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F10 / F11 (2011 - Current)
The new chapter in the highly successful story of the BMW 5 Series Sedan (F10) and wagon (F11)

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  #126  
Old 02-12-2013, 09:58 AM
PeterC4 PeterC4 is offline
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Ok I have to know. Sorry for the hijack.

mryakanisachoad: What watch are you sporting in your avatar?
I'll answer for him...50 Fathoms Concept 2000 Blancpain
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  #127  
Old 02-12-2013, 09:59 AM
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I've never done it but everyone I know who has marks it as one of their best experiences in life.

*edit

You're there right now?!?! (((jealous)))

Is Garmisch one of your destinations? (((really jealous)))
I've already done Garmisch on previous trips. This time around I'm just hanging out in the Munich doing local events and museums and taking short trips to places like Dingolfing and Dachau.

Currently I'm hanging out in the executive lounge at the Hilton. I head home tomorrow and it looks like I'll need my xDrive, since we already got 4" of flurries today and that's going to continue into the night.
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  #128  
Old 02-12-2013, 04:53 PM
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I'll answer for him...50 Fathoms Concept 2000 Blancpain

Yes, thank you, PeterC4.

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  #129  
Old 02-12-2013, 08:57 PM
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Yes, thank you, PeterC4.
One of my all time favourite automatics, (While we are diverting the thread)

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  #130  
Old 02-12-2013, 09:00 PM
PeterC4 PeterC4 is offline
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And one more diversion, and that's it...


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  #131  
Old 02-12-2013, 09:38 PM
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One of my all time favourite automatics, (While we are diverting the thread)
Beautiful! The perfect compliment to the F10

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  #132  
Old 02-13-2013, 12:13 AM
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Oh sh**. The boys just pulled out their fancy watches, thread hijacked the most ultimate hijack.

Good timing.
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  #133  
Old 02-13-2013, 05:43 AM
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Dave Ramsey, the radio/TV financial adviser, has an interesting take on automobile leasing:

Explain How A Car Lease Works

QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.

ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.

During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.

Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.

People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car.
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  #134  
Old 02-13-2013, 05:58 AM
rparik01 rparik01 is offline
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Oh this Dave Ramsey?

Dave Ramsey ***10004; @DaveRamsey

Saving only $100 per month from age 25 to age 65 at 12% growth = $1,176,000. Everyone should retire a millionaire!

https://twitter.com/DaveRamsey/statu...06319313461248
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  #135  
Old 02-13-2013, 09:52 AM
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Originally Posted by w5lx View Post
Dave Ramsey, the radio/TV financial adviser, has an interesting take on automobile leasing:

Explain How A Car Lease Works

QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.

ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.

During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.

Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.

People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car.
Interesting take? isn't it as obvious as it can get?
But yes, very well put.. especially the last paragraph.
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  #136  
Old 02-13-2013, 09:54 AM
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Originally Posted by w5lx View Post
A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it's called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.

During that time, you're maintaining the car as if you owned it. You'll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.

Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That's where you'll realize you got screwed over.

People get sold automobile leases because they are told that it's what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think 'how much down and how much a month'. Rich people think 'how much'. If you can't pay cash for a car, then ride a bicycle. But don't lease a car.
Dave Ramsey has some valid points, but he doesn't tell the full story.

I'm about to lease my first vehicle ever. I've always purchased my vehicles but I'm done with purchasing. Here are some points Dave doesn't bring up:

1. With BMW, you are under full warranty, so you don't pay for repairs and so forth.

2. Damage to the vehicle is paid for by insurance, as usual, just like if you purchased the car. But unlike purchasing, when my vehicle gets crushed by someone else and then repaired, I don't eat the depreciation resulting from the accident, which would probably make the vehicle worth less than the residual.

3. With some car companies, you *do* know the interest rate. My money factor with BMW was 0.00125. That is the interest rate. You can use math to figure out exactly what you will pay in interest. And you will know at lease turn in where your vehicle stands in terms of market value vs. residual.

4. One of the main reasons I don't want to purchase my vehicles anymore is because I don't like to sell them. I've always sold them myself because when you trade them in, guess what? You are getting about the same on the trade in as you would get on residual on a lease. So I've sold them. And selling vehicles is a pain. It's something I don't have time to deal with. I own and operate a software company, have a wife and five kids ages 3 to 16, have service organization responsibilities, and so forth, so am very busy. So selling a vehicle is one of the ultimate burdens.

5. This varies by state, but generally you will pay significantly more in taxes by purchasing a vehicle than you would be leasing. In my state, you can get around this by being timely in selling your vehicle. The rules in my state are these: You must sell the vehicle in the same calendar year and you must sell the vehicle before purchasing your next vehicle. If you do this, and if you fill out additional paper work at the time of purchase of the new vehicle, than you can get some credit on the original sales tax you paid for the outgoing vehicle. Again, do I want to deal with this? No thanks.

There are probably other things our good friend Dave is missing. But these are the things that come to my mind quickly. If you are going to own a vehicle for only three years, generally the math comes out so close to leasing vs. paying cash on a vehicle like BMW that the hassles of buying quickly and the risk of depreciation from an accident become the most important governing factors in leasing vs. buying. Which is exactly why I am about to lease for the first time in my life (my vehicle arrives in two weeks ).

I respect Dave, but just like anyone in media, they tell you their side of the story and want to get you hooked on it so you pay them money for their materials and classes and so forth, and so they can get advertising. He runs his business just like anyone else.
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Last edited by cordoor; 02-13-2013 at 10:00 AM.
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  #137  
Old 02-13-2013, 11:46 AM
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When I see the auction selling prices for recent BMW lease returns, I'm seeing 20 and 30 percent discounts to residuals.

I'm a little confused about who's getting "fleeced" in this case?
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  #138  
Old 02-13-2013, 02:51 PM
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Originally Posted by mryakanisachoad View Post
When I see the auction selling prices for recent BMW lease returns, I'm seeing 20 and 30 percent discounts to residuals.

I'm a little confused about who's getting "fleeced" in this case?
What's interesting to me, is that on my car, for example, I have one of those Lease deals where I'm the one "winning" in the first term (i.e the Lease term), because BMW gave me a 74% residual to artificially lower my Lease to get me into my car just before year end (24 month Lease).

Therefore, my buyout is a $46.9K on a $63,450 MSRP car.

Obviously in BMW terms, considering my residual 74% factor is so artificially high, that's a very high residual price to pay. At the same time, when I look at 2011 M Sport 535i's, they sometimes still go for $50's! $46K for a decent mileage 2011 535i was a steal when I was looking just a month and a half ago. IF and a big IF M Sport models still hold their values like they did in 2011/2012 until today (hypothetically speaking), then even those "artificially high residuals" we get to artificially lower our Lease payments aren't so insane after all. Of course, I'm just basing this on a 2-year sample as that's what my Lease is and that's around if not a little under how old 2011 cars are now (hence the comparo).
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Last edited by K-A; 02-13-2013 at 02:53 PM.
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  #139  
Old 02-13-2013, 03:46 PM
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mryakanisachoad mryakanisachoad is offline
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What's interesting to me, is that on my car, for example, I have one of those Lease deals where I'm the one "winning" in the first term (i.e the Lease term), because BMW gave me a 74% residual to artificially lower my Lease to get me into my car just before year end (24 month Lease).

Therefore, my buyout is a $46.9K on a $63,450 MSRP car.

Obviously in BMW terms, considering my residual 74% factor is so artificially high, that's a very high residual price to pay. At the same time, when I look at 2011 M Sport 535i's, they sometimes still go for $50's! $46K for a decent mileage 2011 535i was a steal when I was looking just a month and a half ago. IF and a big IF M Sport models still hold their values like they did in 2011/2012 until today (hypothetically speaking), then even those "artificially high residuals" we get to artificially lower our Lease payments aren't so insane after all. Of course, I'm just basing this on a 2-year sample as that's what my Lease is and that's around if not a little under how old 2011 cars are now (hence the comparo).
I'm looking at auction prices for 2011 535xi's with average mileage in clean condition and its 38,300 - 40,300.
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  #140  
Old 02-13-2013, 03:59 PM
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I'm looking at auction prices for 2011 535xi's with average mileage in clean condition and its 38,300 - 40,300.
I'm talking about M Sport 535i's. They command a huge premium over the "regular" 535i's on the Used market, however that could obviously change as the package becomes more accessible in later MY's.
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  #141  
Old 02-13-2013, 04:03 PM
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I'm looking at auction prices for 2011 535xi's with average mileage in clean condition and its 38,300 - 40,300.
Where are you looking at auction prices?
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  #142  
Old 02-13-2013, 04:10 PM
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Another issue generally not acknowledged by people who denigrate leasing is this more recent concept of "diminished value".
One of the reasons I'd be hesitant about buying a new car these days is because of the databases which are kept by companies like Carfax. The "diminished" value concept is pretty new but highly organized.

Leasing is almost like accident insurance for accidents.

A 10 or 15 thousand hit on a new luxury car will crush her value. Sure, prior accidents always lowered the potential value of a car but nowhere near the extent it does today. That's a fact.

Last edited by mryakanisachoad; 02-13-2013 at 04:12 PM.
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  #143  
Old 02-13-2013, 04:11 PM
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Where are you looking at auction prices?
Manheim.
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  #144  
Old 02-13-2013, 04:35 PM
PeterC4 PeterC4 is offline
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Originally Posted by w5lx View Post
Dave Ramsey, the radio/TV financial adviser, has an interesting take on automobile leasing:

Explain How A Car Lease Works

QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.

ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.

During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.

Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.

People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car.
I read this with interest. It's a terrible summary of leasing and very one-sided. First and foremost, if someone buying a $70,000 car cannot calculate the implied interest rate in the lease, or have someone at the office do it for them, shame on them. Anyway there is no disguising what the inherent interest rate in the lease is. If you know the residual, and you know the price of the car and you know the payments, then I can tell you the rate every day of the week. The naive part of the summary above is that the residuals are set with the OEM being the winner every time. Maybe Dave forgot about the last auto crisis and why OEMs refused to lease cars despite the financial constraints - they were not doing well on the residual value estimates. When fuel prices shoot up unexpectedly, guess what happens to lease residuals on big SUVs that were set 36 months ago? They go down...to the detriment of the OEM. He is right about excessive wear and tear, but you should know that before you enter into a lease. I have purchased cars all my life and I have lost on trade-ins more than a few times. I should have leased in at least 3 instances that I can remember. In some cases, I keep the car a long time, give it to a family member and it works out just fine. But to summarize it like he did above is embarrassing. Radio-TV financial adviser...yah right.
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  #145  
Old 02-13-2013, 05:08 PM
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The Suze Ormans and Dave Ramseys of the world will tell you that buying anything over and above the cheapest most basic car that meets reasonably your needs is a poor financial decision.

With that said, the Ramsey scenario is a one-sided portrayal of the situation. Contrary to his claims, it's possible to lease with close to free money and given the artificially inflated residuals that subvent many lease deals it's far from the fleecing he portrays it to be. The only universal truisms are that there are good deals and bad, and that the poorly educated consumer is more likely to land himself with the latter and not the former. It's possible to get terrible deals with traditional financing, and it's possible to make a bad deal and overpay for your car when you're writing a check.
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  #146  
Old 02-13-2013, 05:21 PM
PeterC4 PeterC4 is offline
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The Suze Ormans and Dave Ramseys of the world will tell you that buying anything over and above the cheapest most basic car that meets reasonably your needs is a poor financial decision.

With that said, the Ramsey scenario is a one-sided portrayal of the situation. Contrary to his claims, it's possible to lease with close to free money and given the artificially inflated residuals that subvent many lease deals it's far from the fleecing he portrays it to be. The only universal truisms are that there are good deals and bad, and that the poorly educated consumer is more likely to land himself with the latter and not the former. It's possible to get terrible deals with traditional financing, and it's possible to make a bad deal and overpay for your car when you're writing a check.
+1 Dave is just as dangerous as the "bad deal" because he is giving bad advice. I would love to debate this with him.
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  #147  
Old 02-13-2013, 07:26 PM
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+1 Dave is just as dangerous as the "bad deal" because he is giving bad advice. I would love to debate this with him.
I wouldn't necessarily call it bad advice. You have to realize who his target audience and customers are.

His target audience is not the person who can determine interest rate based on residual and payment. It is the person (who, interestingly, is probably "most people") who will get a bad lease deal almost every time because they don't know what they are looking for.

So Dave needs to keep it simple. And honestly, the simplest thing is to negotiate a good price (also difficult for a lot of people) and pay cash (assuming they are following the rest of his program, which tries to keep other things equally simple).
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  #148  
Old 02-13-2013, 07:35 PM
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One more thing to point out regarding the residual and value of the vehicle on the auction market. Even if BMW gets lower than residual at auction, they are probably not losing money.

Their cost to build and deliver the vehicle to the customer is likely low enough to accommodate any reasonable additional deprecation below the residual.

So it is likely in best case scenario for the customer where they get the lease at a high residual and its value at the end is well below that, it's likely also still a win and profitable for the manufacturer (remembering that the manufacturer holds the lease in BMW's case, not the dealer).

The dealership always wins to some degree. They got their up front fees (e.g. "dealer fees" and any money factor markup). But also, when the vehicle sells low at auction, it's usually the dealership picking it up and then they get the usual high margin on the used car sale (used cars are much higher margin than new cars).

So, I view what is happening with BMW and leases today as BMW's way of increasing volume without lowering price, which would somewhat sabotage the brand image because the D bag in all of us would no longer feel the exclusivity of the brand tied to price.

I'm fine with it. In reality, it's pretty win-win-win (manufacturer, dealer, customer).

I realize the current great lease situation we have with BMW may not exist with other brands, and so Dave might very well be right with those. But we are talking BMW here.
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Last edited by cordoor; 02-13-2013 at 07:48 PM.
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Old 02-13-2013, 07:44 PM
PeterC4 PeterC4 is offline
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Originally Posted by cordoor View Post
I wouldn't necessarily call it bad advice. You have to realize who his target audience and customers are.

His target audience is not the person who can determine interest rate based on residual and payment. It is the person (who, interestingly, is probably "most people") who will get a bad lease deal almost every time because they don't know what they are looking for.

So Dave needs to keep it simple. And honestly, the simplest thing is to negotiate a good price (also difficult for a lot of people) and pay cash (assuming they are following the rest of his program, which tries to keep other things equally simple).
Not sure I buy it. The very essence of a lease is residual risk protection. Keep the car in decent shape, bring it back, drop of the keys and you're good to go. It's all about the residual value...at 45% or less in three years, you are probably a buyer. At over 55% probably leasing at with 3% financing, you're good. Look, I buy my cars, but Canadian residuals are almost 20% lower than US residuals on a lease.
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Old 02-13-2013, 07:51 PM
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cordoor cordoor is offline
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Originally Posted by PeterC4 View Post
Not sure I buy it. The very essence of a lease is residual risk protection. Keep the car in decent shape, bring it back, drop of the keys and you're good to go. It's all about the residual value...at 45% or less in three years, you are probably a buyer. At over 55% probably leasing at with 3% financing, you're good. Look, I buy my cars, but Canadian residuals are almost 20% lower than US residuals on a lease.
I'm not disagreeing with you. I was explaining why I believe Dave says what he says.

I was simply saying "bad advice" is not the term I'd use.

I'd probably say he is feeding milk to babes. Whereas more sophisticated people like you would rather eat steak.
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See, when the Government spends money, it creates jobs; whereas when the money is left in the hands of Taxpayers, God only knows what they do with it. Bake it into pies, probably. Anything to avoid creating jobs. - Dave Barry

Last edited by cordoor; 02-13-2013 at 08:02 PM.
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