Actually your negative equity of around 10K will be less of a percentage if you go for the more expensive car.
Right now you owe double what your current car is worth.
If you buy the newer BMW you will owe 25% more than what the newer car is worth.
Anyway you slice it you are not in a great situation.
If you really want the newer car my advice is go for it.
Whether you owe 20K or 40K is not the issue, its what will make you happy.
I have a 2001 330i paid in full, no debt and love it.
I had a 1997 318i and the difference is night and day.
If you really want it and you can afford it, money is just that.
You can always make more in the future.