Here is the problem with leasing

[mclaren]

I've written a lot in this forum about the advantages of leasing. There is a significant problem though. People who keep up with what is going on know that there are some great deals from time to time but not all the time. If your lease ends at a bad time in terms of deals what do you do ? Assuming you need a car you've got a problem. This situation doesn't exist when you purchase a car since there is no fixed time frame. In 2006 they had a give away deal on Z4s. At the time I was 20 months into a 36 month lease on a 3 series and was able to work a deal where I got out of my 3 series lease for only $700 which was sort of a miracle. Now I've got 8 more months on my Z4 lease and am worried there might not be a deal to my liking next year.

[tturedraider]

Time to try something completely new!! A diesel 335!! :thumbup:


btw - you make an excellent point.

[beewang]

...There is a significant problem though. People who keep up with what is going on know that there are some great deals from time to time but not all the time. If your lease ends at a bad time in terms of deals what do you do ? Assuming you need a car you've got a problem. ....

Nonsense!! :confused:
(read more below)


....This situation doesn't exist when you purchase a car since there is no fixed time frame. In 2006 they had a give away deal on Z4s. At the time I was 20 months into a 36 month lease on a 3 series and was able to work a deal where I got out of my 3 series lease for only $700 which was sort of a miracle. ...

So have you thought of just buying your leased car (as if you had bought the car) ?? Problem solved!!;)

[mclaren]

Yes, I have thought about buying the car but the residual is crazy high and buying it would be insane financially unless they offered 5K or so off which they might do but what if they don't ?

[chrischeung]

If your lease ends at a bad time in terms of deals what do you do ? Now I've got 8 more months on my Z4 lease and am worried there might not be a deal to my liking next year.

Did you consider selling your excellent lease now, in the height of summer, and pocketing the "equity"? Then use that money towards a new lease, that may likely be more desireable in the future. Be ahead of the curve - by getting that initial great deal, you are already way ahead IMHO.

[mclaren]

Chris, the trouble with selling my lease on swaplease or similar is the MSDs. I'd have to find someone willing to pay me the 4k which shouldn't be a problem except that most folks don't understand stuff like MSDs and would start worrying they were somehow getting the shaft. In other words it is more than take over my great lease and have fun driving a loaded Z4 for 8 months.

[beewang]

Yes, I have thought about buying the car but the residual is crazy high and buying it would be insane financially ...

Well then!! Buy someone else's used Z4... what difference does it make??!!:dunno: you actually get a chance to rectify any mistakes you made on your own Z4 (i.e. Wish I had this color, this option etc..) ;)

[mclaren]

Well then!! Buy someone else's used Z4... what difference does it make??!!:dunno: you actually get a chance to rectify any mistakes you made on your own Z4 (i.e. Wish I had this color, this option etc..) ;)

I don't want someone else's Z4 and mine's just about perfect optionwise. In any case I started this thread to point out the fixed time frame with leasing could be a problem and shouldn't have mentioned my particular situation. ;)

[mclaren]

The solution to the time frame problem might be to turn in your leased car 1-3 months early if they have a killer deal on something you want for your next car. So you pay 1-3 payments but if you got a great deal on the one you're turning in and are getting another great deal on the new one it sounds OK to me.

[AMP]

The solution to the time frame problem might be to turn in your leased car 1-3 months early if they have a killer deal on something you want for your next car. So you pay 1-3 payments but if you got a great deal on the one you're turning in and are getting another great deal on the new one it sounds OK to me.

BMW will also allow you to extend your lease on a month-to-month basis if you have another car on order. Generally the best deals are had at the model-year changeover and the end of the calendar year. I always try to time my lease maturity dates to be close to one of these two events.

Beware of the odd term leases (30mo, 39mo, etc). In the past these were sweetened at certain times in order to have your lease mature during historically slow months. I almost signed a 39mo deal a few years back at the end of december. Much better deal than 36mo, but would have had the lease maturing in the early spring which isn't the best time of year to be getting a good deal on the next car.

[BayAreaBMWFan]

I had written about this a long time ago. You have a fairly long window to order your car. Assuming US delivery, the window starts between 60-90 days before you current lease expires since you could in principal lock the lease rates for 60 days after expiration of the program. You have the option to extend your current lease for 2 months no questions asked and for another four if you have a car on order. So that gives you another 2 months to wait and see; and then four months after that. If you are doing ED, your initial start window is even longer since you would lock in your rate when you order, pick up the car in 60 days and then have another 6-8 weeks in the middle.

MSDs can be a problem but I have done lease transfers with MSDs. Just depends on the deal. If your original deal is killer, people will fork up the MSDs also; they might ask for a copy of the contract. You can ask them to call BMWFS to confirm.

[NASA43]

I had written about this a long time ago. You have a fairly long window to order your car. Assuming US delivery, the window starts between 60-90 days before you current lease expires since you could in principal lock the lease rates for 60 days after expiration of the program. You have the option to extend your current lease for 2 months no questions asked and for another four if you have a car on order. So that gives you another 2 months to wait and see; and then four months after that. If you are doing ED, your initial start window is even longer since you would lock in your rate when you order, pick up the car in 60 days and then have another 6-8 weeks in the middle.

MSDs can be a problem but I have done lease transfers with MSDs. Just depends on the deal. If your original deal is killer, people will fork up the MSDs also; they might ask for a copy of the contract. You can ask them to call BMWFS to confirm.

When you say you have 2 months you can extend, no questions asked, you mean even if you don't have another BMW on-order? Do you simply call BMWFS and ask to keep the car for 2 more months? I assume at the same payment?

[Calif65GM]

Well this is true in any business.

Do you sign a long-term agreement to lock in prices or go short and hope for a deal down the line?

It's always going to be a "gamble". It's just are you a risk taker or risk averse.

Who knows in 8-mth the economy maybe even worse off then now. You never know.

[pilotman]

to the OP, I respectfully disagree to an extent. You are limiting yourself far too much, why only consider BMW? There are ALWAYS deals to be had somewhere, whether it be MB, Audi/VW, Infiniti, Acura, etc etc

Plus, there is almost ALWAYS a deal one some model of BMW, if you are extremely flexible (i.e. could take a Z4, a 1 series, a 5 series etc) then you can still swing it.

I am able to get Chrysler employee discount and Nissan/Infiniti discount, and I change things up every couple of years. We usually have two cars, one is usually a BMW (but not always), sometimes I'll get Japanese, or another German etc....

Also, as BMWBayarea notes, BMW is actually very flexible about allowing extension of leases when another BMW is on order....of course you can't control, plan for massive economic changes like we are experiencing now....

[pilotman]

BMW will also allow you to extend your lease on a month-to-month basis if you have another car on order. Generally the best deals are had at the model-year changeover and the end of the calendar year. I always try to time my lease maturity dates to be close to one of these two events.

Beware of the odd term leases (30mo, 39mo, etc). In the past these were sweetened at certain times in order to have your lease mature during historically slow months. I almost signed a 39mo deal a few years back at the end of december. Much better deal than 36mo, but would have had the lease maturing in the early spring which isn't the best time of year to be getting a good deal on the next car.

this is a very interesting point you make, but is this accurate? For example, my wife's BMW X3 lease is a 39 month (euro delivery) that ends in October, I usually try to lease a last year's model left over the lot, and September/October usually works well for that....

again, an interesting point you raise.

[kyfdx]

I've written a lot in this forum about the advantages of leasing. There is a significant problem though. People who keep up with what is going on know that there are some great deals from time to time but not all the time. If your lease ends at a bad time in terms of deals what do you do ? Assuming you need a car you've got a problem. This situation doesn't exist when you purchase a car since there is no fixed time frame. In 2006 they had a give away deal on Z4s. At the time I was 20 months into a 36 month lease on a 3 series and was able to work a deal where I got out of my 3 series lease for only $700 which was sort of a miracle. Now I've got 8 more months on my Z4 lease and am worried there might not be a deal to my liking next year.


Well.. In a very general way... March seems to be one of the best months to lease a BMW... So, if my lease was ending then, I'd be less worried...

Now.. my lease ends in November... Got a killer deal on a leftover '05 the last time... but, that was an aberration.... Not sure what will happen this time.. I'm already looking..

[Robert A]

You can always get a six month extension if the dealer is willing to associate your name with a BMW production number. It'll buy some time, and BMW won't adjust your lease rate upwards if you had a significant cap reduction. And of course, you can always buy the car out of the lease, which would leave you in essentially the same spot as you would have been if you'd bought it in the first place.

I've written a lot in this forum about the advantages of leasing. There is a significant problem though. People who keep up with what is going on know that there are some great deals from time to time but not all the time. If your lease ends at a bad time in terms of deals what do you do ? Assuming you need a car you've got a problem. This situation doesn't exist when you purchase a car since there is no fixed time frame. In 2006 they had a give away deal on Z4s. At the time I was 20 months into a 36 month lease on a 3 series and was able to work a deal where I got out of my 3 series lease for only $700 which was sort of a miracle. Now I've got 8 more months on my Z4 lease and am worried there might not be a deal to my liking next year.

[Z4luvr]

I understand the OP's point of view. I got a great deal on my Z4 and it will be up in June 2009. The new Z4's will be coming out at that time and the terms will not be good. Even adding 2 months or so won't make a big difference. Right now my plan is to get a 2010 Z4 with the twin turbo about 6-9 months after it is out by which time the "new model" bad terms should have melted away. My plan for the interim period is to assume a short term lease on leasetrader like I did earlier this year.

I had a 2006 530i that I turned in and needed something fairly fast. I wasn't ready to buy a 535 at that point, so I needed something short term. I got a 2005 MB CLK 320 for 7 months, drove it 3000 miles a month and paid about $550 a month total. That also made me appreciate my Bimmers even more!

[BayAreaBMWFan]

When you say you have 2 months you can extend, no questions asked, you mean even if you don't have another BMW on-order? Do you simply call BMWFS and ask to keep the car for 2 more months? I assume at the same payment?

From what I have heard (and I think read), the 2 months at the same lease payment is not a problem. In some states like CA where the DMV fees are high extending for two months does not make sense. However states where the reg fee are not too high, the two month extension makes a lot of sense if you want to wait.

[philippek]

Build a strong relationship with your CA and you'll always be able to get a deal. Even on buying out your leased car, if that's what you choose to do.

You leased for a number of good reasons. The plummetting resale value of the Z4 is one of them. The lease gives you a solid exit strategy which is worth something, even though you don't happen to want to use that strategy now.

I'm the type who does plan his vehicles two or three ahead, but there are so many variables when it comes to these deals that's it's not really worth the effort trying to plan out past the next car. Market timing doesn't work in real estate, the stock market or cars.

[Robert A]

I'm told that you can get a lease extension only if you have a production number. Otherwise, its 10 days.

Now, as to DMV renewals, this is where ED comes in handy because the DMV registration shouldn't cycle until the anniversary of the car's arrival in the US. When I signed the ED lease paperwork on my 530i, I asked the dealer to hold up the DMV registration until the car arrived at the dealership. That bought me about 2-1/2 months of extra time and was totally legit.

From what I have heard (and I think read), the 2 months at the same lease payment is not a problem. In some states like CA where the DMV fees are high extending for two months does not make sense. However states where the reg fee are not too high, the two month extension makes a lot of sense if you want to wait.

[mclaren]

Market timing doesn't work in real estate, the stock market or cars.

I agree 100% with that statement phil, but that never kept me from trying !

A strong relationship with a CA does you no good with BMWFS. This .9% financing or my .0005 money fracture on the Z4 or trunk money, free options etc.

As an option trader in the stock market I know the value of an option, and the option to buy or not buy a car at the end of a lease is a very valuable option that is under appreciated.

[mclaren]

I generally feel the same way about boats, planes, cars, and women - I'd rather rent.

[Robert A]

Registered investment advisor here, who believes entirely in passive investments. Still, I agree that the "put" option in a car lease is a valuable asset that's under appreciated.

Market timing doesn't work in real estate, the stock market or cars.

I agree 100% with that statement phil, but that never kept me from trying !

A strong relationship with a CA does you no good with BMWFS. This .9% financing or my .0005 money fracture on the Z4 or trunk money, free options etc.

As an option trader in the stock market I know the value of an option, and the option to buy or not buy a car at the end of a lease is a very valuable option that is under appreciated.

[omszz]

If you want a new car, and only plan to keep the car for 2-3 yrs, I think a good lease makes more sense. I say this because generally all the leases I've had in recent years, the street value of the car at the end of the lease is much lower than the residual price on the lease. As such if I had purchased, the amount lost on the same car would have been more over the same period. This is also start to pop up in news lately where car manufacturers are reporting huge writeoffs on leases.

[NASA43]

From what I have heard (and I think read), the 2 months at the same lease payment is not a problem. In some states like CA where the DMV fees are high extending for two months does not make sense. However states where the reg fee are not too high, the two month extension makes a lot of sense if you want to wait.

Thanks for the info. That's good to know. My lease is up in Feb and I don't know what I'm going to do this time. I would like to wait and see how much BMWFS will reduce the payoff on my 5 series but I know I won't get their best price until a week or two before the lease is up. I also have my eyes on a couple other cars. One thing I'm pretty sure of is I won't be leasing another BMW given where the rates are now (maybe something will change for the better during the winter).

[German Expat]

You could also worst case go for a 1 or 2 month rental car if you can accept to drive something else then a BMW.
I travel a lot and I can always turn over my car to my wife when her lease is up and then rent one for myself since half of the time its parked at the aiport in any case.
I also do agree with another poster, market timing 2 or 3 years ahead is really tough. E.g. if you timed it this year to hit the old model at the model change you would have lost out on the residuals when they changed.