PDA

View Full Version : Leasing VS buying at different angle


HPIA4v2
03-23-2007, 07:03 AM
Assuming someone with 60K at hand and can afford to set aside $800 monthly.
I still think leasing makes sense, is there any BIG flaw on this exercise?

Option 1, leasing a loaded 535i and put the 60K in index stock funds (7.5***37; return annually on investment). Leasing payment is $800/month no down (maybe security deposit but you get this back right?).
In 10 years assume leasing 3 different similar cars (hope $800/ month is still doable thoughout 10years span)
Year balance on investment
0 $ 64,657.96
1 $ 69,677.52
2 $ 75,086.77
3 $ 80,915.95
4 $ 87,197.66
5 $ 93,967.05
6 $ 101,261.95
7 $ 109,123.18
8 $ 117,594.70
9 $ 126,723.88


Option 2, buying the car outright for $60K, keep it for 10 years; and put $800/month into index stock fund returning 7.5%
Year Balance on investment
0 $ 9,936.97
1 $ 20,645.38
2 $ 32,185.11
3 $ 44,620.69
4 $ 58,021.68
5 $ 72,463.03
6 $ 88,025.50
7 $ 104,796.12
8 $ 122,868.69
9 $ 142,344.27

Option 2 ends up with more money but in 10 years the same car will need maintenance so I think it's still comparable. Also you get to drive 3 different cars in 10 years.
The question is do I miss anything here?

aficionado
03-23-2007, 09:16 AM
Seems resonable.

As a buyer and not a leaser, the benifit of buying says, after the car is payed off, you can stop put away that $800, if need be.

Plus, after the car is payed off, you can trade down if needed.

I have a 2001 Vette, worth about $20,000. I don't have to get a 50K bimmer. Actually, the smart 'financial' move is to buy a 20K - 30K car and drive it for 10 years. This would mean almost no out of pocket expenses, for a new car with warranty.

Eitherway, a car is a depreciating asset and isn't any better than flushing your money down the toilet.

HPIA4v2
03-23-2007, 10:57 AM
I agree, car is depreciating asset as well as most of the time we are dealing with a "want" rather than "need". If not we won't be here talking:)

It's just that, I am wondering if buying car is becoming a passe.
Trust me I am in the buyer camp all this time but try to be open mind about lease and can't say it's really that bad thing about it even from finance stand point.

BTW, I may forgot to point out option2 may leave you about $10K more since a 535i may worth that much in 2017. (based on linear interpolation of a 528 MY1997 according to KBB).
But you may have to spend 10K anyway to keep it going for 10years.

I didn't do this for shorter period of time since leasing is definitely wins out.

mason
03-23-2007, 11:09 AM
Question: Did you index $800 with 0.625***37; growth everymonth? Or, you did $800X12X1.075?

If you do hold on the car for at least 7 years, buying always make more sense. This has been proven on all sorts of financial articles or financial TV shows.

You also need to factor in your mileage. I have 2 cars at home, at least one of them must be purhcase outright because 2 cars eat up 37,000 miles a year.

The only problem is that when you are done with the car, selling it or trading-in is a hassle.

HPIA4v2
03-23-2007, 11:33 AM
I used a simple investment calculator online.
I believe the 7.5% return is compunded also the gain is done annually not monthly (for both options).

That's what everybody is saying about lease VS buy, but the intangible thing is people who lease gets a new car every 3/4 years.
I guess I have to keep asking myself if 142k-126k = $16k in 10 years worth that "intabgible" factor.

chrischeung
03-23-2007, 12:50 PM
One of the minuses of leasing is the lack of flexibility. But if you can manage and accept that risk, the benefits will sometimes outweigh the costs.

dfortier
03-23-2007, 12:55 PM
For me it was a primarily a matter of cash flow. I have a 2006 BMW 525i that listed for $48k+. My lease payment is about $525/month with $4,000 down for 36 months. I drive 11 miles to work 5 days a week, so commuting is not a mileage burner for us. This is the family car, so we vacation and take long trips several times a year. As long as I keep the miles within limits, we'll be OK.

My dealer will let me get out of the lease 6 months early as long as I step into a new lease. After 30 months I will have put in $19,750 ($4,000 = ($525 * 30)). So, after 9 years, I will have put in $60,000+ and driven 3 new cars that were fully warranted by the manufacturer, and not paid a penny in maintenance.

Is this worth it? I think so after driving high-end ($60k+) cars in the past that lasted 6+ years with $2,000+ maintenance bills several times a year. I think what makes this work is the free maintenance and the fact that BMW's hold their value.

Ugly Bear
03-23-2007, 01:44 PM
You are missing that lease payments on second and third cars will be at least 10***37; higher due to inflation. Also, new car MSRP will be going up with time, in 7 years car MSRP may be good 30% higher.

wagonman
03-23-2007, 07:08 PM
if you put 60k down on the car as in buying you are forgetting to factor in lost opprtunity cost on the 60k. yuo can use your 7.5% annual return. by setting aside 800 per month what are you doing, mimicing a lease payment?
i think so much of the buying vs leasing argument really hinges on how long you want to keep the car. disadvantage of buying and holding is of course the hassle when you go to sell or trade. also, the maintenance costs after warranty is up. advantage is it is yours and YOU decide when and how to sell. no mileage restriction. leasing: let's face it it is a glorified rental. now, i admit it is a rental with one driver:you but it is still a rental. advantage is no maintenance costs and your out of pocket may well be less. i would do what makes you most comfortable since in the end buying vs leasing is going to come out about the same...

SergeyM
03-23-2007, 07:09 PM
You are missing that lease payments on second and third cars will be at least 10% higher due to inflation. Also, new car MSRP will be going up with time, in 7 years car MSRP may be good 30% higher.


Not necessarily. My 2007 550 was cheaper to lease that my 2002 540. What is worst about leasing is that it takes away the pride of ownership and new car excitement. You know in advance that in 2-3 years youíll be driving something else, newer and likely better, so there is no point to be excited or happy. Itís like dating a woman knowing that you will never marry her, without any emotional attachment, you just spending time and sooner or later there will be someone else.

chuck92103
03-23-2007, 07:26 PM
You need to take into account the repeated tax, and several thousand you will pay to get into multiple leases. Also, with a lease you will be buying tires in some cases before the lease is up.

In the long run, owning outright is always cheaper.

Leasing is attractive for many reasons. Number one is a consistent monthly outflow of cash. So many people get scared because of a $1000-$3000 repair/maintenance bill because they are living paycheck to paycheck.

There is a mininum monthly cost to own a car whether you lease or own. In the long run the amount will be lower if you own.

If you always want new, and do not mod your car, leasing is the way to go. If you buy a car and plan keep it long term, leasing is not for you.

There is no wrong way to go. It comes down to what works best for you. Both options require the consumer to pay for depreciation. The person leasing only pays for depreciation and rental charges where the buyer pays for the asset and depcreciation.

Ugly Bear
03-23-2007, 08:17 PM
Not necessarily. What is worst about leasing is that it takes away the pride of ownership and new car excitement.

It also makes me think that I will have to get another car in three years and that may not necessarily be a car that I like so I may end up picking something at random and possibly driving car I hate for three years. Buying provides feeling of stability especially counting that BMW is a bit unpredictable, especially in US. For example, I loved my M3 sedan and wanted to get a new one. But BMW took it away. Now BMW is taking away mid-powered NA engine, leaving only underpowered 528xi and turbo in AWD line. They suddently pulled from Bluetec diesel alliance. I honestly have no idea what BMW will be offering in 2010.

aficionado
03-23-2007, 09:27 PM
You are missing that lease payments on second and third cars will be at least 10% higher due to inflation. Also, new car MSRP will be going up with time, in 7 years car MSRP may be good 30% higher.


I agree with this and is why I'm making a move now. I figure in "X" number of years my car will be worth $10,000 less and a BMW will be $10,000 more and I'll have to come up with $20,000 more.

shabbaman
03-24-2007, 06:45 AM
Not necessarily. My 2007 550 was cheaper to lease that my 2002 540. What is worst about leasing is that it takes away the pride of ownership and new car excitement. You know in advance that in 2-3 years youíll be driving something else, newer and likely better, so there is no point to be excited or happy. Itís like dating a woman knowing that you will never marry her, without any emotional attachment, you just spending time and sooner or later there will be someone else.

Exactly true. While *our* car gets interim oil changes, diff and tranny fluid changes, annual brake fluid changes, fuel filter changes, love and attention, the car we just leased will get none of the above. In 2 years it will be nothing but a memory.

BTW, our in 2003 our 530i listed at $48K, our 2007 xiT listed at $59K. Take away the price of the xDrive and wagon, that still causes the 2007 to be $7K - $8K more expensive than a comparably equipped 2003. My, how prices have gone up. :tsk:

krash
03-24-2007, 08:19 AM
Assuming someone with 60K at hand and can afford to set aside $800 monthly.
I still think leasing makes sense, is there any BIG flaw on this exercise?

Option 1, leasing a loaded 535i and put the 60K in index stock funds (7.5***37; return annually on investment). Leasing payment is $800/month no down (maybe security deposit but you get this back right?).
In 10 years assume leasing 3 different similar cars (hope $800/ month is still doable thoughout 10years span)
Year balance on investment
0 $ 64,657.96
1 $ 69,677.52
2 $ 75,086.77
3 $ 80,915.95
4 $ 87,197.66
5 $ 93,967.05
6 $ 101,261.95
7 $ 109,123.18
8 $ 117,594.70
9 $ 126,723.88


Option 2, buying the car outright for $60K, keep it for 10 years; and put $800/month into index stock fund returning 7.5***37;
Year Balance on investment
0 $ 9,936.97
1 $ 20,645.38
2 $ 32,185.11
3 $ 44,620.69
4 $ 58,021.68
5 $ 72,463.03
6 $ 88,025.50
7 $ 104,796.12
8 $ 122,868.69
9 $ 142,344.27

Option 2 ends up with more money but in 10 years the same car will need maintenance so I think it's still comparable. Also you get to drive 3 different cars in 10 years.
The question is do I miss anything here?

It all depends. Leasing is a great idea for some people. Buying is a great idea for others.

Personally speaking, I'm getting a new car every 3 years anyway. Period. Life is good.
:thumbup:
Therefore, that pretty much makes the buying vs leasing argument a no brainer for me.

I have much much more than $60k in liquid assets. Plus, I have a high enough income to afford a fully loaded 550i.

Why would I buy a $60,000 depreciating asset if I'm getting rid of it in 3 years anyway? Plus, I could do better by keeping my money in the other investment instruments (individual stocks, bonds, ETFs, REITs, etc.).

Also, when it comes to cars, I tend to live (drive) very modestly. For example, I usually settle for very affordable cars like a fully loaded 335.

ProRail
03-24-2007, 10:03 AM
Not necessarily. My 2007 550 was cheaper to lease that my 2002 540. What is worst about leasing is that it takes away the pride of ownership and new car excitement. You know in advance that in 2-3 years youíll be driving something else, newer and likely better, so there is no point to be excited or happy. Itís like dating a woman knowing that you will never marry her, without any emotional attachment, you just spending time and sooner or later there will be someone else.

I've heard this theory before, and I feel that it doesn't hold for most people. Every time I hear it I feel kind of depressed about anyone who would live this way. Why would you not spend money on a girlfriend? Why would you not take care of your car simply because you aren't going to own it forever? I don't mean to be insulting. I'm just not sure that your theory is valid.

revlis240
03-24-2007, 10:38 AM
There are 2 kinds of people in the car world. Those who lease and those who buy.

Not to demean anyone that thinks buying is better, but to anyone that says leasing deprives you of pride of ownership i would have to disagree. Who owns the car when you buy? Usually the bank, so you dont really "own" the car until 5 years passes by. 5 years later you have an old model, reasonably worn, outdated car--and youre probably eyeing that new shiny one anyway, which defeats the purpose of buying the car only to sell it 5 years later when you could have saved hundreds of dollars a month and just leased it to get a new one every few years.

anyway, if you knew for a CERTAINTY that your "wife" in 5 years would be old, have some dings, probably a chipped windshield, worn leather, etc etc and you could trade her in for a new shiny 20 year old and NOONE would hate you for it (including yourself), what selfrespecting man wouldnt do that. :)

Also, to the OP, if you think that a new e60 is going to last you 10 years...:eeps: haha. Mine has broken 3 times in 1 year, just 1 reason why I would never, EVER have a bmw out of warranty

just my .02
:)
Abe

chuck92103
03-24-2007, 11:10 AM
Also, to the OP, if you think that a new e60 is going to last you 10 years...:eeps: haha. Mine has broken 3 times in 1 year, just 1 reason why I would never, EVER have a bmw out of warranty

just my .02
:)
Abe

Most issues with new cars are resolved during the first year of ownership. So having a car out of warranty would not scare me.

I would never buy or lease a car, regardless of make if I continued to have repeated issues. Whether the car is in warranty or not, repeated dealer visits are a turn off for me. As with any car company, some customers will have bad experiences, it is the luck of the draw. Most do not which is why they are repeat customers.

Remember, there are more BMWs on the road out of warranty than in warranty. I don't see a massive dumping of cars.

If you give any car company $500-$1000 every month for the rest of your life, I am sure they will keep you in a warrantied car. You are essentially buying repair insurance.

revlis240
03-24-2007, 11:31 AM
dont get me wrong i love them (enough to spend $900/mo on one)

but my 330Ci - broke all the time
550i - breaks all the time


now the SC400 on the other hand, has gone 15 years before needing 1 repair (ac went low, you could consider that normal)

Abe

krash
03-24-2007, 12:09 PM
What is worst about leasing is that it takes away the pride of ownership and new car excitement.
:tsk:

You know in advance that in 2-3 years youíll be driving something else, newer and likely better, so there is no point to be excited or happy. Itís like dating a woman knowing that you will never marry her, without any emotional attachment, you just spending time and sooner or later there will be someone else.
Exactly.
:)

ks-man
03-24-2007, 03:45 PM
I also agree that the whole pride of ownership is BS.

I can buy any car I want with cash. Still I first decide what car I want and then decide how long I think I will own it. Finally it all comes down to which makes the most sense from a dollars point of view.

I'm leasing my current car but am deciding to buy my new 535 with cash. I'm in Chicago where when leasing you pay tax on the whole car as well as a 6***37; monthly use tax. In the end it would cost me $1,000/month to lease the car. I only plan on having the car for 3 years but I still think it is wiser for me to buy the car outright and take my chances on selling it in 3 years. But believe me, had I leased the car I would have been just as proud to show off my new Bimmer

And for all those people who say they can do better with their money somewhere else, I'm in finance and to figure you can get 10***37; in the markets is just crazy. I'm not saying that the markets can't return 10% but please don't bank on that. Assume that you invest over the long term (that is over 10 years, not 3-4 years) you can pretty safely assume that you'll get 6% after fees. But keep in mind how you'll feel if you lose 5% a year for 3 years. If you can't stomach that, buy the car with cash if you can afford it and don't pay the 7% finance or leasing costs saying you can beat that somewhere else. Trust me, the last thing I want to do is pay a car company or bank 7%.

wagonman
03-24-2007, 06:38 PM
who is posting how financially secure they on this board is a bonafide :asshole: i know people who have unbelievable incomes (compared to most) and others who have assets so large they could choke a horse. and, guess what they would NEVER be caught dead saying anything about their financial strength anywhere let alone a bmw message board.
there is a saying, " the greatest swords never leave their scabbards". that means those who are showing their swords are" joooooooooookers. got it?

krash
03-24-2007, 08:52 PM
who is posting how financially secure they on this board is a bonafide :asshole: i know people who have unbelievable incomes (compared to most) and others who have assets so large they could choke a horse. and, guess what they would NEVER be caught dead saying anything about their financial strength anywhere let alone a bmw message board.
there is a saying, " the greatest swords never leave their scabbards". that means those who are showing their swords are" joooooooooookers. got it?

Somebody got up on the wrong side of the bed this morning...

Seriously dude, the OP brought up a valid point about leasing vs buying. I think it is relevant to point out that no matter how much cash you have, leasing still makes sense financially. Don't get why you're wound up so tightly.

Ugly Bear
03-24-2007, 10:54 PM
who is posting how financially secure they on this board is a bonafide :asshole: i know people who have unbelievable incomes (compared to most) and others who have assets so large they could choke a horse. and, guess what they would NEVER be caught dead saying anything about their financial strength anywhere let alone a bmw message board.
there is a saying, " the greatest swords never leave their scabbards". that means those who are showing their swords are" joooooooooookers. got it?

Man, are you always pissed? Looking at your posts, you may want to seek professional help with depression and/or anger management. Seriously - it is not healthy.:dunno:

Ugly Bear
03-24-2007, 11:07 PM
I think it is relevant to point out that no matter how much cash you have, leasing still makes sense financially.

Depends on the brand and specific model, I guess. If you get model in the beginning of the cycle, you may want to buy and keep it for 5-6 years. See, 2003 545 looks the same as 2007 550. But you probably don't want to buy current E60 in 2009 when F10 is about to come out. One of my friends bought M5, I believe, in 2002 and just three years later it looked old. :yikes:

On the other hand, we have bought Infiniti FX45 first month they were out, around March 2003. Still own it, the car looks and feels like new, clean inside, practically no different from the car that just came off the lot. Regular warranty expires this year, but powertrain warranty is 7 years, Infiniti is reliable brand (this car had ZERO problems), so I am going to keep the car for about 2-3 years more, until either powertrain warranty expires or cars begins to look dated. The car is paid, so no monthly payments for a few years ahead. Service is almost free, I am using points from my Driver's Edge MC to pay for services :thumbup:

Now, I am getting 2007 E60 in a week which I am seriously considering leasing and then buying F10 in 2010.

Oh, and just to piss off wagonman: I do can afford simply paying cash for E60 :D

Bob@BPS
03-25-2007, 01:38 AM
There's something else to consider. Are you an employee and do you write off your car as a business expense? Interest on an auto loan is deductible on a Schedule C if you're self-employed, but not on form 2106 for an employee. That means if you're an employee and you lease the interest is included in the lease payment and is therefore deductible. That's one thing that often makes a lease a better option.

You pay principle and interest in a purchase. It's call depreciation and the money factor in a lease, but they are basically the same thing.

An interesting comment I've heard so many times is when someone says they don't like leases because they don't have any equity. Where do you think equity comes from ??? YOU paid for it. The only reason you have equity in an asset is because you're paying for it faster than it's depreciating. In a lease, you are reimbursing the leasing company for the depreciation that occurs while you're driving their car.

Just my $.02.

Bob DeLellis, CPA, EA and
President
Bimmer Performance Store, Ltd.

shabbaman
03-25-2007, 05:40 AM
There are 2 kinds of people in the car world. Those who lease and those who buy.
Abe
What about those who buy used vs. those who buy new. Financially speaking, the guy who buys your well cared for lease return is making out much better than you. I, for one, will lease if the car and the situation warrant it and will likewise buy if the conditions are better for that. To me, the E39 is a timeless car that I will keep for as long as it stays on the road not because it's financially prudent to do so but because I enjoy driving it. The E60 is a wonderful car, it just doesn't have the character of the E39.


Not to demean anyone that thinks buying is better, but to anyone that says leasing deprives you of pride of ownership i would have to disagree. Who owns the car when you buy? Usually the bank, so you dont really "own" the car until 5 years passes by.

If your wife or girlfriend borrows $1000 from your best friend does that mean he owns her.:bigpimp:

Last time I checked the registration card on *my* car it was my name that was on it, not BMW Financial Services. The Bank does not own my car just like a bank does not own my house. I can do whatever I want to my car, including setting it on fire, filling it up with diesel fuel or driving it without coolant. As long as I make my monthly payments 'till the loan matures the bank cannot do anything about it.

Nobody said buying is better than leasing or that leasers care less about their cars. Trust me on this - nobody who leases a BMW will go through the painstaking process of doing all the additional maintenance that is NOT required by BMW, perform profilactic maintenance and document it as some of the people on this board who own their cars. That's the kind of pride in ownership that is being talked about.

Which of your cars get more attention? The 15 year old Lexus that you own or the BMW's that you lease?

I don't want you to think that I'm saying that folks who lease do not take care of their cars. On the contrary, most do. They get the oil changed when the service indicator lights up and get the car washed and waxed every week and at 36,000 miles when they turn the car in it looks flawless...and they're on to another car. I simply don't know ANYBODY that does what Mike Miller says should be done to BMW's when they're leasing them. Simply put, there's no incentive to do so.



5 years later you have an old model, reasonably worn, outdated car--and youre probably eyeing that new shiny one anyway, which defeats the purpose of buying the car only to sell it 5 years later when you could have saved hundreds of dollars a month and just leased it to get a new one every few years.

My old car is just as shiny as my new one. Pride of ownership. Your 15 year old Lexus doesn't look to bad either, btw. Seriously though, if you drive a reasonable 12K per year, after 5 years your car will only have 60K. While it will require some maintenance I would hardly call it worn.




anyway, if you knew for a CERTAINTY that your "wife" in 5 years would be old, have some dings, probably a chipped windshield, worn leather, etc etc and you could trade her in for a new shiny 20 year old and NOONE would hate you for it (including yourself), what selfrespecting man wouldnt do that. :)


What if your wife trades you in after a couple of years?:dunno:


Also, to the OP, if you think that a new e60 is going to last you 10 years...:eeps: haha. Mine has broken 3 times in 1 year, just 1 reason why I would never, EVER have a bmw out of warranty

just my .02
:)
Abe
Think about this. The most demanding, costly Bimmers to maintain are the ///M cars. Somehow, unless they're involved in a crash they pretty much all seem to live past the tender age of 10. While BMW's aren't known for their reliability, they are known for their durability.

shabbaman
03-25-2007, 05:49 AM
Now, I am getting 2007 E60 in a week which I am seriously considering leasing and then buying F10 in 2010.



How and why would you be seriously considering a car that does not even exist?

spots
03-25-2007, 06:27 AM
One category leases suck is the mileage cap. 12k a year is nothing. Work the numbers at 20k a year (our car) and 55k a year (my work trucks). Purchasing works out much better for us. I don't consider our vehicles assets. They are expenses.
I would never consider purchasing a vehicle I didn't think would last 200k with minimal maintenance.

Ugly Bear
03-25-2007, 09:34 AM
How and why would you be seriously considering a car that does not even exist?

As I said, 2010 will be beginning of the new 5er life cycle. If one wants to buy, first/second year is better since your car will look modern for 5-6 years. Today's E60 will look dated in 5 years (if you care about such things, of course). Oh, and if I don't like it, I'll get some other brand. Japanese are getting closer all the time.

krash
03-25-2007, 10:12 AM
One category leases suck is the mileage cap. 12k a year is nothing. Work the numbers at 20k a year (our car) and 55k a year (my work trucks). Purchasing works out much better for us. I don't consider our vehicles assets. They are expenses.
I would never consider purchasing a vehicle I didn't think would last 200k with minimal maintenance.

This is true. I only put on about 10k miles per year. Fortunately, I have a very easy commute to/from work. For long trips, we typically take my wife's SUV (Acura MDX).

Leasing works for me.

Also, I suppose I should give a disclaimer here...

I have been a huge advocate of leasing. I always lease my cars.

However, we bought my wife's Acura MDX (with cash). It made far more sense to buy her car rather than lease it. First of all, she'll be perfectly happy with that car for 7-8 years. Second, we put a lot of mileage on that (long trips, etc.)...

So although I appear to be a HUGE advocate for leasing, that is only partially true.

We actually buy 1 and lease the other.

shabbaman
03-25-2007, 11:37 AM
As I said, 2010 will be beginning of the new 5er life cycle. If one wants to buy, first/second year is better since your car will look modern for 5-6 years. Today's E60 will look dated in 5 years (if you care about such things, of course).

It really isn't a concern for me. I have way too many more important things to worry about than if my car looks modern or dated.

Ironically, my E39 is more fuel efficient, just as safe in a crash, has just as many airbags and is more reliable (according to consumer reports) than the E61 that we just leased (which, I have said is a terrific car). It has all the features that I need and even some that I don't. Sure, it may not be the most recent design out there but if it has all the criteria I look for in a car (and safety is the most important for me) why would I replace my car just because some company decides that the product they are selling is no longer *in style*?

wagonman
03-25-2007, 08:56 PM
This is true. I only put on about 10k miles per year. Fortunately, I have a very easy commute to/from work. For long trips, we typically take my wife's SUV (Acura MDX).

Leasing works for me.

Also, I suppose I should give a disclaimer here...

I have been a huge advocate of leasing. I always lease my cars.

However, we bought my wife's Acura MDX (with cash). It made far more sense to buy her car rather than lease it. First of all, she'll be perfectly happy with that car for 7-8 years. Second, we put a lot of mileage on that (long trips, etc.)...

So although I appear to be a HUGE advocate for leasing, that is only partially true.

We actually buy 1 and lease the other.

i actually like the buy one car lease the second for couples. it makes a lot of sense. buy the car that puts on more miles and lease the one for the person that wants or would appreciate getting a new car every 3yrs. plus-and this is a large part of it for me is that if you are leasing two cars you are out of pocket what about 1500-1600 per month on lease payments? that is more than my mortgage payment and not very appealing. that said, buy two reasonably nice cars and you are coming up with what? about 85 to 100k in cash? that is a lot of dough where i come from. that is why i like the idea of buying one and leasing one. somehow it seems to cushion the blow a bit. my two cents..

cheapa55
03-27-2007, 02:36 PM
Interesting topic. I am a buyer and never thought about leasing until BMW's deals came along. It seems like a great deal to lease a BMW. here is a question.

Is it worth it to lease it and buy it at the end?


I drive about 25-30K miles/year. Leasing seems out of the question for me, correct? Are there any options for me if I drive that much besides purchasing a car?

chuck92103
03-27-2007, 04:12 PM
Interesting topic. I am a buyer and never thought about leasing until BMW's deals came along. It seems like a great deal to lease a BMW. here is a question.

Is it worth it to lease it and buy it at the end?


I drive about 25-30K miles/year. Leasing seems out of the question for me, correct? Are there any options for me if I drive that much besides purchasing a car?

I am in the same boat. I drive a lot and customize my car. Leasing works best when the car is a sunday driver or a second car, or you drive little, no vacations, long road trips, etc. Just to/from work and that's it. Kind of defeats the point of having a bimmer but it is what it is.

A big part of owning/leasing a bimmer is using the car. I cannot see leasing a car with a 10k mile per year limit. That's hardly any driving. You are basically paying BMW to store their car for 2-3 years.

aficionado
03-28-2007, 02:02 PM
As I said, 2010 will be beginning of the new 5er life cycle. If one wants to buy, first/second year is better since your car will look modern for 5-6 years. Today's E60 will look dated in 5 years (if you care about such things, of course). Oh, and if I don't like it, I'll get some other brand. Japanese are getting closer all the time.


You'll get old waiting to buy our car.

I can't buy an 07 because of the 08 refresh. I can't buy an 08 because it's the first year of a refresh. I can't buy an 09 because a new style will be out. I can't buy a 2010 because it's the first year, so maybe I can buy a 2011 or 2012, but even with a 2012 a refresh is only a year or two away, so I can't buy a 2013 and 2014 will be the first year of a refresh and a 2015 and 2016 is to close to a new style and 2017 is the first year of a new style.....:tsk:

BeemerGuy
04-13-2007, 07:22 AM
Interesting thread... and good analysis there OP. I've done both, lease and buy. There are two advantages to leasing BMWs that I haven't read here yet:

1) Gap insurance. If your car gets totalled or stolen during the lease, you don't owe the difference between what the car is worth and the lease payoff, as you would if you had conventional financing.
2) BMW incentives. Quite often (everytime, in my experience) BMW FS will give you preferred rates and/or a lower lease payoff (if you want to get out early) on your trade-in if you lease or buy another BMW.

To me, it really matters what kind of rate they are offering at the time. If the MF is good, I'll lease*. If not, I'll buy.

Michael

* It depends on the company too. Some manufacturers have really lousy lease programs (lots of fees). BMW does pretty good, and their fees are minimal, IIRC.

stevepow
04-15-2007, 12:18 PM
I did a similar analysis when I got my car last year - it was close to a draw at the time, but I was a little worried that with the options on my car, it might not be so easy to sell or trade, so I went with the lease. If I still want the car at the end of the 3 years, I can buy it and I'll know it will probably be one of the best used BMWs I can find.

I owned my last car out right and that worked out really great because the car, an e39 M5, was in top shape / low mileage and held its value extremely well. It worked out to be the least expensive car I have owned in quite a while.

It is a case by case thing - I think you have to run the numbers based on lease rates and consider other factors also.

Sixondubz
04-15-2007, 02:12 PM
If you are a business owner Lease ! End Thread

Bob Shiftright
04-15-2007, 03:05 PM
Sounds reasonable to me, too...

I am a business owner and I asked my tax lawyer/accountant if it made any sense for me to lease a car. He emphatically told me that it would not. It probably depends on what kind of business you have and what you need, or don't need, a car for. I need to shave, put on a suit and meet with clients a couple of times a year, so it doesn't really make sense for me.

When I bought my Volvo in 1997, I considered leasing, thinking I'd put the money in dot-com stocks that were appreciating at 50% annually, lease the car and, well, maybe get a "free" Ferrari out of the deal. Those were wonderful days in the stock market. Jose Canseco was was a regular guest on CNBC dressed in a vertical chalkstripe power suit and sharing his wisdom about investments. Fortunately, I didn't do this because the dot-com bubble exploded, and I would have managed to net about a 90% loss on the stocks that I didn't buy. That's in addition to the lease payments. 10 years later, the Volvo still doesn't burn any oil and the seats are still comfy. And it's cost me $0 in payments over the last 10 years. A few bucks in repairs, though.

But if you know that the US stock market (or real estate, or jojoba bean futures) are going to appreciate at 7.5 % per year for the next ten years, it should work out fine.

http://www.oreillynet.com/users/files/23984/risk_reward.gif