.
If you intend to trade in the BMW at the end, its market value and your equity position become important.
Refinancing isn’t guaranteed.
Applying to refinance is one potential option, but approval will depend on the financing available and your qualifications at that time.
BMW Select May Be Best If You:
- Want the benefits of owning your BMW
- Want a lower monthly payment than traditional financing
- Don’t want lease mileage restrictions
- Drive a lot of miles
- Want the freedom to customize your BMW
- Understand and have a plan for the final balloon balance
Is BMW Select the Same as Leasing?
No. This is one of the most important distinctions for BMW shoppers to understand.
Although the lower monthly payment can make BMW Select look somewhat like a lease, BMW Select is a retail installment financing contract with a final balloon payment.
With a lease, you’re essentially paying for the use of your BMW according to the terms of the lease and have mileage and vehicle-condition requirements.
With BMW Select, you receive the benefits of ownership and there are no lease-style mileage restrictions. However, you’re responsible for the balloon balance at the end of the contract.
That distinction makes BMW Select an interesting middle ground for shoppers who like the lower-payment characteristics commonly associated with leasing but would rather finance their BMW.
Which BMW Financing Option Is Right for You?
There’s no single financing option that’s best for every BMW driver.
Choose traditional financing if…
You’re looking at a new BMW 5 Series, X7, 3 Series, or another model and can picture yourself driving it for many years. You value ownership, don’t want mileage limitations, and are comfortable with a potentially higher monthly payment in exchange for paying down the vehicle over time.
Consider leasing if…
You want to experience a new BMW every few years and like having access to the latest BMW performance and technology. Your annual mileage is predictable, and you’re comfortable returning the vehicle according to lease-end requirements.
Consider BMW Select if…
You want the benefits of ownership and unlimited mileage but would prefer a lower monthly payment than traditional financing. You’re also comfortable planning ahead for the balloon payment due at the end of the contract.
BMW Financing for Los Angeles-Area Drivers
For drivers in Glendale, Pasadena, Burbank, Downtown Los Angeles, and throughout Southern California, driving habits should play a major role in the decision.
A long Los Angeles commute can make traditional financing or BMW Select attractive because neither comes with lease mileage restrictions. By comparison, someone who works closer to home and wants a new BMW every few years may find leasing better aligned with their lifestyle.
The monthly payment shouldn’t be the only factor you consider when choosing a BMW financing option.
Instead, look at your:
- Expected annual mileage
- Desired length of ownership
- Upfront costs
- Monthly budget
- Total amount paid
- Expected vehicle usage
- Customization plans
- Lease-end or balloon-payment obligations
Then compare the available programs for the BMW you’re considering.
BMW offers can vary by model and market, so actual lease and finance programs should always be reviewed at the time you shop. BMW lease offers and APR offers can change throughout the year, so be sure to check the latest offerings.
Explore Your BMW Financing Options at Pacific BMW
Choosing your BMW should be exciting. Choosing how to pay for it shouldn’t have to be complicated.
At Pacific BMW in Glendale, California, our finance team can help you compare traditional BMW financing options with BMW leasing and BMW Select balloon financing based on the vehicle you’re considering, your driving habits, and your financial priorities.
Whether you’d like the long-term benefits of ownership, the flexibility of leasing, or the lower monthly payments and ownership benefits offered by BMW Select, understanding the differences can help you make a more informed decision.
Browse our new BMW inventory, explore current BMW offers, or contact Pacific BMW to compare financing options for your next BMW.
BMW Select availability and terms vary. Financing and leasing are subject to credit approval and program eligibility. Rates, programs, incentives, payments, and terms may change. Contact Pacific BMW for current program details.
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