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-   -   Doesn't Anyone Buy Anymore? (http://www.bimmerfest.com/forums/showthread.php?t=596309)

palermo22 01-24-2012 12:20 PM

Doesn't Anyone Buy Anymore?
 
I became a member of Bimmerfest a little while ago - I'll probably wind up buying a 328 with European Delivery (just waiting to test drive and see the car in person). But the point I want to make is that it seems as though more people lease this car rather than buy. I realize there are business reasons to lease (tax write-off) and that those that don't keep their car longer than three/four years that leasing might be the way to go. However, I plan to keep the car at least six/eight years - as a long-time car buyer I have always done this on the basis that a car depreciates immensely the first few years and then slows down - meaning that once you get past year three the car is less expensive unless the manufacturer is not reliable and various problems pop up in the later years (hopefully, this will not be the case with the 328). Anyway, just wanted to see if there was something that I am not aware of by buying instead of leasing (while I had planned to buy with cash - getting a 1.99 or even 2.99 loan might change my mind - I don't like to have debt).

tturedraider 01-24-2012 01:52 PM

Roughly 50% lease and the other half buys. There's no truly fiscally sound reason to lease except for business purchases. Otherwise leasing is really a lifestyle choice.

Just so you know, www.PenFed.org is a first rate credit union. Anyone can join. They have 1.99% financing currently up to 48 months, 2.49% to 60 months. Since they cater to the military they are very familiar with ED financing. Most other lenders are not. They get very nervous about not getting their lien perfected post haste. PenFed understands the process. BMWFS, of course, is the biggest lender for EDs. If you are eligible to join USAA they are also well versed with EDs. Are you a veteran? If so, you are eligible to join USAA. If you are eligible and are not a member I highly suggest joining. No one can touch their auto insurance rates. Their auto financing is usually right in line with PenFed's.

Robert A 01-24-2012 02:03 PM

Perhaps a lot of folks lease because they like the payment.

That said, for long-term buyers, it also makes sense to lease with an eventual plan to purchase. There are two reasons behind this logic: 1) If the car turns out to be a dud or you wreak it, you can unload it at the end of the lease and 2) if the car is worth less than the residual, you can often negotiate a lower buyout price -- effectively giving you another bite at the apple. The downside to the lease is that the cost of money (the effective APR) is often a little higher.

palermo22 01-24-2012 02:08 PM

Quote:

Originally Posted by tturedraider (Post 6584247)
Roughly 50% lease and the other half buys. There's no truly fiscally sound reason to lease except for business purchases. Otherwise leasing is really a lifestyle choice.

Just so you know, www.PenFed.org is a first rate credit union. Anyone can join. They have 1.99% financing currently up to 48 months, 2.49% to 60 months. Since they cater to the military they are very familiar with ED financing. Most other lenders are not. They get very nervous about not getting their lien perfected post haste. PenFed understands the process. BMWFS, of course, is the biggest lender for EDs. If you are eligible to join USAA they are also well versed with EDs. Are you a veteran? If so, you are eligible to join USAA. If you are eligible and are not a member I highly suggest joining. No one can touch their auto insurance rates. Their auto financing is usually right in line with PenFed's.

Thanks - I have been a USAA member for 25 years (I am a retired State Department Foreign Service Officer).

justinnum1 01-24-2012 02:16 PM

Quote:

Originally Posted by palermo22 (Post 6584282)
Thanks - I have been a USAA member for 25 years (I am a retired State Department Foreign Service Officer).

cool, so like CIA?

sunny5280 01-24-2012 03:24 PM

Quote:

Originally Posted by palermo22 (Post 6584062)
I became a member of Bimmerfest a little while ago - I'll probably wind up buying a 328 with European Delivery (just waiting to test drive and see the car in person). But the point I want to make is that it seems as though more people lease this car rather than buy. I realize there are business reasons to lease (tax write-off) and that those that don't keep their car longer than three/four years that leasing might be the way to go. However, I plan to keep the car at least six/eight years - as a long-time car buyer I have always done this on the basis that a car depreciates immensely the first few years and then slows down - meaning that once you get past year three the car is less expensive unless the manufacturer is not reliable and various problems pop up in the later years (hopefully, this will not be the case with the 328). Anyway, just wanted to see if there was something that I am not aware of by buying instead of leasing (while I had planned to buy with cash - getting a 1.99 or even 2.99 loan might change my mind - I don't like to have debt).

Leasing is often a means to get into a vehicle which you cannot afford to buy.

palermo22 01-24-2012 03:51 PM

Quote:

Originally Posted by justinnum1 (Post 6584300)
cool, so like CIA?

So, not exactly - but close!

palermo22 01-24-2012 03:55 PM

Quote:

Originally Posted by sunny5280 (Post 6584437)
Leasing is often a means to get into a vehicle which you cannot afford to buy.

I understand the concept of leasing - I was just trying to determine why so many people on here are talking about leasing (as opposed to buying - especially with the low interest rates out today). I have always thought of leasing as renting: at the end of the rent period you have nothing to show for what you spent. Of course, I understand when you're young it may become the sole option for getting into a BMW (or other expensive car).

todd92 01-24-2012 03:59 PM

Leasing made sense a while ago when the residuals were ridiculously high. Buying new never makes sense, you take the huge depreciation hit in the early years regardless of how long you hold on to it. All 3 BMW's I currently own were bought very low mile CPO at huge discounts vs new. I own several other cars I bought new, but buying them used wasn't an option.

sunny5280 01-24-2012 04:29 PM

Quote:

Originally Posted by palermo22 (Post 6584481)
I understand the concept of leasing - I was just trying to determine why so many people on here are talking about leasing (as opposed to buying - especially with the low interest rates out today). I have always thought of leasing as renting: at the end of the rent period you have nothing to show for what you spent. Of course, I understand when you're young it may become the sole option for getting into a BMW (or other expensive car).

Given some of the discussions I've read it's partly for the reason I stated.

tturedraider 01-24-2012 04:38 PM

Quote:

Originally Posted by Robert A (Post 6584271)
Perhaps a lot of folks lease because they like the payment.

That said, for long-term buyers, it also makes sense to lease with an eventual plan to purchase. There are two reasons behind this logic: 1) If the car turns out to be a dud or you wreak it, you can unload it at the end of the lease and 2) if the car is worth less than the residual, you can often negotiate a lower buyout price -- effectively giving you another bite at the apple. The downside to the lease is that the cost of money (the effective APR) is often a little higher.

This is a valid point. Some people look at it as buying an option to purchase depending on future performance and circumstances.

tturedraider 01-24-2012 04:41 PM

Quote:

Originally Posted by palermo22 (Post 6584282)
Thanks - I have been a USAA member for 25 years (I am a retired State Department Foreign Service Officer).

Quote:

Originally Posted by justinnum1 (Post 6584300)
cool, so like CIA?

Quote:

Originally Posted by palermo22 (Post 6584473)
So, not exactly - but close!

I was an intelligence analyst in the Army for four years.

Michael Schott 01-24-2012 05:17 PM

Quote:

Originally Posted by palermo22 (Post 6584481)
I understand the concept of leasing - I was just trying to determine why so many people on here are talking about leasing (as opposed to buying - especially with the low interest rates out today). I have always thought of leasing as renting: at the end of the rent period you have nothing to show for what you spent. Of course, I understand when you're young it may become the sole option for getting into a BMW (or other expensive car).

Leasing is like renting no doubt but many of us prefer it for a few reasons. It's still much less expensive due to the residuals and relatively low money factors. Also, it allows you to get a brand new car every 3 years and avoid BMW's pricey maintenance. The negative and for some this is huge, is the lack of equity.

palermo22 01-24-2012 05:55 PM

Quote:

Originally Posted by Michael Schott (Post 6584645)
Leasing is like renting no doubt but many of us prefer it for a few reasons. It's still much less expensive due to the residuals and relatively low money factors. Also, it allows you to get a brand new car every 3 years and avoid BMW's pricey maintenance. The negative and for some this is huge, is the lack of equity.

Yes, I would imagine that would be huge: making $500+ payments for four years = $24,000+ and at the end of that period you have no equity.

LS2 MN6 01-24-2012 06:37 PM

Lease
-------
Smaller payment, no money down
New car every 2-3 years
Low miles traveled

Buy
----
Larger payment, with money down
Car is yours, no one can take it
High miles traveled

Those are the most basic reasons for doing one versus the other. Over time it really depends on your life style (and how long you keep a buy and how much money you dump into it) that really makes one choice better than the other.

I personally drive a TON (20-25k a year), so I have to own my cars or be willing to drive the **** out of my Corvette in the summer (to not go over my lease mileage on my "other" car). I did that once, never again.

LS2 MN6 01-24-2012 06:41 PM

Quote:

Originally Posted by Robert A (Post 6584271)
Perhaps a lot of folks lease because they like the payment.

That said, for long-term buyers, it also makes sense to lease with an eventual plan to purchase. There are two reasons behind this logic: 1) If the car turns out to be a dud or you wreak it, you can unload it at the end of the lease and 2) if the car is worth less than the residual, you can often negotiate a lower buyout price -- effectively giving you another bite at the apple. The downside to the lease is that the cost of money (the effective APR) is often a little higher.

Some leasing companies (in my experience GMAC now Ally) won't let you renegotiate the price of a "Buy" at the end of your lease. You either pay what's on the contract or the dealer collects the car and it goes to Auction.

Now once at Auction you can track it down and try to get it back for less than your original "Buy" amount. This was done mostly because leasing was heavily subsidized by some leasing companies thru inflated residuals (that's one of the main reasons GMAC needed so much Gov money and why Chrysler Financial effectively went Bankrupt).

Michael Schott 01-24-2012 07:03 PM

Quote:

Originally Posted by palermo22 (Post 6584714)
Yes, I would imagine that would be huge: making $500+ payments for four years = $24,000+ and at the end of that period you have no equity.

But if you buy you may have $650.00 payments and a car worth 50% of what you pd plus potentially expensive repairs after 3 years. And you've paid out $31,000!

palermo22 01-24-2012 07:53 PM

Quote:

Originally Posted by Michael Schott (Post 6584852)
But if you buy you may have $650.00 payments and a car worth 50% of what you pd plus potentially expensive repairs after 3 years. And you've paid out $31,000!

This may say it better (using a decently equipped 2012 328)

Lease $550 - 48 months - spent: $$26,400

Net spent: $26,400

Purchase - Spent $42,000

Value after four years: $24,000 (based on 50% depreciation)

Repairs and Maintenance (thus far) - all paid by BMW

So after four years I am now sitting with a car that I have spent $24,000 on and I have equity of $24,000. Under leasing - even if your payments only equalled $24,000 - after four years you have nothing!

brkf 01-24-2012 08:45 PM

Quote:

Originally Posted by palermo22 (Post 6584945)
This may say it better (using a decently equipped 2012 328)

Lease $550 - 48 months - spent: $$26,400

Net spent: $26,400

Purchase - Spent $42,000

Value after four years: $24,000 (based on 50% depreciation)

Repairs and Maintenance (thus far) - all paid by BMW

So after four years I am now sitting with a car that I have spent $24,000 on and I have equity of $24,000. Under leasing - even if your payments only equalled $24,000 - after four years you have nothing!

Um...nobody leases 3s for 4 years. When I optioned up a 328i and looked at ED, MSDs, etc the final rang up around:

MSRP: 44995
ED with 700 profit: 39875
MF: 0.00176
Residual: 65%
Sales Tax: 7.75
MSDs: $3150 (450 X 7, but I think this would probably be 400 X 7)
Lease fees: 800
Payment: $449.19
Total cash outlay: 16971


Same car purchased ED:
Purchase 39875
Full purchase price w/Tax: 42965
Cash down: 5000
Loan amount: 37965
60 month loan at 1.79% (Navy Federal): 661.96
Total payments over 36 months: 23830.56
Total expenditures including down payment: 28830.36
Realistic value of 3 series after 3 years - 55%: 24747
Total owed on loan: $15594
Difference in your favor: 9153
Total spent over 3 years: $19677

Purchase for the short-term on a BMW isn't usually so good as they support the heck out of their leases.

Longterm - yes, the loan is the way to go.

3ismagic# 01-24-2012 09:20 PM

I had originally planned to lease, but ended up buying due to idiosyncratic circumstances that involved me having to make some liquid assets conveniently "disappear". Needless to say I have a whole lot of equity in my 335d.

In the future I see myself moving towards the 2-3 year ED lease with max MSD model.

palermo22 01-24-2012 10:45 PM

Quote:

Originally Posted by blueguydotcom (Post 6585041)
Um...nobody leases 3s for 4 years. When I optioned up a 328i and looked at ED, MSDs, etc the final rang up around:

MSRP: 44995
ED with 700 profit: 39875
MF: 0.00176
Residual: 65%
Sales Tax: 7.75
MSDs: $3150 (450 X 7, but I think this would probably be 400 X 7)
Lease fees: 800
Payment: $449.19
Total cash outlay: 16971


Same car purchased ED:
Purchase 39875
Full purchase price w/Tax: 42965
Cash down: 5000
Loan amount: 37965
60 month loan at 1.79% (Navy Federal): 661.96
Total payments over 36 months: 23830.56
Total expenditures including down payment: 28830.36
Realistic value of 3 series after 3 years - 55%: 24747
Total owed on loan: $15594
Difference in your favor: 9153
Total spent over 3 years: $19677

Purchase for the short-term on a BMW isn't usually so good as they support the heck out of their leases.

Longterm - yes, the loan is the way to go.

We can both make figures do anything we want - I would pay cash (and it's sitting in a tax free bond fund not earning very much). So very simply (using your example) - let's say I lose a $1,000 on inerest never earned - so the car costs me $43K + 1K = $44K - and you say it's worth 55% after three years (I actually think closer to 60% but we'll use 55%) - so after three years I have a car worth almost $25,000 - and I have spent $19,000. So I have spent $2K more than you but I have an asset worth $25K - and you have nothing!

davidc1 01-25-2012 04:28 AM

How is it that you spent 19k and have asset worth 25k after three years?

SuperTerp 01-25-2012 06:16 AM

Quote:

Originally Posted by davidc1 (Post 6585379)
How is it that you spent 19k and have asset worth 25k after three years?

I think he means he spent a total 44k, then took the depreciation hit (19k) and could recover 25k on a sale, which would fall in line with those figures.

davidc1 01-25-2012 07:41 AM

Quote:

Originally Posted by SuperTerp (Post 6585489)
I think he means he spent a total 44k, then took the depreciation hit (19k) and could recover 25k on a sale, which would fall in line with those figures.

OK. So the guy who leased spent 17K and have 27k of liquid asset in the bank then.

SuperTerp 01-25-2012 08:10 AM

Quote:

Originally Posted by davidc1 (Post 6585652)
OK. So the guy who leased spent 17K and have 27k of liquid asset in the bank then.

This is also true :D


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