[wtwo3]

Originally Posted by TheMaxXHD

There is a reason BMW has the recent college grad program (that I am taking advantage of), grads have a higher chance of lower obligation, even if they make less. If there was a very low uptake of that program, they wouldn’t be offering it.

I'm not sure that's entirely true. It's not an inventoriable asset which costs money to have on offer. The reason the program is offered is 1) short term benefit - incentivize younger population to get into BMW ownership, 2) long term benefit - build brand loyalty from an earlier age, and 3) because everyone else offers one also, especially direct competitors. Grads having a higher chance of lower obligation or not, the program still necessitates a strict debt to income ratio as well as an automotive payment to income ratio to qualify. In fact I'd argue recent grads are a higher risk category for a company like BMW because of the lack of credit history, and as such they necessitate 6 months of credit history as minimum qualification.

Besides that, while I agree with much of what you're saying in that it's more complicated a situation than simply looking at income and that expenses need to be looked at as well - income is a much easier metric to measure against. Sure we can ask "what is the BMW owner's debt to income ratio", but you probably won't get as much conversation there

[TheMaxXHD]

Originally Posted by wtwo3

I'm not sure that's entirely true. It's not an inventoriable asset which costs money to have on offer. The reason the program is offered is 1) short term benefit - incentivize younger population to get into BMW ownership, 2) long term benefit - build brand loyalty from an earlier age, and 3) because everyone else offers one also, especially direct competitors. Grads having a higher chance of lower obligation or not, the program still necessitates a strict debt to income ratio as well as an automotive payment to income ratio to qualify. In fact I'd argue recent grads are a higher risk category for a company like BMW because of the lack of credit history, and as such they necessitate 6 months of credit history as minimum qualification.

Besides that, while I agree with much of what you're saying in that it's more complicated a situation than simply looking at income and that expenses need to be looked at as well - income is a much easier metric to measure against. Sure we can ask "what is the BMW owner's debt to income ratio", but you probably won't get as much conversation there

I agree with your points on the grad program, but that is the thing. The strict debt to income requirement means that there are college grads that meet that requirement, if there were so few college grads meeting it than nobody would be offering it, BMW or other brands. The $1000 credit per person is offset for BMW by encouraging use of BMWFS, but if there was such a low uptake the credit would not net enough benefit on the BMWFS side to warrant the program. Or any other brand’s services or programs.

As for the issue with college grads qualifying, I suspect the biggest hurdle is not credit history time, 6 months isn’t too bad, but rather debt to income ratio. And likely not even the income value, but in this case, the biggest hurdle would likely be school debt affecting that ratio. That probably is the biggest issue for grads attempting to get the credit.

[wtwo3]

Originally Posted by TheMaxXHD

I agree with your points on the grad program, but that is the thing. The strict debt to income requirement means that there are college grads that meet that requirement, if there were so few college grads meeting it than nobody would be offering it, BMW or other brands. The $1000 credit per person is offset for BMW by encouraging use of BMWFS, but if there was such a low uptake the credit would not net enough benefit on the BMWFS side to warrant the program. Or any other brand’s services or programs.

As for the issue with college grads qualifying, I suspect the biggest hurdle is not credit history time, 6 months isn’t too bad, but rather debt to income ratio. And likely not even the income value, but in this case, the biggest hurdle would likely be school debt affecting that ratio. That probably is the biggest issue for grads attempting to get the credit.

I'm not sure if you understand what I'm saying. It doesn't cost BMW anything to offer it. So there's no reason for them to NOT offer it, regardless of how many college grads qualify. BMW isn't offering the program because they think college grads have a high chance of low debt-to-income, they're offering it because they're competing in that market along with other automakers.

And the biggest hurdle is not the same as biggest risk. Debt-to-income and automotive payment to income ratios are a known variables - you either meet the criteria or you don't. Credit history is the biggest risk because it presents an unknown variable to the mix. 6 months of credit history is nothing in the grand scheme of things, but BMW is willing to assume that risk as is dictated by the market to be able to compete in that segment.

[TheMaxXHD]

Originally Posted by wtwo3

I'm not sure if you understand what I'm saying. It doesn't cost BMW anything to offer it. So there's no reason for them to NOT offer it, regardless of how many college grads qualify. BMW isn't offering the program because they think college grads have a high chance of low debt-to-income, they're offering it because they're competing in that market along with other automakers.

And the biggest hurdle is not the same as biggest risk. Debt-to-income and automotive payment to income ratios are a known variables - you either meet the criteria or you don't. Credit history is the biggest risk because it presents an unknown variable to the mix. 6 months of credit history is nothing in the grand scheme of things, but BMW is willing to assume that risk as is dictated by the market to be able to compete in that segment.

Yes, but the competition is not without potential cost, for all automakers with this type of program. For BMW, the upfront cost outside of risk is the $1000 credit, that is not a normal offering to just anyone, and represents a bigger cost than a regular consumer who doesn’t qualify. The hope is that is paid back not just by the sale of the vehicle, but also by the interest of the loan via BMWFS, versus a credit union, which credit unions are popular by current and recent students (and many others too) due to CU’s being more lenient on giving loans and have lower rates. I’d be going with my credit union if not for the credit which negates the benefit of the lower rate of my cu.

There is risk in a small credit history yes, but that is not where the biggest risk comes in. What matters is the debt to income ratio. That is the biggest risk. How leveraged one person is. That is with anyone, student or not. Decades of credit or only 6 months of credit. Ultimately that’s what will be weighed heavily outside of your direct income to determine whether or not you qualify you for any loan. Credit history length helps determine your reliability (which does help indicate risk), debt to income helps determine whether or not you can actually afford and aren’t over-leveraged in debt (the biggest risk to default, and thus creditors).

That is why the six month requirement for the grad program for BMW seems small when you compare it to the additional requirements of less than a 45% debt to income ratio, and an automotive payment to income ratio of less than 20%.

[wtwo3]

Originally Posted by TheMaxXHD

Yes, but the competition is not without potential cost, for all automakers with this type of program. For BMW, the upfront cost outside of risk is the $1000 credit, that is not a normal offering to just anyone, and represents a bigger cost than a regular consumer who doesn’t qualify. The hope is that is paid back not just by the sale of the vehicle, but also by the interest of the loan via BMWFS, versus a credit union, which credit unions are popular by current and recent students (and many others too) due to CU’s being more lenient on giving loans and have lower rates. I’d be going with my credit union if not for the credit which negates the benefit of the lower rate of my cu.

There is risk in a small credit history yes, but that is not where the biggest risk comes in. What matters is the debt to income ratio. That is the biggest risk. How leveraged one person is. That is with anyone, student or not. Decades of credit or only 6 months of credit. Ultimately that’s what will be weighed heavily outside of your direct income to determine whether or not you qualify you for any loan. Credit history length helps determine your reliability (which does help indicate risk), debt to income helps determine whether or not you can actually afford and aren’t over-leveraged in debt (the biggest risk to default, and thus creditors).

That is why the six month requirement for the grad program for BMW seems small when you compare it to the additional requirements of less than a 45% debt to income ratio, and an automotive payment to income ratio of less than 20%.

Again I think you're not understanding.

Let me put this another way. The biggest risk is what's unknown, regardless of metric category. A debt-to-income of 100% isn't a risk... you know why? cause it'll get denied. It's manageable risk because it's KNOWN. When you apply for credit, the lender calculates your debt-to-income. You then either meet the threshold or you don't. Simple as that. Unless you're hiding debt off the books, it's a known variable. I'm not talking about what metric impacts your credit score the most on credit karma.

Lack of credit history presents a completely unknown variable into the underwriting decision. BMW is choosing to give out loans with limited credit history in order to compete in this segment, and as such that is undoubtedly the biggest level of risk attributed to THIS segment.

You're also misrepresenting the basis of BMWs additional requirements of 45% debt to income and automotive payment to income of 20%. Those figures are actually higher than what auto lenders typically look for. Lenders typically look for a ~36% debt-to-income ratio for traditional auto loans. So they're giving more leeway to college grads assuming they'll have higher debt to incomes (mainly because incomes of recent college grads are typically significantly lower). Which is the opposite of your original basis of "college grads have a high chance of low debt to income".

As for the cost of the program. I'm saying it doesn't cost them anything to "offer" it. It doesn't have any inventoriable costs associated with it nor developmental costs. The $1,000 is NOT an up-front cost as you mentioned. It's a post-sale incentive. The very nature of offering it is to increase sales in that particular segment. If college students were clamoring to purchase a BMW, THAT'S when BMW would be incentivized to NOT offer the program. You can draw parallel to the current automotive climate vs. the climate 4 years ago. There was a lack of interest in cars, and that's when BMW offered the highest incentives. Now that everyone wants a car, many of those incentives are reduced or completely eliminated.

[TheMaxXHD]

Originally Posted by wtwo3

Again I think you're not understanding.

Let me put this another way. The biggest risk is what's unknown, regardless of metric category. A debt-to-income of 100% isn't a risk... you know why? cause it'll get denied. It's manageable risk because it's KNOWN. When you apply for credit, the lender calculates your debt-to-income. You then either meet the threshold or you don't. Simple as that. Unless you're hiding debt off the books, it's a known variable. I'm not talking about what metric impacts your credit score the most on credit karma.

Lack of credit history presents a completely unknown variable into the underwriting decision. BMW is choosing to give out loans with limited credit history in order to compete in this segment, and as such that is undoubtedly the biggest level of risk attributed to THIS segment.

You're also misrepresenting the basis of BMWs additional requirements of 45% debt to income and automotive payment to income of 20%. Those figures are actually higher than what auto lenders typically look for. Lenders typically look for a ~36% debt-to-income ratio for traditional auto loans. So they're giving more leeway to college grads assuming they'll have higher debt to incomes (mainly because incomes of recent college grads are typically significantly lower). Which is the opposite of your original basis of "college grads have a high chance of low debt to income".

As for the cost of the program. I'm saying it doesn't cost them anything to "offer" it. It doesn't have any inventoriable costs associated with it nor developmental costs. The $1,000 is NOT an up-front cost as you mentioned. It's a post-sale incentive. The very nature of offering it is to increase sales in that particular segment. If college students were clamoring to purchase a BMW, THAT'S when BMW would be incentivized to NOT offer the program. You can draw parallel to the current automotive climate vs. the climate 4 years ago. There was a lack of interest in cars, and that's when BMW offered the highest incentives. Now that everyone wants a car, many of those incentives are reduced or completely eliminated.

Ah, I understand what you are getting out now. Apologies lol. Finance is a finicky thing. Now I remember why I went into IT instead of finance

[wtwo3]

Originally Posted by TheMaxXHD

Ah, I understand what you are getting out now. Apologies lol. Finance is a finicky thing. Now I remember why I went into IT instead of finance

All good... I have a degree in finance but never held a finance related job Built a career in supply chain.

[440i6MT]

Originally Posted by wtwo3

All good... I have a degree in finance but never held a finance related job Built a career in supply chain.

I hold a Master's in Political Science. Doubt I'll ever work as a politician

[JusticeM5]

Originally Posted by Delmoney335

It's called leasing

Leasing is only a good thing when you own a business and you can write the car off. As far as an M Vehicle you can't go too wrong when you finance because depending on how you maintain it it'll hold a pretty good value to ratio. I have a 2015 F10 M5 Comp purchased it as a second owner and if I sell it today in todays market I'll end up just losing like 10K in almost 5 years. I call that a win win. I have enjoyed this car everyday since I purchased it in March of 2018. I'm thinking about purchasing the new 2023 G80. With this one I believe I'll end up making money instead of losing money.

[JusticeM5]

Originally Posted by JDR_G80

I bought Dogecoin at .0005 and now I can afford an M3c and a vacation house.

I'm assuming you purchased around 1K shares, because I purchased 50 shares of BitCoin @ 200 a share and I pulled out when it was around 50K a share

[JusticeM5]

Originally Posted by MSpain

My salary is about 81k dollars (70k euros) before taxes. Taxes in here for that salary move around 40%.
And I can easily afford an M4. I think this highly depends on whether you have a house paid or a mortgage, kids, family to take care of, etc.
I find quite interesting how some of you consider a 90k income as "middle class".
Here in Spain it would be high class

In NYC to be considered middle class you need to make roughly 250K

[JusticeM5]

Originally Posted by MMMTREE

I have no income and paid for my car in advance with stimulus checks. As soon as the funds run dry, the car has to go.

Don't forget you're leaving that last part out. The FEDS come knocking at your door...

[JusticeM5]

Originally Posted by taek

Yep. My closest Jeep dealership's Grand Cherokees are $65k. Wagoneers are $83k to $88k.

Are BMWs really that different?

New 2023 G80 M3 Comp 96K-106K
New 2023 F90 M5 Comp 106K-143K
I would think so....

[JusticeM5]

Originally Posted by QueueWhere

BMWs are really expensive, and if you cannot afford them, then don’t buy them. You can, of course, get an older and used car, but you would probably have to spend tons of money on repairing and maintenance. So, go for something simpler in the beginning.
I also wish I didn’t have to work that hard for everything I have and basically trade the time of my life for the money and the possibilities they give. Sometimes I wish I was like people from the wealthyliving.com list and didn’t have to work that much. But it looks like this life is not predestined for me. But I always have the possibility to go live in the woods.

Anything is possible as long as you are willing to take chances. Many people never end up where they want in life because they never took a chance or they always asked someone else for their opinions and that person conveyed their fears unto you. The reality is that you have to decide where do you want to be in life.

[JusticeM5]

Originally Posted by Socaldriver

You have to lay low and the X5 will be the perfect vehicle for me. What would be a good narco vehicle?

Don't forget to make the car bullet proof.

[jmg]

Originally Posted by akers983

The same. I have a law degree but won't work as a lawyer.

Originally Posted by 440i6MT

I hold a Master's in Political Science. Doubt I'll ever work as a politician

Originally Posted by wtwo3

All good... I have a degree in finance but never held a finance related job Built a career in supply chain.

Ditto, I was Pre-Physical Therapy, then went for a 2nd BS in CIS... My career has nothing to do with either.

[VINCER0]

Originally Posted by JusticeM5

In NYC to be considered middle class you need to make roughly 250K

Yeah agreed, in NYC one can be middle to upper-middle class depending on debt to income ratio.

Make $300k but have massive loads of debt then you're middle class...possibly even low-middle class.

Make $200k but have zero debt then you're closer to upper-middle class.

I make $200k and wifey makes $80k, we have little to no debt.

[Hapbob]

Retired twice.
USAF
Public School teacher.
No debt
No kids
Wife taken care of $
May as well spend it on what I want to do in life.
BMW is my retirement toy.

Hap

[NCRob]

Probably very few absolutes here other than:
1. A family of 4 making $40k won’t be driving a BMW (new or near what most would consider “good” condition)
2. Every member of Metallica can afford a BMW

[wtwo3]

I think what's interesting is cultural views on discussing salary. In much of Asia it's perfectly appropriate to ask people how much they make, whereas here in the US it's sort of taboo... like you don't disclose your political association (although this seems to have changed quite a bit ) and you don't disclose how much you make. In fact it's often considered rude to even ask the question.

[2008M36MT]

I'm 36, make $175K in TX. $20K additional from a rental property (usually goes back into home though), mortgages paid off, no car loan, no college or grad school debt, no CC debt. Never goes as far as I hope, but Roth is maxed out, $3.5K per month going into savings, $200/paycheck to HSA. I have lots of medical expenses which are paid off as they're incurred. My cars are all used, current value about $100K.

[mavz]

Originally Posted by JusticeM5

In NYC to be considered middle class you need to make roughly 250K

Truth... my building wanted 4k a month to renew the lease on my 500 sqft studio