Z4 Lease Offer

[03&04Owner]

Hello everyone! My question is, there is a Special Lease Offer by BMW FS until the end of April for $399*/month for 30 months.

$399 First month's payment
$2,500 Down payment
$400 Security deposit
$3,299 Cash due at signing

Monthly lease payments of $399.00 for 30 months based on MSRP of $37,570.00. As shown: 2006 Z4 3.0i with optional Metallic paint, Sport Package and Xenon Headlights has a MSRP of $38,470.00. If registered outside of NY, $415.00/month with $3,365.00 due at signing includes $415.00 monthly payment, $2,500.00 down payment and $450.00 security deposit.

Is this a good deal? I have always leased from BMW FS with 0 down and no security deposit, that's why the idea of the 2.5K doesn't attract me, but it seems that the offer with whatever they are passing on to the dealership to make it 400 or less a month seems good. I also like the 30 month lease.

What do you guys think?

Thanks for your help...

[kevjandon]

Leasing Sucks IMO. :D

[ilkhan4]

Leasing Sucks IMO. :D

Wow, helpful.

Anyway, I'd be looking to get a 3.0Si for that payment, but then I'm always trying to find those kind of crazy deals. My M Coupe payment was only $50 higher.

I'd also avoid putting any money down on a lease except for what you need to. It's much better to keep it yourself and pay the higher payment out from what you saved. So, keep the $2500 and pay the extra ~$70/month from that until the end of the lease. That way if the car is totalled, you're not out the full $2500.

[kevjandon]

Wow, helpful.

what you saved. So, keep the $2500 and pay the extra ~$70/month

Not sure what you're saving on a lease:rofl:

399 per month at 30months = 11,970 + 3,299 due at signing

Totals $15,269

At the end of 30 months, you have nothing and spent $15,269

If you buy, at 30 months you only have 20 payments left on a 60 year note of around 575per month which comes to only 11,500 owed on the car leaving you with at least 10,000 in equity at the end of 30 months.

Leasing sucks! If you can't afford it now, save some money until you can. Otherwise your just renting your car.

[03&04Owner]

Not sure what you're saving on a lease:rofl:

If you buy, at 30 months you only have 20 payments left on a 60 year note of around 575per month which comes to only 11,500 owed on the car leaving you with at least 10,000 in equity at the end of 30 months.



How do you calculate 575 on a 40K plus car? How much down do you need to get to that payment?

[ilkhan4]

Not sure what you're saving on a lease:rofl:

399 per month at 30months = 11,970 + 3,299 due at signing

Totals $15,269

At the end of 30 months, you have nothing and spent $15,269

If you buy, at 30 months you only have 20 payments left on a 60 year note of around 575per month which comes to only 11,500 owed on the car leaving you with at least 10,000 in equity at the end of 30 months.

Leasing sucks! If you can't afford it now, save some money until you can. Otherwise your just renting your car.

Well, for one thing, you have a car that's worth ~$15k less than what it was worth at the beginning. So, you can choose to buy it if you like it, or walk away. Plus you don't have any personal financial liability if something happens to it. It sets in stone what the car is worth at the end. Oh, and you've also had the use of a really nice car for 30 months.

I don't want to get into a buying vs leasing debate here. He didn't ask if leasing was right for him (or you), he asked if we thought it was a good deal.

['Cane]

Not sure what you're saving on a lease:rofl:

399 per month at 30months = 11,970 + 3,299 due at signing

Totals $15,269

At the end of 30 months, you have nothing and spent $15,269

If you buy, at 30 months you only have 20 payments left on a 60 year note of around 575per month which comes to only 11,500 owed on the car leaving you with at least 10,000 in equity at the end of 30 months.

Leasing sucks! If you can't afford it now, save some money until you can. Otherwise your just renting your car.

If he were to buy the car (over 60 months) with the same money up front, his payment would likely be ~$625/month. That's a big difference.



Are you getting it from Vista? If so, who is your salesperson?

[JT///M3]

Not sure what you're saving on a lease:rofl:

399 per month at 30months = 11,970 + 3,299 due at signing

Totals $15,269

At the end of 30 months, you have nothing and spent $15,269

If you buy, at 30 months you only have 20 payments left on a 60 year note of around 575per month which comes to only 11,500 owed on the car leaving you with at least 10,000 in equity at the end of 30 months.

Leasing sucks! If you can't afford it now, save some money until you can. Otherwise your just renting your car.

Listen to this man. He knows what he's talking about. Leasing is a horrible concept for people who can't truely afford a high end vehicle. Its like the 2 year/interest only mortage that you get b/c you can't swing the payments on a 30yr fixed.

[ilkhan4]

Listen to this man. He knows what he's talking about. Leasing is a horrible concept for people who can't truely afford a high end vehicle. Its like the 2 year/interest only mortage that you get b/c you can't swing the payments on a 30yr fixed.

Okay, I'll tie up all my money in large, moving depreciating assets that I park in public places and share the road with people who took 10 minute driving tests. Much better than those I-bonds I was thinking about.

[03&04Owner]

Ok Guys, just wanted to know if "as a lease" this would be a good deal. My preference is to lease.

Just wanted to know 'if the price is right".

Thanks

[mng]

Z4s have depreciated like rocks. People who leased in the beginning saved themselves from being upside down in a nasty way 3 yrs later. If a car has an attractive resid and he doesn't plan on keeping it, then it's not a bad idea.

If you wanna talk smart financial decisions, buying ANY *new* car is a bad idea (save for a few exceptions, like a new Ferrari at MSRP that could be resold a yr later at the same price). Get caught in the ugly part of the depreciation curve buying new.

Personally, I've gone all 3 routes (buying new, used, leasing) in the past, all for different reasons.

03&04 - there are some online Lease evaluator sites that will analyze terms compared to what's in the open market (for a price). Don't have any personal experience with any of these, but may be something to check out. good luck

[kevjandon]

Thanks JT! I'm glad someone gets the overall point.

As for 03&04 owner,

I'm just saying that there is no such thing as a good deal on a lease.

But as for the lease you show, I say :thumbdwn: for the following reasons:

If leasing is your preference because you want to drive a car at the top of your price range and have the payment of a car at the bottom of your price range, use the following as a guide:

If BMW is announcing the "special" lease rate, there is still room to negotiate.

When leasing, you never want to leave the dealership putting any money down. $0 Down, period.

Then you want the lowest payment possible, period.

Walk out five times if you have to. Just keep walking out until they come down to where you don't think they'll come down any more.

Get the highest mileage possible. Don't let them sneek in 10K or 8K miles per year when you drive 12K miles.

Make sure the lease is a closed end lease. You don't want to be hit with hidden charges on the back end.

Next, call your insurance company. They usually require specific terms if your leasing the car and it is usually more expensive than if you simply had a loan on the car. Also, with a lease you may want to buy gap insurance (not sure if it applies to leased cars, but worth asking as I think it does). If you walk out of the dealer ship with a $200/mo payment and the residual after 30 months is 30K, you will be upside down in the lease in case of a total loss accident. You need to make sure you're covered for this. A leased cars insurance is always higher and offers less flexiblity than a purchased cars insurance. Kind of like renters insurance vs. homeowners insurance. Renters is always higher.

Finally, make sure you understand how the sales tax works in your state. Some states, the sales tax is pro rated and added to the monthly payment ($399 + tax per month). In other states, you simply pay the lease payment ($399) and then when you register the car, you must pay the entire sales tax on the purchase price ($38,000) of the car. The first way is preferred, the second way sucks.

I'm in OK and they do the second way. My former state NV did the 1st way. Either way, make sure you take into consideration the sales tax as it is either a lager front end down payment or a larger monthly payment. Additionally, if your state makes you pay it all up front, it would be good to find out if you get a sales tax credit back at the end of the lease when you turn in the car for another one. In OK, once you pay the sales tax, it's gone. No pro-rated credits. In NV you get a portion back.

Be a smart consumer, know as much as possible, pay as little a possible and get everything you want.:D

['Cane]

Next, call your insurance company. They usually require specific terms if your leasing the car and it is usually more expensive than if you simply had a loan on the car. Also, with a lease you may want to buy gap insurance (not sure if it applies to leased cars, but worth asking as I think it does). If you walk out of the dealer ship with a $200/mo payment and the residual after 30 months is 30K, you will be upside down in the lease in case of a total loss accident. You need to make sure you're covered for this. A leased cars insurance is always higher and offers less flexiblity than a purchased cars insurance. Kind of like renters insurance vs. homeowners insurance. Renters is always higher.

You want to make it sound like you know what you are talking about, but I think you need to do some more research.

1. Lease payments have GAP insurance already factored in.
2. Insurance companies require 100/300 for liability. If he is already carrying that coverage (many people do), there will be no difference.

[JT///M3]

I think we've proven that leasing sucks and why it sucks. But if you really need to drive that 06 Z4 on a 25k salary, then go for it. Even my accountant says leasing is a no brainer bad deal. Unless you can write it all off at the end, but even then he says, its still a bad deal.

[mng]

I think we've proven that leasing sucks and why it sucks.

so you would rather him buy a new Z4, have a larger payment every month and then have to pay to get out of it 2-3 yrs later (when dealers are giving them away new as they are now)? good idea

Or what about the Cayenne? Sticker on the turbo was about 110K. Residuals were based on that number....when they weren't selling, dealers would discount drastically off the MSRP. So suddenly the spread bet selling price and the resid shrunk, thereby decreasing the payments considerably. Assuming the buyer only wants the (rapidly depreciating) truck for 3 yrs, you think it would be better to take out a std 60 month loan? Porsche finance would love that - they wouldn't be the ones stuck upside down in 3 yrs.

what does your accountant say about buying new? If you can advocate that as financially sound, i'd like to hear it.

There are instances where leases and balloon-pmt type financing is a viable option. Implying (condescendingly) that it always "sucks" just makes you look foolish. In addition, it wasn't the thread-starters intent to hear everyone's preferences on leasing or not. Along those lines, i won't respond again here. Our opinions are worth exactly what 03&04Owner paid for them.

[JT///M3]

so you would rather him buy a new Z4, have a larger payment every month and then have to pay to get out of it 2-3 yrs later (when dealers are giving them away new as they are now)? good idea

Or what about the Cayenne? Sticker on the turbo was about 110K. Residuals were based on that number....when they weren't selling, dealers would discount drastically off the MSRP. So suddenly the spread bet selling price and the resid shrunk, thereby decreasing the payments considerably. Assuming the buyer only wants the (rapidly depreciating) truck for 3 yrs, you think it would be better to take out a std 60 month loan? Porsche finance would love that - they wouldn't be the ones stuck upside down in 3 yrs.

what does your accountant say about buying new? If you can advocate that as financially sound, i'd like to hear it.

There are instances where leases and balloon-pmt type financing is a viable option. Implying (condescendingly) that it always "sucks" just makes you look foolish. In addition, it wasn't the thread-starters intent to hear everyone's preferences on leasing or not. Along those lines, i won't respond again here. Our opinions are worth exactly what 03&04Owner paid for them.

No car is a financially good thing. They are all depreciating liabilities. That said, its a necessity. Is it not? So you can ride your bike or take public transportation to and from work and I guess you can just take nice Sunday walks around the block instead. I don't see your point. But I do see that you're upset.

The main reason I don't like leasing is that you pay and in the end, you have nothing. You buy, and hopefully you don't overpay, and in the end, you can resell it or own it free and clear. Whats so hard about that? Its like renting and owing your own property. Sure, the cost of ownership maybe more than leasing/renting, but in the end, you have something to show for it (regardless that it appreciates or depreciates).

Maybe you should stop replying.
:rofl:

[JT///M3]

Another thing, perhaps we're not really answering the original question, but we are indeed sharing information and opinions on relevant topics. Heated discussions only make it more fun.

[JT///M3]

One more post and then I'm done.

Lets look at leasing from the Stealers perspective. Do you know why stealers love leasing? Its like they loan you a car for a set amount of money and time. Then you bring it back to them and they don't have to give you nothing, more likely, get you into another lease. Or even better if you've driven over the allotted amount of miles, they can get more money out of you. Or even better, if you're way over, resign you to another lease term. Or even better, just get you to buy the dang thing at a higher residual value than current used cars of the same/like model. Or they take your car that you just paid the depreciation for them over the past 2-3 years, and they resell it. Its great! Just like a money machine. So many great options for a stealer, not so many great options for you.

Personally, if you don't mind driving a used car or money matters to you more than how cool you're friends/neighbors think you are, then buy a used car.

['Cane]

No car is a financially good thing. They are all depreciating liabilities. That said, its a necessity. Is it not? So you can ride your bike or take public transportation to and from work and I guess you can just take nice Sunday walks around the block instead. I don't see your point. But I do see that you're upset.

The main reason I don't like leasing is that you pay and in the end, you have nothing. You buy, and hopefully you don't overpay, and in the end, you can resell it or own it free and clear. Whats so hard about that? Its like renting and owing your own property. Sure, the cost of ownership maybe more than leasing/renting, but in the end, you have something to show for it (regardless that it appreciates or depreciates).

Maybe you should stop replying.
:rofl:

Or, he could buy the car, and after three years, not only would it have cost him $6000 more, but he would still be upside down.

['Cane]

One more post and then I'm done.

Lets look at leasing from the Stealers perspective. Do you know why stealers love leasing? Its like they loan you a car for a set amount of money and time. Then you bring it back to them and they don't have to give you nothing, more likely, get you into another lease. Or even better if you've driven over the allotted amount of miles, they can get more money out of you. Or even better, if you're way over, resign you to another lease term. Or even better, just get you to buy the dang thing at a higher residual value than current used cars of the same/like model. Or they take your car that you just paid the depreciation for them over the past 2-3 years, and they resell it. Its great! Just like a money machine. So many great options for a stealer, not so many great options for you.

Personally, if you don't mind driving a used car or money matters to you more than how cool you're friends/neighbors think you are, then buy a used car.


Your logic is flawed because at the end of the lease, the Dealer does not own the car, the leasing company does. If it is a nice car, they can buy it and resell it (just like any trade in), but most end up going to the auction.

[casper]

No car is a financially good thing. They are all depreciating liabilities. That said, its a necessity. Is it not? So you can ride your bike or take public transportation to and from work and I guess you can just take nice Sunday walks around the block instead. I don't see your point. But I do see that you're upset.

The main reason I don't like leasing is that you pay and in the end, you have nothing. You buy, and hopefully you don't overpay, and in the end, you can resell it or own it free and clear. Whats so hard about that? Its like renting and owing your own property. Sure, the cost of ownership maybe more than leasing/renting, but in the end, you have something to show for it (regardless that it appreciates or depreciates).

Maybe you should stop replying.
:rofl:

A car is an expense, not an investment. You set a monthly budget for that expense. With leasing, your monthly cost is lower than with buying the same car, so at the end of 3 years, you spent less than if you were buying, you do not need to worry about selling or trading in, simply return it.

If houses depreciated like cars, would you buy a house or rent one?

Even if you keep ypur car for 6 years or more (when you say that at the end of buying you have something to show for, is because you kept it for over 5 years), you have repairs and maintenance that you don't have on a 3 year lease.

I am just surprised that some people think that buying is better than leasing, it does not make sense.

[03&04Owner]

A car is an expense, not an investment. You set a monthly budget for that expense. With leasing, your monthly cost is lower than with buying the same car, so at the end of 3 years, you spent less than if you were buying, you do not need to worry about selling or trading in, simply return it.

If houses depreciated like cars, would you buy a house or rent one?

Even if you keep ypur car for 6 years or more (when you say that at the end of buying you have something to show for, is because you kept it for over 5 years), you have repairs and maintenance that you don't have on a 3 year lease.

I am just surprised that some people think that buying is better than leasing, it does not make sense.

I agree, I have been leasing for a long time. One of my current cars is an E39 2003 530i. I purchased it at the end of the lease, because it is a great vehicle. Now i'm thinking that maybe I should free up the probably 30K I have sitting on that car, lease a Z4 and put the money i would get from the sale of the 530i to work!

[numbersguy]

I leased a Ford F150 a few years ago. I didn't appreciate it at the time but it was a killer deal. When the lease was nearing termination I started getting a flood of mailings from Ford Motor credit begging me to buy the truck at its payoff which was about 4.5K more than its retail value at the time. They messed up when they set the residual value. The same thing happened when I leased one of the first year Ford Expeditions in 1997. The leasing companies apparently thought the darn things wouldn't depreciate. Believe me they did depreciate by 2000, and the leasing companies screwed themselves.

I bought my present cars, a 2004 Expedition and a 2004 325i. So far I'm glad I bought the bimmer because it was fairly stripped and has held its value well. I'm sorry I didn't lease the Ford because its value has dropped much faster than I expected. The leasing companies aren't the only ones who can make this mistake.

[sailskidrive]

What ever happened to the days of conservative fiscal responsibility? You know the good old formulas taught in Economics and Personal Finance 101? Spend 2.5 - 3 times your income on a house and one third of one years salary on a primary vehicle financed over 36 months.

My father always drove leased cars, however he negotiated them as part of his compensation package at work, that way the only thing he paid towards vehicle was personal income tax on the value of the lease. Unfortunately most of us don't have that kind of opportunity available to us. Outside a circumstance like that I can't imagine why anyone would want to make a payment for 36-48 months on a vehicle and in the end walk away with nothing, especially since that lease payment will still most likey be 70-80% of what a traditionally finance vehicle would cost per month. They would be much better off purchasing a certified used vehicle and having something to show for it.

Cheap credit makes people feel wealthier than they are and allows them to live well beyond their means by trading part of their future for something here and now. Leasing is the ultimate extension of that cheap credit to those who can least afford it. My stepfather, who incidently is the 17th cheapest person on the face of this Earth, taught me that as a kid and I have learned to live within my means. I am truly amazed at work when I hear the mid-twenty-somethings (a few years younger than myself) bragging on about the new "M" they "aquired" last weekend. I know for a fact that these folks do not even have a pot to crap in and just like their vehicle lease are renting their residence. Luckily for myself, such inviduals lack of fiduciary understand have bought me a boat in Annapolis and a fiesty little silver convertible in the garage.

>>If he were to buy the car (over 60 months) with the same money up front, his payment would likely be ~$625/month. That's a big difference.

Flame me for this one... but IMHO if you need to finance a car for 60 months, you CANNOT afford it. Take a breather for a few days, sit back and find a vehicle that fits your budget without selling your future to Bank of America etc.

~Sail :cheers:

['Cane]

>>If he were to buy the car (over 60 months) with the same money up front, his payment would likely be ~$625/month. That's a big difference.

Flame me for this one... but IMHO if you need to finance a car for 60 months, you CANNOT afford it. Take a breather for a few days, sit back and find a vehicle that fits your budget without selling your future to Bank of America etc.

~Sail :cheers:


Apparently not everybody is a wealthy as you. :rolleyes: Long, long, long, long gone are the days of financing a car for 36 months. The days of financing a car for 72 months is here. Salaries are not increasing at the same rate as the prices for cars (and especially real estate). I am sorry if that upsets your "conservative fiscal responsibility", but that's the way it is. Get over yourself.

[sailskidrive]

>>The days of financing a car for 72 months is here.

Wow... I just checked my credit union's website and low and behold 72 months is here! (%5.24 APR)
I guess it all comes down to what is important in life and how you wish to manage your debt. Buy what you need and can afford or shoot for the moon.

To each their own. :thumbup:

My apologies if I came off like I was riding the high horse... :)

~Sail

['Cane]

My apologies if I came off like I was riding the high horse... :)

~Sail

You did, and it's ok. :thumbup: FWIW, I am basing my thoughts on 7+ years of experience in the car business (working for one of the largest dealers in the US).

[JT///M3]

What ever happened to the days of conservative fiscal responsibility? You know the good old formulas taught in Economics and Personal Finance 101? Spend 2.5 - 3 times your income on a house and one third of one years salary on a primary vehicle financed over 36 months.

My father always drove leased cars, however he negotiated them as part of his compensation package at work, that way the only thing he paid towards vehicle was personal income tax on the value of the lease. Unfortunately most of us don't have that kind of opportunity available to us. Outside a circumstance like that I can't imagine why anyone would want to make a payment for 36-48 months on a vehicle and in the end walk away with nothing, especially since that lease payment will still most likey be 70-80% of what a traditionally finance vehicle would cost per month. They would be much better off purchasing a certified used vehicle and having something to show for it.

Cheap credit makes people feel wealthier than they are and allows them to live well beyond their means by trading part of their future for something here and now. Leasing is the ultimate extension of that cheap credit to those who can least afford it. My stepfather, who incidently is the 17th cheapest person on the face of this Earth, taught me that as a kid and I have learned to live within my means. I am truly amazed at work when I hear the mid-twenty-somethings (a few years younger than myself) bragging on about the new "M" they "aquired" last weekend. I know for a fact that these folks do not even have a pot to crap in and just like their vehicle lease are renting their residence. Luckily for myself, such inviduals lack of fiduciary understand have bought me a boat in Annapolis and a fiesty little silver convertible in the garage.

>>If he were to buy the car (over 60 months) with the same money up front, his payment would likely be ~$625/month. That's a big difference.

Flame me for this one... but IMHO if you need to finance a car for 60 months, you CANNOT afford it. Take a breather for a few days, sit back and find a vehicle that fits your budget without selling your future to Bank of America etc.

~Sail :cheers:

Finally, a voice of reason. I too went by some of those simple rules. I have no qualms about driving a 2-4 yr old used car. I like having my money do other things for me.

I think 03&04 proved my point exactly, even though he probably didn't realize it.

"I agree, I have been leasing for a long time. One of my current cars is an E39 2003 530i. I purchased it at the end of the lease, because it is a great vehicle. Now i'm thinking that maybe I should free up the probably 30K I have sitting on that car"

Just the fact that you can sell your 530 for 30k is the main reason why leasing makes little sense. You actually have something to show for it in the end when you buy.

Now, taking everything into context, I would probably lease a 06 Z4 only b/c this car's sales figures suck big time and it depreciates like a Yugo. You can only win if you lease this thing for 299 or 399 (whatever the current heavily discounted fee is, since they can't seem to give away a Z4 with 5k of dealer incentives). According to published figures by Fred Meloan, the Z4 is the biggest dud BMW has ever produced. Sorry. Personally, this works out in the favor of those of us who don't mind buying your used lease return in a few years (esp the MZ4). So lease away! Just remember, its better to have your cake and eat it too instead of just eating it.

[sailskidrive]

I have a feeling it was hard for the Z4 to follow the Z3. I believe BMW could of had a hit if they just made a slightly BIGGER Z3 instead of going off on this tangent. Anyway, I still like the Z4 and would mostly likely have a "gentlly used" one in the driveway right now if we weren't backed into a corner with my old truck. It was a 2002 Silverado and the dang thing had the worse case of piston known to man with only 64k miles on it! GM of course denies piston slap is a real problem and refused to do anything about it. We ended up trading it for a new F-150. (first time ever trading in a vehicle)

On a bizarre note, in order to get Ford's "matching $1000" in addition to the current incentives I HAD to finance through Ford Motor Credit. However, $11k is the minimum amount that they will finance. The problem was the balance came to $10600, so I had my girlfriend over at the "accessories counter" picking out all kinds of crapola that we didn't need. Needless to say, it's a very organized vehicle. LOL Wish I could have got a deal like that on a new X5.

Maybe BMW will buy out GM someday, 15k oil change intervals for all!


~Sail :thumbup: :thumbup: :thumbup: :thumbup:

[03&04Owner]

I think 03&04 proved my point exactly, even though he probably didn't realize it.

"I agree, I have been leasing for a long time. One of my current cars is an E39 2003 530i. I purchased it at the end of the lease, because it is a great vehicle. Now i'm thinking that maybe I should free up the probably 30K I have sitting on that car"

Just the fact that you can sell your 530 for 30k is the main reason why leasing makes little sense. You actually have something to show for it in the end when you buy.



Actually what I meant was that I beleive I made a mistake by purchasing the vehicle. I have tied up a substantial amount of money by doing so. Since it was purchased I could not deduct it as I could while it was leased. I own my business, so by buying, no deduction.

Anyway my point is, there are different reasons for people to either buy or lease. For me makes more sense to lease.

Thanks

[bob lindquist]

the new Z4 lease program utilizes a low money factor (interest rate) and high residual value. (less value is consumed as you drive it). The 30 month term is to avoid having a roadster thru the third winter. You get 3 summers and 2 winters.


And yes its a very good lease.

you can have the same value and put less cash down if you like.

I am at Braman.

[03&04Owner]

the new Z4 lease program utilizes a low money factor (interest rate) and high residual value. (less value is consumed as you drive it). The 30 month term is to avoid having a roadster thru the third winter. You get 3 summers and 2 winters.


And yes its a very good lease.

you can have the same value and put less cash down if you like.

I am at Braman.

Now this is the type of answer I was looking for. Which Braman? Can you PM me your info?

Thanks

[BayAreaBMWFan]

To chip in:

Leasing is just another form of ownership where you keep the car for the term of the lease. The disadvantage in leasing is that you pay for the initial depreciation of the car. Hence versus keeping the car for a longer term, your average depreciation costs are higher. For example, a typical car will depreciate 40% of its value every three years. So after three years it will be worth 60%, then be worth 36% over the next three years. So the difference between depreciation between the first three years vs the second three years is about 16% of MSRP.

However do keep in mind the following:

1. If you are able to get a big discount up-front (like ED), the discount is amortized over a shorter period of time. So if you buy at 90% of MSRP, the depreciation costs over the first three years (30%) become comparable to the depreciation costs over the next thee years (24%). On my 525 lease, with a 77% residual, I am paying 12-13% depreciation over 2 years :).

2. BMWs can be expensive to maintain outside the free warranty period. As cars become more complex, the money spent to repair and maintain them keeps on going up. This is especially true in high wage states like CA, where a BMW dealer charges $150/hour and independents chare $110/hour for labor.

3. For high value cars, the savings in sales tax can be substantial.

4. You do not take any residual risk. If the car is worth less than the residual, you simply walk away. If it is worth more, you can keep it.

5. You do not take any risk of accidents resulting in diminished value. Try selling a bimmer after a major accident and you would lose 10-15% easily.

6. For people who are good at investing their money, the money you did not put in into the car payments, can be invested in other higher return assets, like stocks, real-estates, gold or whatever is the flavor of the season.

7. Often you have promotional MFs, especially on BMWs, which reduce the interest charge substantially. BMWs typically offers lease incentives for new cars and low APRs for CPOs.

8. If you lease a car, your insurance deductible for comprehensive and collision can not be too high. For BMWFS the limit is $1000. Some other companies keep it at $500. But this is not an issue for most people, since even if you were owning/financing the car, you would not keep the deductible more than a $1000, would you?:dunno:

Based on some extensive math, it make sense to own a car for if you plan to keep it for more than 6 years. At that point the lower depreciation costs, will compensate for the repair/maintenance costs. If you plan to buy one and keep it for less than 6 years, you are financially beter off leasing, since the savings in depreciation, are not substantial enough to compensate for the money spent in maintenance/repairs and the residual risk you take (resale value).

And not to mention, every time you purchase a new car you get a pretty substantial rebate $500-$1500 from BMW CCA.

One strategy which can be used is to lease a car when lease specials are running and at the end of the lease get the dealer to CPO it, and buy it again at the promotional APR being offered by BMW to move the CPO cars. You reduce your interest rate costs substantially by using the promotional interest rates (lease new, buy CPO).

It is only people who can not run a spread-sheet who shill that leasing is bad. There are pros and cons. Many people value their time more than savings on a used car and do not want any maintenance/repairs headache. With BMWs zero out of pocket program for 4 years, the savings can be substantial.

[BayAreaBMWFan]

Okay, I'll tie up all my money in large, moving depreciating assets that I park in public places and share the road with people who took 10 minute driving tests. Much better than those I-bonds I was thinking about.

Yup I bonds are nice right now, 6+% with good liquidity and tax benefits if you use them for education etc. And people frown at leases with interest rates lower than 5% :)

[casper]

What ever happened to the days of conservative fiscal responsibility? You know the good old formulas taught in Economics and Personal Finance 101? Spend 2.5 - 3 times your income on a house and one third of one years salary on a primary vehicle financed over 36 months.

My father always drove leased cars, however he negotiated them as part of his compensation package at work, that way the only thing he paid towards vehicle was personal income tax on the value of the lease. Unfortunately most of us don't have that kind of opportunity available to us. Outside a circumstance like that I can't imagine why anyone would want to make a payment for 36-48 months on a vehicle and in the end walk away with nothing, especially since that lease payment will still most likey be 70-80% of what a traditionally finance vehicle would cost per month. They would be much better off purchasing a certified used vehicle and having something to show for it.

Cheap credit makes people feel wealthier than they are and allows them to live well beyond their means by trading part of their future for something here and now. Leasing is the ultimate extension of that cheap credit to those who can least afford it. My stepfather, who incidently is the 17th cheapest person on the face of this Earth, taught me that as a kid and I have learned to live within my means. I am truly amazed at work when I hear the mid-twenty-somethings (a few years younger than myself) bragging on about the new "M" they "aquired" last weekend. I know for a fact that these folks do not even have a pot to crap in and just like their vehicle lease are renting their residence. Luckily for myself, such inviduals lack of fiduciary understand have bought me a boat in Annapolis and a fiesty little silver convertible in the garage.

>>If he were to buy the car (over 60 months) with the same money up front, his payment would likely be ~$625/month. That's a big difference.

Flame me for this one... but IMHO if you need to finance a car for 60 months, you CANNOT afford it. Take a breather for a few days, sit back and find a vehicle that fits your budget without selling your future to Bank of America etc.

~Sail :cheers:

He who dies with the most debt wins the game. There is nothing wrong with debt, on the contrary, enjoy as much as you can, and if it's with someone else's money, better.