BMW's Residual Value Loan: "Value Loan"

While there's a desire to acquire a car one has long yearned for and keep it for a long time, the urge to always drive the latest, most cutting-edge model is probably not unique to me.

For instance, the BMW M3, currently the most intriguing car for me. The introduction of the new generation M3, equipped with a high-revving 4-liter V8 engine,
to Japan was in August 2007. The "M DCT Drivelogic" dual-clutch transmission, which appeared a year later, has captivated my mechanical heart.

Whether it will develop into a long-term relationship is something to be determined by the first vehicle inspection, but I want to try out the much-talked-about model... As I pondered this, I casually browsed the BMW website as usual and stumbled upon their loan calculator for BMW Financial Services. If I decide whether to keep or let go of the car after the first inspection, a 36-month payment plan with a residual value loan seems convenient. Assuming the expenses are covered by the down payment, let's calculate the case of paying the principal loan amount of 10.63 million yen over 36 months with a Value Loan.
…when calculating with Value Loan.

Value Loan Payment Example *Purchasing a BMW M3 M DCT with a 36-month loan. Expenses paid as a down payment. As of January 2009.	Standard Loan Case
Loan Principal: ¥10,630,000 Total Loan Payments: ¥11,638,482 Loan Interest Rate: 4.15% Number of Payments: 36 Initial Payment: ¥177,425 Monthly Payment: ¥176,300 x 34 Residual Value Rate: 54% Residual Value: ¥5,466,857 (Final Payment) *No bonus payments	Loan Principal: ¥10,630,000 Total Loan Payments: ¥11,324,139 Loan Interest Rate: 4.15% Number of Payments: 36 Initial Payment: ¥316,639 Monthly Payment: ¥314,500 x 35

Monthly Burden Halved

The calculation results in a monthly payment of around ¥160,000. Compared to the standard loan, the Value Loan, which accrues interest on the residual value, results in a total payment that is about ¥310,000 higher. However, the monthly burden is reduced by approximately half.

Contributing to this is the high residual value rate. For the BMW M3 M DCT, the residual value rate after three years is an impressive 54%. Furthermore, this figure is for the "closed-end" type, which guarantees the residual value if conditions such as mileage are met (an "open-end" type, which does not guarantee the residual value, is also available). This means that even if the market price falls after three years, the borrower will not incur any additional costs. This peace of mind is extremely significant if one intends to part with the car at the end of the loan term.