Are there negative impacts to paying off a loan early with BMW Financial?

[Vectors2final]

How long have you been with them?

I ditched USAA after ten years because they were taking me to the cleaners. Two cars, no tickets or accidents, in my early thirties. Had all policies with them to include umbrella, home and valuables.

I left them for Geico... Same elevated coverage sans my home and I went from $3,2xx to around $1,4xx per year for just auto and umbrella.

[Spritztour]

Originally Posted by M3Fahrer

The car is a depreciating asset.

If it drives, flies, floats or f***s, lease it. - Spencer/The Rock on Ballers

Leasing is a different story, and I personally finance mine, but I added that quote just for reference. Invest your money elsewhere and continue to make the monthly payments on the car.

I? financed my F80 for 72 Months at 1% interest. I? like to pay off my stuff but this was almost free money. I? can make large payments further down the road but getting a 3% return on my money and paying 1% to BMW why not.

[Mike991M4]

When I was younger, I raised my deductible to the max to save on insurance coverage. Wrecked the car 2 weeks later and regretted it.

[Vectors2final]

Originally Posted by Mike991M4

When I was younger, I raised my deductible to the max to save on insurance coverage. Wrecked the car 2 weeks later and regretted it.

That was USAA's retention call..


USAA: You can take a driving class and we can give you a discount, but it won't be much.

Me:

USAA: We can also raise your deductible to $1000

Me:

[DBACE]

Thinking about paying off a loan, but worried about how it will change the number that indicates your willingness to go into debt, but really wants to address insurance increase of 30%........sell it.

[04RC51]

Pay the car off and drop insurance to bare minimum! What could possibly go wrong?

Just make sure to post up when you regret it!

[Emcee]

Originally Posted by Vectors2final

That was USAA's retention call..


USAA: You can take a driving class and we can give you a discount, but it won't be much.

Me:

USAA: We can also raise your deductible to $1000

Me:

Umm... having a $1000 is actually the smart thing to do.

If you're using insurance for things less than $1000 or $1500 you're wrecking your rate. Also the savings over the long term is greater, maybe I'm just lucky but I've still yet to use my car insurance in over 10 years of car ownership.

[socal619]

Originally Posted by csczero

Thanks everyone for their input, really appreciate it. My premium increased about 30% with no at fault accidents(one not at fault collision) or recent tickets(last one was 3 years ago).

My thing is the m3 is rarely driven, about 4000 miles a year at most. All my other 3 cars have liability that's why I was hoping to drop comprehensive on the m3. Even if it's a few hundred bucks, I just feel it's being wasted considering the car is rarely driven (relatively speaking compared to other cars). Just trying to save some money where I can.

Currently have liberty mutual and going to be shopping around to see any better rates. Cheapest I found was Geico, anyone have experience with them?

I did and I switched back to AAA in a heart beat... I was roughly w/ AAA for 10 yrs... made a claim since I bent my stock wheels on the fwy. When it came to my renewal my premium jumped $800 ish... switched to Geico... after 3-5 months, elderly couple ran a light a tbone me.. Geico was the worst.. it was like pulling teeth.. it was nightmare. After few wks of the accident, I decided to go back to AAA... paid a lil more but, not worth the headache. Try wawansea.. not sure if they cover your state.

[espressoo]

Originally Posted by RobbyMack

I'm just not understanding the situation. If you've got enough scratch to only have $6k remaining on a 3 year loan after making 9 payments I can't see how insurance costs would even factor into your financial picture. Also the physical damage piece (comprehensive/collision) is such a small piece of the cost. The liability piece is way more expensive.

I think you meant 21 payments but I agree. If the OP doesn't drive the car enough to justify the cost of ownership, get rid of it. Unless a $50K+ car to you is a disposable beater, why in the world would you not include comprehensive coverage for only a few hundred more? You're risking a $50K+ asset to save a few hundred? That defies common logic.

[Rxpert]

Originally Posted by 2000cs

When I buy a car I almost always have financed it for the longest possible term, then paid it off about 6-12 months later. Paying off earlier does not help credit; paying off later uses debt capacity and cash flow (yes I know paying off means those funds are not available for investment). I’ve found this to be a good discipline in that it has forced me to have the money really before I buy.

I am altering this now because of some bad experiences. I want the manufacturer to have some skin in the game so I will finance only through the manufacturer’s finance company (BMW FS in this forum’s case) and keep the loan through the warranty period or lease for that term. That way if there is a serious problem, BMW and the dealer both have a bit more incentive to help, and BMW FS can waive payments during extended servicing.

Seems extreme, but having been burned once I want to be sure any manufacturer I buy from is aligned with my interests as much as I can.

This for new, used under warranty (from same brand dealer only) or CPO. Used from private party or off-brand dealer I would just pay cash.

This is one of the most intelligent posts I've ever read regarding leasing/financing. Couldn't agree more.

[Vectors2final]

Originally Posted by Emcee

Umm... having a $1000 is actually the smart thing to do.

If you're using insurance for things less than $1000 or $1500 you're wrecking your rate. Also the savings over the long term is greater, maybe I'm just lucky but I've still yet to use my car insurance in over 10 years of car ownership.

Not when you're being charged over 50% more for the same coverage... That grasping for straws was worth about $100 bucks over the course of the whole year if I'm not mistaken.


With my current insurance, I'd only save $30 a year going to $1000.

[csczero]

Originally Posted by espressoo

I think you meant 21 payments but I agree. If the OP doesn't drive the car enough to justify the cost of ownership, get rid of it. Unless a $50K+ car to you is a disposable beater, why in the world would you not include comprehensive coverage for only a few hundred more? You're risking a $50K+ asset to save a few hundred? That defies common logic.

My mistake, when I say I rarely drive it, as in no major mileage accrues on it on a yearly basis. I take it for a drive almost everyday, but each trip is maybe 10-15 miles round trip.

Correct me if I'm wrong, but comprehensive is for anything that doesn't involve collision with another car? So things like theft, natural disasters, tree falling on it, etc. I just don't see high probability of any of those happening. I mean of course, that's why they call them "accidents".

I've had cars that are worth more than $50k and had liability. But then again, I don't know how other state insurance rates are, but I've heard NYS rates are higher than most places? Maybe that's why I'm complaining I've honestly never kept comprehensive coverage on any of my cars, unless I had to (lease/financed).

[stevenvillatoro]

When I had the same dilemma as the OP, I opted to pay down the principal on my car loan to just $300, for the sake of maintaining the loan for its benefit to my credit score. My payment was a token $8/month (via autopay), but I have no revolving loans, no mortgage on my house, and zero CC balances... so I need some sort of tomfoolery to avoid tanking my credit score. When I eventually paid off that loan, my score took an immediate 20-point plunge.

[CeEl]

Originally Posted by espressoo

I think you meant 21 payments but I agree. If the OP doesn't drive the car enough to justify the cost of ownership, get rid of it. Unless a $50K+ car to you is a disposable beater, why in the world would you not include comprehensive coverage for only a few hundred more? You're risking a $50K+ asset to save a few hundred? That defies common logic.

Maybe that’s why his financial situation is so good ... he doesn’t spend cash on insurance but invests it and self insures. With multiple cars, the risk that all cars are going to be damaged is low / the likelyhood that any one of them is damaged about the same, so why buy comprehensive on just one of them? And if he doesn’t use the insurance, he is better off. Over a life time, what are the chances that he gets the money back on the comprehensive?

Really not much different than having large deductibles. Insurance is meant to protect one from catastrophic loss, loss one wouldn’t be able to financially recover from.

Yeah, emotionally it would be devastating to lose such a nice car, but financially and practically (given he has multiple cars) he would be fine.

[floydarogers]

Originally Posted by csczero

...
Correct me if I'm wrong, but comprehensive is for anything that doesn't involve collision with another car? So things like theft, natural disasters, tree falling on it, etc. I just don't see high probability of any of those happening. I mean of course, that's why they call them "accidents".

First, paying off your loan early probably won't affect your credit score negatively - you will owe less, which increases the score. However, you will be making fewer payments which can lower it. Probably a wash in the end.

Second, as some have said, you should maintain *some* comprehensive coverage. Remember, that's what pays for glass replacement, fire damage (if it burns up sitting in the garage or someone's parking lot/structure, theft from the car (someone breaks in and steals your GPS or whatever that's sitting there, etc. Raise the deductible to as high a figure that you are comfortable paying out-of-pocket. Note that windshields are usually $750 or so: putting it at $1000 means you're out the full price for replacement.

You'd be surprised at how many weird things happen: I parked in the safest spot in my work's garage (2 places next to walkway, etc.) They were installing some new cooling equipment, pressure testing some 6" PVC pipes. Elbow at top of 8' section broke, smashed my window and hood. (The contractor's insurance fixed it, but my comprehensive would have been on the hook.)

[zx10guy]

Comprehensive also covers vandalism such as someone keying your car and deer/animal strikes.

My wife's car is in the shop now having the front end rebuilt because of hitting a deer. My now gone Focus was a victim of 2 animal strikes. One was some critter I didn't even see clearly. Ran across a 3 lane major highway with a posted speed limit of 65 MPH late at night. That hit caused bumper cover, lower core support, condensor coil, and I think radiator damage. A couple of years later I hit a F'ing deer just standing in the middle of the road on a pitch dark section leading back to my development. The F'ing deer blended in with the open fields so I didn't see it until I was almost on top of it. That strike finally did in my car as insurance totaled it even though the car was still driveable.

Comprehensive covered all of the above damage without even a major up tick in my insurance premiums. And all of this was in a span of about 3 to 4 years.

As others have said, the savings dumping comprehensive isn't worth it.